The True Cost of China
The true costs of offshore sourcing are quickly being discovered by many OEM purchasing agents and domestic manufacturers. The lessons they are learning are costly and sometimes disastrous.
The True Cost of China for Manufacturing Outsourcing
In the beginning stages of outsourcing overseas the savings may appear attractive but when you consider the quantities the offshore source is forcing you to receive at one time, the inventory cost becomes a relevant factor as does floor space.
The delivery time table from overseas is a slow process which can sometimes be in excess of 7 weeks. When the shipment is received your goal is to hope to have flawless castings but if incoming inspectors discover the lot needs to be rejected, your problems are only just beginning because more products may be in transit with the same issue. This may not only leave you and your company without product but the task of trying to recover credit for the rejected material is sometimes impossible.
The last two issues are really the most important. Some companies are discovering that the castings being manufactured in China are not meeting ASTM alloy specifications; the result is premature part failure. Lawsuits arising from this can be monetarily disastrous.
The last issue is that your company’s technology may be at risk. Some horror stories of domestic manufacturers outsourcing overseas include the China diecaster copying or even using existing tooling to sell the product domestically, in effect stealing your market share.
These experiences along with the rising manufacturing costs in China have companies scrambling for domestic suppliers of castings.
The Chinese are in the process of revaluing their currency, a move that would instantly boost the price of Chinese exports. Caudle Manufacturing in the mean time will continue to rely on innovation and experience in order to supply defect free, timely , competitive and value added zinc diecastings.