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Low Cost Manufacturing in the U.S. — Really?

I recently read the article titled “Is ‘Low-Cost’ Manufacturing Headed To The U.S. Next” written by Joel Hans with Manufacturing.net.  The article discussed the positive outlook of “reshoring” manufacturing as the pendulum starts to swing to the U.S. Click here to read the article > 

When we think about manufacturing abroad, we think of low-cost production.  But does it really make sense to singularly look at just that one aspect?  In addition to the operational issues of manufacturing abroad, there are many other aspects that a company should take into consideration, such as:

  • Timeframe:  How quickly will you be able to get the product/raw materials when needed?  Are you aware of any cultural aspects that could slow down your shipments?  Would a delay shut down your production line and keep you from delivering, as promised, to clients?
  • Inventory:  Will you need to stock more or less inventory?  How will this impact your inventory turn ratio (and your profitability)?
  • Capital expenditures / financing:   Will purchasing large quantities abroad require a capital investment to be made?
  • Labor and Fuel:   As labor costs in many current low-cost manufacturing nations start to rise, and fuel prices remain high, will these costs make manufacturing in the U.S. a better decision?

When you couple these aspects with the points made by Joel Hans, it paints a positive picture for manufacturing here in the U.S.  As the pendulum continues to swing, your company may find that you need to increase jobs or expand operations locally, regionally or nationally.   STOP.   Before you plan a move, hire more people or make a large capital expenditure in new equipment, make sure that you investigate the opportunities to capitalize on the many state and local credits and incentives that may be available to you.   Contact your MarksNelson professional or David Belpedio at dbelpedio@marksnelsoncpa.com to learn more.

About the Author

Joe WondraView all posts by Joe Wondra