Strategic Offshoring is NOT Anti-North American! In Fact, It’s the Best Thing You Can Do to Support North American Workers!

August 1, 2024

How many of us change our own oil today? When I was young, everyone did. Why not now?

The answer is simple.

A specialized industry that had the facilities, equipment, ready parts and supplies, and hazardous goods disposal grew with the ability to do a drive-through oil change in five minutes for a price that was impossible for me to match at home, and a quality result that only specialists can achieve.

My time, money, and resources can now be used in better places where I can realize a better return. Doing my own oil change today is a waste of time, an unnecessary risk, and a potential environmental concern. Not to mention a waste of money sourcing and storing the equipment and supplies.

It’s the same, only worse, for North American hardgoods and tech companies to continue to build internally or source locally specific parts and subassemblies that are now produced faster, better, and to a far higher quality in massive, new, manufacturing 4.0 specialized factories in low-cost labor powerhouses like Vietnam, China, Mexico, and Eastern Europe.

Why build internally or source locally a PCB assembly for $250, when you can buy a higher quality product produced in a specialized facility and have it landed at your plant for $100?Why have a 50,000 square foot machine shop with 20 CNC machines churning out aluminium cases for your sensor technology at $200 per case, plus staff, plus workers saftey, plus, plus, plus…when that same design, machined to better tolerances more consistently can be landed in your bay for $52?

These two scenarios are taken from a real-life example in Western Canada. Under the old structure of building internally or sourcing locally, the company struggled to break $40M in revenue, 15% margin, and 35 staff. No one had seen bonuses or even a raise in years, and the company had to seek external funding to continue its survival. How is this good for North American labor or industry?

When this same company embraced strategic offshoring, globalizing their supply chain, margins rose to over 30%, resources were redirected to their core technology, R&D flourished, the company was able to beat competitors in larger, more competitive markets, staffing grew to 400, bonuses, raises, and benefits were delivered, and the top line hit over $130M within 5 years.

So which scenario is better for North American Industry and Workers? Flogging a dead horse on parts and subassemblies that will never be economically built here…or embracing a global supply chain strategy, taking advantage of it, and focusing our skills on enhancing our core technologies and expanding into global markets?

The REDUx Engineering Contingency-based Managed Offshoring Program

For small to medium-sized manufacturers, where do they start? The risks and expenses surrounding developing global suppliers in countries the size and complexity of China and Vietnam have always outweighed the potential benefits…until now!

The REDUx Engineering Contingency-based Managed Offshoring Program makes adopting a global supply chain safe, easy, and profitable!

Offshoring parts and subassemblies is no longer risky, time-consuming, or costly. The REDUx Engineering Contingency-based Managed Offshoring program offers a seamless solution for SMEs in hardgoods or technology manufacturing. This program connects you with a network of pre-vetted, world-class contract manufacturers across Eastern Europe, Vietnam, China, and Mexico, covering every vertical and industry specialty.

REDUx works with your team to identify the right parts and subassemblies to offshore, ensuring maximum positive bottom-line impact.

The program includes design for manufacturability inputs, translation, and professional contract manufacturing instruction packages. REDUx sources two quotes from contract manufacturers who meet your requirements for cost, quality, delivery, industry expertise, and certifications.

REDUx manages the entire manufacturing process, quality control audits, and final logistics in-country, while allowing you to participate in the process as much as you prefer.

You receive your products at your plant with a 30% to 50% net landed savings over previous costs, without any upfront fees. Your finance department verifies the new landed cost against the old cost and authorizes 20% of the savings to be added to the unit cost at source, which the factory then pays to REDUx.

Summary of Lessons Learned

Strategic offshoring can significantly enhance profitability and growth for North American companies.
Embracing a global supply chain allows companies to focus on core competencies and innovation.
Programs like REDUx Engineering make offshoring accessible and beneficial for SMEs.