All manufacturers, regardless of size, products and market, must
balance the sometimes competing variables of increased speed,
lowered cost, increased safety, lowered risk and increased predict-
ability. When looking at domestic versus international production
and supply chains, additional variables present themselves:
Depending on the market in which the product is sold,
reshoring may minimize transportation costs.
Manufacturing domestically may reduce uncertainty about
what is being processed.
Supplier monitoring costs, such as travel, communication
(translation) and associated opportunity costs tend to be significantly higher with off-shore suppliers.
The regulatory environment in some countries can be
opaque and inconsistent.
Currency fluctuations must be considered.
Companies that outsource or manufacture abroad should
expect to devote extra personnel and time to comply with U.S.
regulations on the importation of goods as well as foreign
country business regulations.
The costs of doing business abroad can go beyond traditional economic costs. Political and security risks may impact a
business’ ability to maintain normal operations.
The need for IP protection and enforcement.
If a manufacturer is considering off-shoring as a cost-cut-ting measure, what considerations should it make before
coming to a final decision?
Emerging Markets: Why Companies Make the
While there is an increasing effort to keep U.S. manufacturers at
home, many companies are embracing emerging markets by basing
some of their facilities overseas. One of the fastest growing overseas
markets in the food industry is Thailand, with annual food exports
exceeding $30 billion in 2012. Food and beverage powerhouses such as
PepsiCo and Nestle have a manufacturing presence in the country.
According to Supisara Chomparn, Director of Thailand Board of
Investment New York, Thailand has become a large player in the food
industry due to its “natural wealth and manmade resources, in addition
to its prime location at the heart of Southeast Asia.” She adds that the
nation’s high quality and safety standards also have contributed to its
success in the food processing market.
Many U.S. companies choose to do business overseas due to the number of benefits offered. The Thailand Board of Investment offers companies
both tax-based incentives, such as exemption or reduction of import
duties, and non-tax incentives, which can include permission to bring in
foreign workers or permission to own land.
Chomparn says emerging markets, particularly in Asia, will continue to
impact the growth of U.S. food companies into the future. “As consumers in Southeast Asia experience increasing income levels and begin to
demand increasing amounts of ready-to-eat and frozen food products,
U.S. companies located in Thailand will benefit from being so closely
positioned to these markets.”
Manufacturers should consider how their decisions about products,
vendors, financing, transportation, warehousing, risk tolerance and
greenhouse gas emissions will affect their business performance
and their bottom line. Every business is unique and there is no
one-size fits all solution for everyone. There are several resources
— both from industry and the federal government — available
to help manufacturers make the decision about where to locate
manufacturing operations. Two of those resources include the
Total Cost of Ownership Estimator by the industry-led Reshoring
Inititiative and SelectUSA, a federal program.
What resources are available to domestic manufacturers
The MEP works with U.S. manufacturers to help them address
their most pressing issues while also developing plans for
future growth. The program’s nationwide network provides a
variety of services ranging from innovation strategies to process improvements to green manufacturing. The program has
60 centers in all 50 U.S. states and Puerto Rico, with more than
1,300 field staff to work directly with manufacturers on their
most pressing issues.
An interactive map highlighting the MEP resources across
the country is available at http://www.nist.gov/mep/find-your-local-center.cfm ◆
A FOOD SAFETY FACT
FROM CLARION LUBRICANTS
Interview by Lindsey Jahn, Associate Editor
For food-safe lubricant solutions,
turn to the food-safe lubricant authority.