Total Cost of Ownership
If the words total cost of ownership are not currently on your mind, ¬†I can almost guarantee that after listening to today‚Äôs interview that will no longer be. ¬†We were glad to welcome Harry Moser, founder of the Reshoring Initiative, to join us for a discussion about a topic that we hope is sweeping the nation in 2013. ¬†The Reshoring Initiative is an organization devoted to helping US manufacturers realize the true cost associated with offshore manufacturing and educating them on the critical role they play in the future of the US economy. ¬†Today‚Äôs discussion revealed some eye opening statistics and possibilities that the Reshoring Initiative is working to make realities. ¬†
What is the true cost of Offshoring Manufacturing?
We‚Äôve all heard the reasons why so many companies in the past have shipped their manufacturing jobs overseas. ¬†Lower labor cost and raw materials cost have always been the primary drivers. ¬†Often companies are able to look at these lower cost and compare them to the additional incurred expenses of freight and justify their actions. ¬†However, as we learned today more often than not organizations are not looking at the true cost of their decisions. ¬†How about the additional cost of warehousing these shipped goods, or the expenses of traveling overseas to set up and inspect your facilities? ¬†¬†Let’s also not forget the intangibles, such as the loss of innovation when you move engineering away from the manufacturing.
Mr. Moser left us speechless (which almost never happens) with some of his startling statistics. ¬†Consider this, when looking at offshoring on a purely cost basis manufacturing in the US cost 69% higher than manufacturing in China. ¬†However, when an organization properly calculates the total cost of ownership (TCO) US manufacturing actually drops to 4% lower than Chinese Manufacturing. ¬†Want to hear about Mr. Moser‚Äôs plan to bring back 1 million plus jobs to US soil? ¬†Take a moment and listen to the entire interview. ¬†You can also stay up-to-date with the Reshoring Initiative by following them on Twitter here.
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