Whether you are part of the aerospace industry or manufacturing luxury cars, there are two main priorities to consider when it comes to running and operating a successful business: minimizing your costs and maximizing your potential profits.
In recent years, one of the most popular ways to achieve a reduction in costs has been to look at the location you choose for the manufacturing of your products. In many cases, sourcing an alternative location, typically outside of your native country, allows you to benefit from lower worker wages, while taking advantage of cheaper storage, and, in many cases, more affordable access to raw materials and supplies.
If you are looking to make the most of every cent, manufacturing overseas could be the perfect solution. Read on to explore the advantages you could enjoy, and the way in which it can transform your business.
Reduction Of Costs
As we have mentioned, choosing to manufacture products overseas is often the easiest way to cut your costs, especially when compared to manufacturing your products domestically. There are a number of reasons for this, but it usually comes down to a reduced cost of living—the average hourly wage in the US is significantly higher than in Mexico and other countries.
In countries where the overall cost of living is lower, businesses can reduce the amount that they pay their workers. This reduces the cost of labor, and, in turn, translates to reduced manufacturing costs and higher margins. In some cases, this chance to cut costs also means a lower price for your customers.
Greater Choice In Manufacturing Partners
Heading overseas for your manufacturing needs can also open up a wider range of choices for that side of your business. Rather than restrict yourself to a few options, you can take advantage of manufacturers who have more than one specialty.
For example, manufacturers in the aerospace industry in Mexico could also produce tech products, offering greater variability to your product line. In many cases you will be able to locate several manufacturers with the click of a button, and, in an industry where time is money, this can make a significant impact.
Increased Production Capacity
In addition to a larger variety of choice in manufacturers, heading overseas also increases the volume of orders that can be created in a single production round. This not only allows you to boost the amount of items you produce, but you may also benefit from a discount on bulk production.
Proximity To Raw Materials
One of the biggest advantages to overseas manufacturing is that you are likely to be in closer proximity to raw materials, and this can have a dramatic impact on helping you to cut your costs. If you have a product that requires a particular raw material, this can be one of your most significant barriers to progress.
You will need to arrange for the material to be shipped to your production site, and this will inevitably take time. Both the shipping costs and the time lost can increase the costs you face. But by manufacturers overseas, you can cut the distance between the place of production and the location of the raw materials, enabling you to save massively on expenses of both time and money.
Access To Skilled Talent
Looking further afield for your manufacturing can also unlock a pool of skilled talent which far exceeds anything you would be able to access in a country such as the United States. A somewhat disparaging attitude towards manufacturing jobs, as well as manual labor in general, has resulted in a dramatic skills shortage in the USA’s domestic labor market.
Are There Any Downsides?
As with any decision, it is important to weigh the potential downsides. If you are considering taking your business abroad, make sure you are aware of both the pros and cons, such as the types of negative impacts it could have on your business. Some of the most common disadvantages to moving abroad include:
Cultural Issues: One of the most significant issues you are likely to face is cultural differences, including language divides. Differences in cultural norms can be tricky, and, in some cases, may hold up production, costing you more than you save.
Physical Distance: Having your production in another country also limits the amount of oversight that is possible. You will need to put in a lot of effort if you want to visit the facility and check up on progress. Another option is to hire a third party to stay on-site and ensure that production stays on schedule and that the quality is up to your standards.
Negative Press: Depending on your product and the country you choose, you may have a negative reaction from customers and consumers, both in your home country and the one you’re planning on relocating to.
If you are considering moving your production overseas, it is important that you are well aware of the pros and cons, in order to help you make the best decision for you and your business. But as has been proven by the numerous companies who have made offshoring a regular part of their business model, it’s clear that when undertaking correctly, the benefits of manufacturing overseas can far outweigh any potential issues you may face.
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