Recently, we talked about several reasons to be optimistic about the future of manufacturing in America. One of the major takeaways from that post was that the number of manufacturing jobs in the U.S. is on the rise once again, and that many companies are beginning to consider moving their production back to American locations.
However, you might be wondering “why it is that companies are considering making the switch to manufacturing in the U.S. once again?” Well, there are actually a number of reasons, including:
As we mentioned in a previous post, the energy costs associated with operating a U.S.-based manufacturing location are actually going down. However, the cost savings of moving manufacturing to the U.S. go well beyond that for many companies.
For a lot of companies, even though their production has been moved out of the U.S., their R&D facilities have remained here. By basing their manufacturing facilities nearer to their R&D facilities, companies can save time and money when shipping parts and prototype units between the two.
Not only that, but communication between manufacturing and R&D teams is much easier when they are both located in the same region. This eliminates the need for translating terms, speeding up the communication process (team to team as opposed to team to translator to team). Also, this reduces the chances of a miscommunication between a team used to using one kind of measurement to a team that typically uses another kind of measurement: degrees Fahrenheit versus degrees Celsius, for example.
#2: Simplification of Regulations Requirements
One of the major challenges of operating any business in multiple countries is that each country will have different regulations and requirements for the distribution, import, export or manufacture of any products.
By placing your manufacturing in the same country where goods are to be distributed, you can streamline the approval process for many products and make it easier to avoid intellectual property infringement risks.
Having to pay for customs fees and wait for processing on materials, then having to pay export fees and other taxes for the finished products in order to get it to the intended market can quickly become expensive and time-consuming.
Speaking of shipping times…
#3: Reduction in Transit Times
The delay in the ROI for the manufacture of a new product line as it languishes in the cargo storage of a slow, bulky sea vessel can break monthly income projections, and faster air cargo shipments can be prohibitively expensive, while still having to wait for customs processing.
Bringing manufacturing centers into the region where your company’s products will be distributed saves time. This allows you to see a return on your investment sooner rather than later. In addition, this removes a few middlemen from the sales process, reducing markup and allowing prices to be more competitive.
What’s more, this reduction in transit times also means an increased level of flexibility and responsiveness in meeting consumer demands. The faster a company can leverage consumer needs and wants, the better.
For example, if the first run of a product line sells out in record time, a company that bases its manufacturing in the same country it is distributing those products in can strike while the proverbial iron’s hot, putting more of the in-demand product into customer’s hands while it is still in demand. A company that bases its manufacturing overseas, on the other hand, will have to wait for weeks on shipping alone, during which time the enthusiasm for the product may die down or competitors could release off-brand copies of the product.
A company located overseas could prevent an unexpected shortage of a suddenly popular product by massively over-producing everything, but that would be a tremendous waste of time, money and materials.
A Positive Outlook
Of course, there are many more reasons why any specific company might benefit from basing their manufacturing in the U.S., far too many to cover all of them here. Here at Marlin Steel, we’re excited to have the chance to not only witness a resurgence of American manufacturing, but to be a part of it.
With more companies relocating their manufacturing to the U.S., and thus more manufacturing jobs being created, we’re optimistic for the future of the manufacturing industry in the U.S.