Commentary: December 2005

By Giovanni Opimitti, Vero International USA

Ours is a fiercely competitive global manufacturing arena. We regularly hear from our customers that they feel intense pressures to either move their manufacturing operations to the Far East or to subcontract parts of their organizations to offshore sites. The lure of low-cost labor and manufacturing are hard to refuse and, hence, many have taken the steps to shift manufacturing from the U.S. to China or some other foreign site.

Our response is that we believe manufacturers should make detailed assessments of their business and take steps to remain viable at their current locations. Then they have to determine how they can retain valuable workers with expertise based on decades of commitment to quality workmanship. Worker loyalty means a lot these days, and companies,  especially small and medium-sized organizations, are torn between moving operations to a location that offers a more economical scenario and saying goodbye to a knowledgeable workforce.

Offshoring raises all sorts of issues to consider, such as time-zone disparities. When a problem arises in the Far East, you have a 12- to 14-hour time difference. When does your corporate office hear of the problem and how long before the problem can be rectified? Do you deal with the problem in the U.S. or delegate decision-making options to the Far East shop floor? Further, do you send a specialist to remedy the situation, or do you relocate an engineer to reside on-site to manage and attend to details,  especially when problems arise?

There are language differences. Do you train a Far East engineer or technician to use your equipment or software, oversee the use of your product, and report to your organization stateside? Or do you provide English-to-Chinese training depending on how you establish staffing?

Quality control is a huge issue. How do you maintain quality from 10,000 miles away? If you provide parts or molds for a company such as Ford,  Saab, or Chrysler, how can you assure your customer that foreign-manufactured parts will meet rigorous safety, durability, and reliability specifications?

This scenario also introduces the issue of shipment costs. The extensive distance between the place of production and the place of delivery can become a major consideration. Think, for example, of the high expenses,  both in terms of money and time, associated with having your products shipped back and forth across continents and oceans for repair when they fail upon final installation, or worse, when they are delivered to customers.

Rising manufacturing costs are driving companies to move operations to countries that offer low-cost labor and manufacturing operations. Yet,  the costs of doing so are extremely expensive because the risks are high in terms of jeopardizing part and quality reputations, and customer relations.

We have valued customers throughout the world. We know their concerns associated with reducing manufacturing costs and looking elsewhere to remain productive and profitable. But whining about the “unfair” competition from developing countries and invoking protectionist measures from the local governments does not help the situation.

Our advice is to stay the course, audit your operations to become more efficient, install innovative CAD/CAM software, and train shop-floor technicians to streamline operations to speed time to market and enhance product quality. CAD/CAM software providers play an important role in this dramatically changing business arena. The most advanced CAD/CAM software providers are becoming increasingly proactive in proposing specialized tools that can help their customers reduce costs while enhancing quality.

Truly, these methodologies will help U.S.-based manufacturers maintain growth by keeping them on the leading technological edge, an edge that they still have over their overseas competitors. These methodologies will also help U.S. manufacturers attain new business at their current locations.

Giovanni Opimitti is President of Vero International’s USA-based operations in Bingham Farms, Michigan. Send your thoughts to Mr. Opimitti via e-mail by clicking here.