As an American manufacturing company, we understand that we are competing with overseas giants. It’s no surprise that these non-domestic manufacturers make volume products, at a price-point that’s hard to beat. Recently, we’ve seen an emphasis on “Buying American”. However, that hasn’t necessarily been the case since other American manufacturing companies still need to cut costs and why produce goods domestically if it’s so expensive? News flash, it’s not much more expensive and you are forgetting the hidden costs associated with non-domestic manufacturing. Let’s break down the barrier: 

The Hidden Costs

Shipping & Freight: When manufacturing goods overseas, shipping and freight expenses play a significant role. These costs include:

• Transportation: Shipping products from distant countries involves freight charges, customs fees, and documentation costs.
• Lead Time:  Longer shipping times mean delayed product availability, impacting sales and inventory management.
• Supply Chain Risks: Disruptions due to weather, geopolitical events, or accidents can lead to unexpected expenses.
• Tariffs: Tariffs act as concealed expenses for non-domestic manufacturing by increasing the cost of imported materials or goods, thereby affecting overall production expenses.

Quality Control: Overseas production requires rigorous quality control processes.

• Inspection Fees: Regular inspections to ensure product quality add to the overall cost.
• Travel Expenses: Sending personnel to overseas factories for quality checks incurs travel costs.
• Rejections: Poor-quality products result in rework, returns, and additional expenses.

Communication & Coordination: Managing production across borders requires effective communication.

• Language Barriers: Misunderstandings can lead to costly errors.
• Time Zone Differences: Coordinating with suppliers and partners in different time zones affects efficiency.
• Administration Costs:  Handling paperwork, contracts, and negotiations adds up.

Intellectual Property Protection: Protecting intellectual property (IP) is crucial.

• Legal Fees: Registering patents, trademarks, and copyrights involves legal expenses.
• IP Theft: Overseas production may expose IP to theft or infringement.

The American Way

Oftentimes, large companies just see the quote number and don’t consider the hidden cost associated with non-domestic work. In many scenarios, these large companies look towards the domestic partner to help clean up some of the issues that they are faced with overseas. These issues could’ve been resolved had the large company decided to go with the domestic manufacturer. We get it, non-domestic manufacturing has its place and they do make some good products. However, we are committed to breaking the stigma that non-domestic manufacturing is the best option.

Got Questions?

If you have any questions or would like to send us a quote contact us today!