Within the last few decades, the global supply chain has experienced major advancements in technology, communication, and logistics. This allows more U.S. companies across many industries to turn to global manufacturing to help them compete in a growingly competitive global manufacturing environment. Here are five reasons overseas manufacturing may be just what you need to take your business to the next level.
Every sensible business owner will tell you that keeping production costs low without sacrificing quality is the first step toward running a successful business. But more often than not, raw material costs are similar overseas to what they are in the U.S.
So the main competitive advantage of overseas manufacturing is the cost of skilled labor. Many overseas manufacturing options have the skilled labor force and the equipment to take your product from raw material to final output, at a fraction of the cost.
Injection molds, die cast molds, production fixtures, and other production tooling are often significantly less expensive than U.S. tooling costs, so there’s often an upfront capital cost advantage to starting projects overseas. Learn more about how much money you can save with global manufacturing.
3. Mass Production
With lower overall production costs, high-volume production runs are well-suited for overseas manufacturing. The lower tooling costs, inexpensive skilled labor, along with efficiencies gained with transporting larger shipments make overseas manufacturing a great fit for mass production needs.
4. Scale and Flexibility
International manufacturers have a unique ability to scale manufacturing capacity quickly to respond to customer demand. Adding workshops and hiring skilled labor can be done much faster than here in the states. The nimble nature of many overseas factories allows you to scale your production along with the growth of your business.
5. Supply Chain Diversification
The pandemic effects on the global supply chain have demonstrated the need for manufacturers to diversify their supplier base. The risks associated with having all of your manufacturing in a single country have become too great to ignore. A supply chain strategy that leverages the benefits of multiple overseas sources can help firms mitigate domestic sourcing challenges, reduce single country risk, smooth production planning, and maintain a competitive pricing edge.
Are you looking to diversify outside of China? See how ITI can help.
Partner with ITI for Global Manufacturing Success
Despite its benefits, managing your global manufacturing supply chain is complex and challenging. That’s why many U.S. companies turn to trusted industry experts like ITI Manufacturing. We have been helping U.S. companies compete on a global stage since the 1970s. Schedule a consultation to learn more about how our proven process and decades of global manufacturing expertise can help you make the right manufacturing decisions for your business in these rapidly changing and challenging times.
Some actions have already been taken to cut emissions in China’s two largest emitting sectors – energy and steel – in response to its carbon neutrality pledge set out last year. In the energy sector, PetroChina, the country’s largest oil and gas supplier, has recently announced its plan to become net-zero emissions by 2050. State Power Investment Corp (SPIC), one of the top five power producers in China, has recently committed to peak its carbon emissions by 2023 – 7 years ahead of the national carbon peak pledge. Similarly, in the steel sector, Baowu Steel Group, the world’s second largest steel maker, has targeted to become carbon neutrality by 2050, through increased use of renewable energy (e.g., wind, solar, and clean hydrogen) in production, as well as efficiency improvement.
Similar actions have, however, not yet been observed in the aluminium sector, despite efforts made by some aluminium producers (e.g., Chalco) to relocate their production capacity to Southwest provinces, to take advantage of the cheap hydro electricity there. Even with the closure of 2.5 GW of subcritical captive coal capacity used in Shandong’s aluminium sector, announced recently by the provincial government, China still has over 44 GW of subcritical captive used for aluminium production that needs to be phased out, in order to prepare the sector for a low-carbon future.