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The appeal of moving overseas can be misleading. Before moving a manufacturing facility off-shore, it is important to understand the uncertainties involved. Consider a few facts illustrating the challenges involved in moving manufacturing facilities off-shore.
- Instability of foreign government and currencies.
- Additional cost of doing business overseas.
- The definition of ‘contract' varies by country. Many overseas countries lack a transparent, consistent body of laws.
- A potentially weak supplier network. Without strong suppliers and quality parts, the end product will suffer.
- Increased inventory requirements if shipping product back to North America. Some industries require a six-month inventory pipeline, that requires a major ramp-up period. And, what happens to that inventory if there is a quality issue, a recall or a design change?
- Companies must research shipping, duty and freight costs which take time, adding to a prolonged customer shut down period.
- It takes 21 days to ship components across the Pacific Ocean.
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