It Is Less Cost-Efficient to Manufacture in China
The cost of manufacturing is growing rapidly. While shipping delays and out of stock items continue to plague the manufacturing industry, there are many factors that contribute to the rising strain of outsourced production with companies that manufacture in China.
Although it was once seen as the ideal path to lower margins and overall pricing, producing goods and sourcing materials in China has become a difficult task to the average manufacturer.
With the rise in labor costs, the abundance of tariffs and an endless increase in overseas shipping rates, it can now be less cost–efficient to manufacture in China.
Cost of Labor is Going Up
Over the last decade, China has seen an increase in the cost of living and subsequently, a rise in labor costs.
As the economy continues to stabilize and overall wages grow, the price of outsourced manufacturing and material acquisition has skyrocketed. In turn, this cost of labor may transfer to the purchaser through hidden fees and higher price points.
It is crucial for manufacturing companies to source and price based on stateside production. While some materials are region specific, when possible, stateside manufacturing can place a hold on rising price points.
At Cristaux, we have taken fabrication in-house to a whole new level. The Cristaux Lab is specifically designed to help us produce even the most intricate creative concepts in our stateside, Chicago-based production facility.
China Tariffs Are Here to Stay
China Tariffs continue to challenge the cash flow of any business that depends on their resources to stay afloat. Tariffs on the imports of materials and goods from China have steadily increased over the last year. Unfortunately, they do not seem to be going away any time soon.
Since these materials are necessary to manufacture certain products, tariffs are challenging the pre-existing cash flow of these businesses. The tax burden continues to transfer, creating a ripple effect through the supply chain. This leads manufactures to displace the cost to the end-consumer.
With Cristaux’s vast vendor network, we do our best to accommodate for this shift in the supply chain. We have many stateside vendors that help aid in lower costs to produce goods. Additionally, we source materials all over the world so that we are not dependent on any one country.
Overseas Shipping is Becoming a Land Mine
It is no secret that the cost of overseas freight is higher than ever before. Many major freight carriers have made several increases over just the past few months. All the while, pending charges and tax hikes are still looming in the future.
This is leading stateside manufacturers to have to purchase a higher inventory of goods and materials. Otherwise, they may end up eating the cost if they do not transfer the expense onto their clients.
Depending on your recognition program, buying in bulk might work. If you tend to lean toward rush orders, it is highly recommended that you consider increasing your inventory of awards to avoid additional rush fees and extra freight charges. This way, you can budget for the future without the worry of your recognition order breaking the bank.
What was once viewed as a cost saving strategy, outsourcing labor and manufacturing to China has collectively changed over the last decade. It is important for manufacturers to continue to develop in-house fabrication and production methods to mitigate these types of strains on production.