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There is no question that manufacturing in countries known for lower labor costs can save money on some projects. In cases of highvolume production, selecting low-cost labor regions close to end markets can generate significant savings and in some cases, fulfill the local content requirements necessary for entry into those markets.
However, when total costs are considered, medium- and low-volume production often doesn’t benefit from working at distance, since crossing borders increases logistics costs, adds internal costs relative to team travel and adds complexity to project transfer and support.
In cases of medium- and low-volume projects, a regional U.S. contract manufacturer may represent a lower total cost than a manufacturer in a low labor cost country. Some of that cost difference is visible, but in many cases, the reduction comes from elimination of cost surprises not evident in unit price alone. Burton Industries, a regional electronics manufacturing services (EMS) provider with manufacturing located in Ironwood, Michigan, routinely sees its customers opt to keep portions of their manufacturing in the U.S. for this reason. Here are six areas where using a U.S. contract manufacturer often saves money.
- New product introduction (NPI)
- Logistics
- Quality
- Staff support time
- Production changeovers
- Responsiveness
New Product Introduction The NPI process often provides the best opportunities for removing cost from the product. Design for manufacturability and testability (DFM/DFT) is one area that can drive reduction in cost and elimination of defect opportunities. Product lifecycle management (PLM) analysis can help mitigate obsolescence risk and/or identify potential obsolescence risk early enough to provide multiple remediation options.
Editor's Note: This article originally published in the November 2015 issue of SMT Magazine.
