A Compelling Case Against Offshoring: Buying Overseas and the Impact on Your Business

In businesses and industries nationwide, the decision to offshore manufacturing processes is common. Plastic injection molding is certainly no exception. While many believe that offshoring is the best way to cut costs, the savings may come at the expense of quality if not done carefully; ultimately costing a business more.

This post will examine offshoring in the plastic injection molding space and the impact on manufacturers’ costs.

Why Do Businesses Choose to Offshore?

Before delving into the impact of offshoring, it is essential to first understand the economics and factors driving the decision to offshore.

Few will argue the fact that offshoring production to different countries is a great way to save money up front. There are a few key reasons so many companies look to different countries to cut costs, one of which is low direct-labor costs.

The Dangers of Offshoring

Offshoring can significantly impact your business. Not always in a beneficial way. Outlined below are a few adverse effects of sending business offshore.

• Distance and Key Information “Lost in Translation” – While offshoring internationally may represent potential cost savings, it is also inherently difficult. Managing a supply chain across 10,000 miles and a significant language barrier are not small hurdles for manufacturers.
• A Slow Design Process – Many companies report that mold design takes substantially longer in overseas countries than it does in the United States. The need to change and correct mold design is a significant factor that contributes to a lengthy design process.
• Turnover and Inconsistency in the Product – Turnover is an issue across many industries in countries where injection molding projects are often sent to. A substantial portion of the workforce in spaces such as manufacturing is transient – coming from more rural areas of the country to work in urban centers. These temporary workers remain in the city until they have saved enough money to return home; requiring firms to invest a significant amount of time and resources in training and retraining an unstable workforce. As a result, it is not surprising that experienced moldmakers and molders in these countries are a rarity. A lack of institutional knowledge and experience among workers is reflected in the product, the quality of which is often inconsistent.
• Availability of High-Quality Materials – In other countries, the high-quality materials that are standard in U.S. plastic injection molding are can difficult to secure or subject to a value-added tax.
• Material Substitution – Manufacturers partnering with overseas firms often find that if all materials are not specified in great detail, substitutions of lesser-quality equivalents are made.
• Different Mold Design Standards – U.S. manufacturers design molds with both function and maintenance in mind; creating products that can be easily serviced for long-term use. In contrast, molds produced overseas are typically production units designed for lower volumes and shorter life spans.
• No Quality Guarantee – Overseas manufacturers rarely guarantee their product. Perhaps this is because they understand the hassle of sending parts back from the U.S. to its country of origin and recognize that few people will go to such lengths.
• Loss of Jobs – It should also be noted that offshoring moldmaking business deals a major blow to North American manufacturers. This has been evident in the automotive industry, with many North American carmakers shifting manufacturing abroad. Naturally, smaller shops are especially impacted when clients are lost, and jobs must be cut.

The Bottom Line

As outlined above, there are a number of issues companies can encounter while offshoring to countries that are overseas. While the potential cost savings offshoring represents is often attractive to manufacturers, it is important that companies carefully weigh the savings associated with shifting some operations to low-cost countries (L.C.C.) against the potential challenges and impact on the overall quality of the product.

At New Berlin Plastics, we don’t cut corners. Our services – from mold engineering to prototyping and beyond – are designed around a quality end product. Our U.S.-based operations in New Berlin, Wisconsin are well-equipped to handle your project from start to finish.
To learn more, contact us or visit us at nbplastics.com.