Why you should consider re-shoring

reshoring

noun [ U ]

UK – /ˌriːˈʃɔː.rɪŋ/

US – /ˌriːˈʃɔːr.ɪŋ/

 

The practice of moving a business or part of a business that was based in a different country back to its original country

 

Much has been talked about ‘re-shoring’ but as this Covid-19 pandemic has shown us, importing from “far away” is becoming less attractive. Our business here at Plastic-IT Ltd is all about plastic injection mouldings – we have several lifetimes of knowledge about it within the business.  If you are buying injection moulded plastic components from outside UK – here are some pointers as to how you can reduce your costs by producing domestically – on your “door-step”

Low-cost regions (LCR’s) as the term soon became known, were a salvation solution for many purchase departments, a strategy that began in earnest some 15 years ago.  The promise of low prices, quick delivery and guaranteed quality was a fantastic attraction- let alone multiple trips on the company to exotic places.  The Peoples Republic of China (PRC) promised all these things.  In our industry it was initially mould making that stimulated the interest.  Moulds could be made for a fraction of European costs and delivered in shorter times.  There is no doubt that quality moulds as good as those from a UK, German or Portuguese manufacturers can be bought in China.  We know because we have acted for multinational companies to do just that, but from the initial tooling quotations which looked very attractive, gradually as the realisation of the European quality standard being demanded grew, so did the costs.  Those that bought tooling without much regard to standards found they had simplistic 1960’s style moulds made from dubious steels with poor cooling that did not deliver the quality parts required.

Then we in Europe decided to buy the mouldings, as they must be cheap too, but parts were never moulded from European polymers – only ‘equivalents’. Part quality dropped as cycle times were reduced – bringing quality issues that could not be realised until parts were delivered 8 – 12 weeks after manufacture.

Now in 2021 the LCR is no longer ‘low cost’.  Labour rates are 2.5 times higher than 15 years ago.  (UK increase in same period 37.5% sourcewww.tradingeconomics.com) ‘Blue-collar workers’ now earn more than College Graduates and the RMD – GBP exchange rate has seen the Chinese currency value become 22% more expensive.

But it does not all stop there.  There has always been the 8 weeks shipping delays and the need of FOB payments.  Today we are seeing 12-week lead times being commonplace.  In cash terms this means that 23% of your total purchase value is tied up in additional cash flow financing – (working capital).

We have known for many years that we can be competitive against the LCR’s.  If the TRUE costs of buying from LCR’s is considered, then to re-shore your current LCR supply needs little thinking about.

Here is a list of the direct benefits

  1. You pay less for your parts
  2. You get your parts in days not weeks
  3. You get parts of the assured level of quality
  4. Your cash flow moves from 12 weeks of debit to 4 weeks of credit
  5. You can call someone about any issues who speaks English as well as you.
  6. You can visit to see your parts being made and be home for tea

…and here are the indirect benefits

  1. We will not make any parts off your mould and sell them to someone else
  2. We will look after your mould with a ‘strip, clean and inspection’ after each run and provide a condition report
  3. As a ISO 9001 – 2015 accredited Company we will comply with the requirements of the Quality Standards at all times – and you can check our accreditation.
  4. You will sleep better

If this has raised an eyebrow or two…….get in touch to see how we can help

 

 

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