There are many factors that have led U.S. companies to ship manufacturing jobs overseas for the past few decades. These range from lower labor costs to favorable tax policies, better supply chains, and more.
For years Clark Synthesis, Inc. manufactured high-tech audio transducers for movie theaters, underwater sound systems, and military training systems in China. But that changed a year ago when they moved their manufacturing operations back to the United States.
Why did they give up the benefits of working in China to return to the U.S.? Here’s what they told us:
They cut their lead times down from 4-5 months in China to 2-4 weeks in the U.S. That has made a huge difference in their ability to fulfill customer orders quickly. It has also given Clark Synthesis the ability to tailor products for individual customers, a service they could not provide with offshore manufacturing.
Component availability in China was a problem. The Chinese factory had originally used a vertical manufacturing system (meaning they controlled all aspects of the manufacturing process), but they switched to a horizontal system (which means they outsourced most of their component manufacturing to outside suppliers). Now they could not control component quality, and component quality suffered. This resulted in high numbers of component failures at incoming QA, and high failure rates in final QA. Many orders had to be delayed because of these problems.
When Clark Synthesis moved production back to the U.S. they found a number of local suppliers that manufacture components to print and deliver on time.
Reliability and quality issues became more of a problem in China because it was more difficult to maintain control over all of their operations. But these issues were all solved when they left.
After they brought their manufacturing back to the U.S. one of their clients had one of their underwater sound systems fail in a way they hadn’t seen before. When they inspected it they determined that a recent design change had made the system weaker at a certain point and it had failed as a result. Since all their manufacturing is now done locally they were able to quickly make the needed adjustment and avoid any additional defective products being manufactured.
Clark Synthesis actually reduced their workforce upon their return to the U.S. The Chinese factory averaged building 10 transducers per employee per day. With clever changes to components and processes, Clark Synthesis now builds 30 transducers per employee per day. So their total labor costs didn’t increase as much as you might expect moving production to the States.
This is good news for the U.S. manufacturing industry. The fact that it makes better economic sense for a company to operate in this country than in another that’s been seen as a useful alternative for years should encourage people looking for jobs in this sector and those looking to create or grow manufacturing businesses.
Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks, and small business. Fishbowl is the #1-requested manufacturing and warehouse management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies.