The current supply chain disruptions have left no companies untouched. Those whose supply chains cross oceans have been particularly hit as we have seen ports backed up for days during the pandemic. Most recently, the Russia-Ukraine war and extended lockdowns in China have created even greater supply chain chaos. Many companies find that the lower price for foreign-built molds and plastic products is actually costing them more, and for those who haven’t done so already, now is the time to consider reshoring.
There was a big push to bring manufacturing back to U.S. soil during the Trump administration. As the pandemic raged on and the Administration changed, it became clear that manufacturing close to where you sell becomes an imperative component of supply chain management.
So it shouldn’t have been a surprise during President Biden’s recent State of the Union Address that he talked about, “The rebirth of the pride that comes from stamping products Made In America.” and “The revitalization of American manufacturing.” He said, “Companies are choosing to build new factories here, when just a few years ago, they would have built them overseas…Instead of relying on foreign supply chains, let’s make it in America.” Even in the most polarizing times, both sides can agree that bringing manufacturing back is an important initiative.
To be clear, it isn’t feasible to bring all manufacturing back to the U.S. There will always be a market for overseas injection molders. It doesn’t make economic sense to manufacture cheap plastic commodity items in the U.S, but for critical or complex plastic components, the cost and risks associated with overseas molding may be too high.
Costs and Revenue As A Driver
Most companies choose to have plastic components manufactured overseas because of costs. Overseas providers can offer lower piece prices for many products. However, to understand what you are really paying, evaluate your total landed costs beyond duty, freight, and piece price.
Inventory carrying costs, out of stocks, and upset customers can lead to increased costs or reduced revenue if you cannot get critical products quickly. If you need to visit the manufacturing facility, you will incur expensive travel costs. Another cost you might not have considered is the packaging. Ocean freight may need additional packaging, and if your plastic assemblies have metal components, corrosion may be an issue if not packaged properly. Finally, if you need an order rushed, the cost of airfreight from an offshore manufacturer will be much higher than overnighting it domestically.
Another consideration that can impact revenue is the protection of intellectual property. In 2020, the U.S. Customs and Border Protection seized counterfeit goods that would have been worth over $1.3 billion had they been real. What is real is the impact this has on legitimate companies and their brands. U.S. patents and trademarks are not protected in other countries. You will be required to file in the other countries, and often that isn’t enough to protect your brand from pirates.
Challenging Communication Can Impact Your Business
Another consideration that can impact costs but may be harder to quantify is communication. Collaboration between you and your injection molder is needed to ensure your parts meet your expectations. Collaboration starts with the quote and carries through delivery. For example, if there is an issue with the part’s design that is increasing costs or impacting quality, collaborating with your injection molder is necessary for finding a solution. It goes without saying that communication is a critical component of collaboration. However, there may be language barriers or poor communication with overseas suppliers that can lead to delays, reworks, or other issues that can add to your costs. Working across time zones can add to your frustration if you can’t reach someone during your regular business hours.
GreenLeaf Can Help You Reshore Seamlessly
We understand that the decision to reshore should not be made in haste. We recommend you use a cost calculator can help you find your total cost of ownership and learn how much your company can save by reshoring your injection molding from China or Mexico.
If you decide reshoring is right for you, we can ensure the transfer and startup run smoothly. With extensive experience in mold transfer, we will walk you through every step of the process and ensure that you experience limited downtime. Contact us to get started.
