Before you jump to this conclusion in order to meet your budget, consider the true cost of having an off-shore molder make your products. You have a quote for the tooling and the part price, but have you also added the cost of freight to the port and then to your facility? You will also need to pay customs fees. Typical lead time for the freight is 3 to 4 weeks for off-shore vs. 3 to 5 days in the U.S. Have you factored in the cost of additional inventory to cover the transit time? Most off-shore molders will require at least a deposit or full payment before they ship the product vs. 30 day terms from most U.S. molders. What is your company paying for financing?
There are additional risks when working with an off-shore supplier. Inconsistency in the material that is used to mold the parts is very common. The first run works, but the 3rd or 4th doesn’t fit or is discolored. Shrinkage in molding is very sensitive to the material that was used, the cycle time at which it ran, or how much regrind was used in the material. The part may meet the print when it came off the machine, but as it traveled in the container it shrank or warped to the point that it no longer works. Who’s going to pay for the replacement parts? Let’s say your product consists of several parts that connect together, your only concern may not just be whether they fit, but does the color match? Scarier than color or fit, what if your parts are used with consumables or medical applications, do you know that the material used does not contain toxic chemicals that are released under heat? How about parts that need to hold weight, will it become brittle if left in the sun? A good domestic molder can help you identify cost effective materials that can meet the application environment. They will also back up every shipment with lot numbers and material certification. In the worst case scenario, at least you know a domestic supplier is liable for the products that were made. A Chinese supplier does not even have to give a deposition.
Let’s say I’m frustrated with my off-shore supplier and want to pull the mold and have a U.S. molder run it. It can be a challenge to get the off-shore molder to release the mold, and even if they do, it may only be the insert and not include the mold base. The mold base can be up to 30% of the complete mold cost. Even if it’s a complete mold, the U.S. molder may have to modify the mold to run in their equipment.
You can source your tooling from off-shore and have it produced domestically, but still consider that if you have the molder source the tooling for you, they take complete responsibility for the finished part. It can be very frustrating to be between an off-shore mold maker and a domestic molder arguing over why the part doesn’t fit. Did the mold maker not put in enough vents, or did the molder try to reduce the cycle time to meet their quote? Did the off-shore mold maker make production parts with the material specified for the job, or with what they had in stock? It’s worth the piece of mind, not to mention any mold modification fees that may be incurred, to have the molder take on the ultimate responsibility for the tooling.
What is your time worth? Communication is a challenge when you’re working with off-shore suppliers. Although much of our correspondence is via e-mail, it is still not a substitute for face-to-face conversations especially when you are developing a product. You will need to factor in additional time to communicate not just for the initial project, but also for any modifications to the part that you would like to make in the future.
If producing offshore, you need to locate a dependable company to hire for your molding, which can lead to down time for your company while you are on long travel trips overseas. Is your company ready to pay those travel expenses? Perhaps you could use online product sourcing, but in this day and age do you really know who you are dealing with? Finding an overseas company online entails a great risk of fraud. Finally, you could use a buying agent, but then you have to deal with commissions and with a buying agent it’s hard to regulate production performance.
Buying products made in American factories by American workers keeps jobs in the US. Each dollar spent on payroll is reinvested by the employee in other local industries, such as restaurants, gas stations, hardware stores and their employees. In addition tax dollars generated by local businesses benefit the entire community. Much of the real cost of ‘offshoring’ is hidden by these factors, but they are quite real nonetheless.
Everyone knows that buying in the USA keeps our nation employed and our economy alive and competitive. According to Sue Kirchoff of USA Today, there was a “loss of 2.6 million manufacturing jobs since mid-2000, and studies predict millions of service jobs – call centers, engineering, architectural drafting and others-will move abroad in the next decade.” That’s a lot of unemployed workers. Barbara Hagenbaugh also of USA Today writes “Fifty years ago, a third of U.S. employees worked in factories, making everything from clothing to lipstick to cars. Today, a little more than one-tenth of the nation’s 131 million workers are employed by manufacturing firms. Four-fifths are in services.” Service jobs in the US are increasing while manufacturing jobs are decreasing and many of these service jobs are entry level or low pay jobs.
Here are some statistics from Hagenbaugh’s article.
Percentage of non-farm workers employed in manufacturing and service jobs:
1950 – 34%
2002 – 13%
1950 – 59%
2002 – 82%
What does this mean for the US as a nation? Hagenbaugh continues, “The migration of jobs to China also has serious national security implications. Large military equipment sits idle in repair centers as the few American companies left that provide spare parts or tools have dwindled. Humvees receive armor plating at a painful pace as only one U.S. manufacturer of armored steel remains. Thanks to its lopsided balance of trade with the U.S., China has been able to increase its military funding by 18.2 percent during the last year, much of it focused on emerging military and space applications.”
China’s foreign trade has grown faster than its gross domestic product (GDP) and has a labor force of 795.3 million people. For the past 25 years the government has also focused on foreign trade as a major vehicle for economic growth, with 21% of China’s exports going to the US, and a total of $1216.1 billion dollars world wide. China is the second largest world economy with a GDP of $10.21 trillion (behind only the U.S.) on a Purchasing Power Parity. Meanwhile the US exports only 6% of our goods to China. According to CIA World Factbook, the US public debt is $9 trillion. In “Correlation and Casualty”, L. Josh Bivens writes, “The relationship between trade deficits in manufactured goods and manufacturing employment seems obvious: imports decrease labor demand in manufacturing while exports spur this demand. A rising trade deficit means, all else equal, that labor demand in U.S. manufacturing is reduced.”
Jobs kept in the US increase the US economy while exporting manufacturing jobs increases unemployment which in turn strains national healthcare and unemployment and reduces consumer spending. Ned Barker of Frontline PBS says, “They (China) also face discriminatory rules, burdensome red tape, language difficulties, and a population that earns only a fraction of what U.S. consumers make, and therefore lacks the purchasing power to buy consumer goods made in America.”
Some people, like Yvonne Smith, the communications director at the Port of Long Beach, see our dependence on foreign trade as a direct cause to the current state of the US economy. She has reported that through just Long Beach, the U.S. is importing $36 billion in goods a year from China and exporting just $3 billion. Ned Barker also finds “U.S. imports from China outpace U.S. exports to China by more than five to one, and the deficit shows no signs of abating.”
How about the patent you have on your product? China’s commercial law is still a work in progress. Business executive and lawyer Craig Maginness at http://www.exinglobal.typepad.com states, China has a very “Lax protection of IP rights (Indeed in some sectors it seems as if official government policy is to encourage co-option of foreign technology).”
Consumers these days are becoming more and more concerned with the way products are produced and where they are produced. Buying made in the USA also insures that manufacturing workers are paid fair wages, have safe working conditions and that manufacturing plants take care of the natural environment around them. In an article by Kerri Houston, she finds that both worker and environmental conditions are not up to US standards, “Chinese manufacturing benefits financially from ignoring the few environmental laws on its books. Waterways and wells in China run red and purple with dyes and toxins that factories dump into ground and river. Many Chinese factories disregard international norms for workers by embracing low pay, forced labor, and deplorable work conditions.”
Why buy Made in the USA? To insure a better product at a reasonable cost and support local economies that keep Americans employed. If you are looking for the right company for injection molding, consider the costs of the environment, your own mold making and production, and the future of America. Often times a U.S. production company is a better bargain. For more information, visit www.injectionmoldingusa.com.
Post time: 02-22-2017