At one time, offshore production was the best choice for many original equipment manufacturers. Due to several factors, overseas machine shops could provide a lot of benefits to OEMs using their services. However, due to several key factors, this manufacturing strategy has lost momentum. This article will look at some of the factors that have led to reshoring manufacturing and CNC machining and why many OEMs now favor domestic machine shops.
Manufacturing grew in countries like China, Taiwan, and Malaysia because they offered inexpensive production services due to substantially lower labor costs. This price made them an attractive alternative to the rest of the world for parts fabrication. In the United States, many corporations found that they could save capital by using offshore manufacturing services instead of paying higher local production costs.
However, over time this paradigm has changed, and the economic balance in manufacturing is shifting back to domestic services. Most attribute these shifts to technological advancements in manufacturing that reduce the amount of manual labor. Additionally, many countries have experienced recent economic growth and prosperity, leading to rising labor costs in offshore facilities. The following factors contribute to the reshoring of overseas production services:
These conditions have significantly changed how corporations plan their future production orders. Too often, supply chains of critical components and parts get disrupted by one or more of the problems listed above, and strategic sourcing professionals want a better solution. One answer that seems to make the most economic sense to many companies involves reshoring their manufacturing. The result equals more work for local CNC machine shops, and the next section covers how they accomplish that work.
Domestic manufacturing happens internally or gets outsourced to machine shops. It was once common for manufacturers to have internal machine shops, but that no longer represents the most cost-effective solution. With all of the different manufacturing requirements, the cost of maintaining an experienced staff, and keeping pace with all of the applicable standards and technologies, running an internal machine shop is expensive. Operating a large-scale machine shop with a mixture of different CNC mills and lathes can easily cost millions dollars annually. Instead, partnering with domestic machine shops set up to manufacture as a service often offers the best solution for streamlining an organization’s supply chain.
Manufacturing as a service, or MaaS, combines the capabilities of a local machine shop and Just in Time (JIT) inventory management with the OEM for a more efficient manufacturing model. With the machine shop focused on part manufacturing, they will have the resources to maintain a highly trained and certified staff, featuring the most up-to-date equipment and processes. Additionally, with these shops servicing a wide range of customers and technologies, MaaS manufacturers typically employ personnel with more experience and familiarity with multiple fabrication requirements and techniques.
With a MaaS machine shop, original equipment manufacturers can expect the following benefits in contrast to offshore manufacturers:
Many benefits come with reshoring overseas manufacturing to domestic services. The following section looks at how the local machine shops prepare to provide these services.
A local machine shop can improve on the services from offshore manufacturers in several valuable areas:
At Plethora, we are proud of our Manufacturing as a Service model of business. We feature the best machinists and engineers working on the best equipment in the industry. We are ISO 9001 certified and are constantly looking for ways to refine and improve our processes and procedures to elevate our capabilities to the highest quality. Our online DFM and quoting systems are ready to receive your data so we can begin working with you on your next project. To get started, upload your design files to Quote My Part or call us at 415-726-2256.
The Plethora Team
The Plethora team is your go-to CNC manufacturer for hardware done right the first time. We have the tools and experience needed to create high quality custom parts quickly and with precision, whether you need a prototype or production run.