Americas Reshoring Partner for OEMs

On-going global trade tensions, geopolitical instabilities, and the COVID-19 pandemic, have resulted in significant disruptions and strains on supply chains worldwide. To address these uncertainties, OEMs are seeking localized suppliers to create a more robust supply chain with fewer risks – and reshoring is an ideal solution.

At ABS, we know the value of a healthy supply chain. When it comes to reshoring, ABS delivers superior quality, streamlined logistics, less inventory on water, and excellent proximity to the U.S. and Canada – all of which provide OEMs with more control over their supply chain. Watch our short video or contact our team to learn more about reshoring to North America with ABS.

What is Reshoring of Manufacturing?

It is estimated that around 98% of supply chains across the globe were impacted during the pandemic, and industries with offshoring incurred more risk and disruption. This is causing companies to take a hard look at their supply chain network. Instead of waiting for conditions to return to normal, many OEMs are taking the opportunity to evolve their business model to increase agility, responsiveness, and resiliency for the future. One way companies are achieving these objects is relocating manufacturing closer to home – a process known as reshoring. Over the past several decades, many North American OEMs transitioned manufacturing offshore, typically to locations in Asia such as China and India, to take advantage of perceived lower costs and other anticipated benefits. Reshoring is the opposite of offshoring; and is simply bringing manufacturing back from overseas.

The Relationship Between Total Cost of Ownership and Reshoring

While some costs such as labor may have been lower with offshoring, recent wage inflations in parts of Asia erode much of these potential cost savings. In some instances reshoring manufacturing may not be the lowest cost option, but it may be the best cost option when factors such as product quality, supply chain risk and brand reputation are factored in to the equation. OEMs are realizing that reshoring is a much more competitive and attractive option when Total Cost of Ownership (TCO) is considered. TCO is a concept that has been associated with supply chain management and manufacturing for decades. The idea is that the cost of owning a product over its lifespan is broader and more encompassing than simply the initial price paid. To learn more, read the ABS article on why TCO matters in CNC machining.

Would your supply chain benefit from a heavy fabrication partner that is located closer to home?

Contact the team at ABS – we are the Americas’ OEM Reshoring Partner.

The Value of Reshoring

With the digitalization of manufacturing and increased automation, workforces are becoming less reliant on humans and fewer personnel are required. This coupled with the desire to reduce supply chain risk and improve product quality make reshoring a more attractive option for OEMs.

There are many advantages to reshoring manufacturing to North America. The following highlights the main benefits and makes the case for partnering with a proven and experienced manufacturer like ABS, who has 6 state-of-the-art facilities serving OEMs across North America. All of the advantages below result in production efficiencies and cost savings as well as lower risk for OEMs.

Superior Quality: offshore manufacturing is known for its less expensive labor. However, offshoring often involves raw materials, tools, and equipment that are also cost driven, often leading to quality issues. A growing number of North American OEMs are looking for reduced quality risks and are seeking an alternative to offshore manufacturing. Reshoring offers North American OEMs more reliable and higher-quality products, which translates to a higher value manufacturing solution with reduced risk. North America has strict standards, and has earned a reputation for manufacturing very high-quality products for various industries, including highly technical and precise sectors such as aerospace and medical devices.
Excellent Proximity to U.S. and Canada: this is the most obvious benefit of reshoring to North America but it cannot be overstated. OEMs must maintain control over manufacturing and it is much easier to oversee production when manufacturing is closer to home. You can easily travel to most locations in North America in a few hours to check on the status of production whereas most flights to Asia take a day. Additionally, the time differences across North America are very manageable, allowing similar work schedules between personnel and the manufacturing location. This is a huge advantage compared to manufacturing in Asia where there is around a 14-hour time difference, especially when dealing with any urgent matters that cannot afford a delay.
Streamlined Logistics: reshoring means that finished goods often only take hours to arrive in the U.S. or Canada compared to weeks from most Asian countries, resulting in transportation costs that are much lower as well as a lower risk of delays or damage during transit. This benefit has only been amplified in recent years as there have been significant travel and logistics delays with goods from Asia. Shipping costs skyrocketed during the pandemic, specifically container freight rates, due to logistics disruptions. Reshoring streamlines logistics for OEMs, reducing the risk of logistics delays and cost spikes as well as securing brand reliability and consumer trust.
Less Inventory on Water: as with all supply chains, reducing the inventory throughout the chain is key. For example, goods transported by ocean freight often have a lead time of at least 8 weeks, 6 weeks of which are spent on the water in transit. This scenario results in two big issues: 1) a discovered defect would require the recall of all the product in the supply chain, including the inventory on the water, and 2) volume adjustments due to demand fluctuations are slow and lag by around 8 weeks. A real world example of these issues played out at ports across the globe; as a result of logistics disruptions caused during the pandemic, ports observed huge pile-ups of container ships that took months to resolve, resulting in massive product delays. Reshoring solves the inventory on water problem by dramatically decreasing the amount of time goods spend in transit - improving speed to market and the ability to rapidly respond to changing market conditions and customer demands.
Responsible Business: over time, companies have continued to put more emphasis on responsible and sustainable manufacturing where importance is placed on the conditions of the factory and the origin of raw materials. One of the advantages of North America is the value it places on its workforce and keeping them safe. Law labors are enforced and there are limits on how many hours personnel can work each week and restrictions that ensure a safe work environment. Additionally, there are laws to ensure the quality and traceability of raw materials for manufactured products. Unfortunately, the same cannot be said for many countries in Asia. Therefore, companies can do business in North America knowing the workforce is taken care of under the local laws and their reputation is not at risk.

About ABS

Established in 1971, ABS Machining has grown to become the recognized global leader in large CNC machining, fabrication, and assembly for OEMs. The key to our success has been exceptional people, unparalleled facilities, and an unwavering commitment to quality. Our people are experts in their given field. Their expertise is matched only by their passion for serving our clients. We continue to invest in our people with education programs, cross training and in our internal accredited apprenticeship center.

Our facilities are state-of-the-art and we are equipped to serve our client’s requirements in:

Our massive fleet of machines and automated welding systems has delivered solutions to the most technically challenging projects. Our commitment to maintaining unparalleled facilities is evidenced by our renowned continuous capital reinvestment initiatives. Our commitment to quality goes well beyond our ISO 9001:2015 Registration. From the inception of all programs, ABS quality professionals work closely with each customer to ensure all their unique requirements are met or exceeded. It is this commitment that has positioned ABS as a strategic supplier to leading OEMs worldwide.

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