There is a wonderful trend occurring in North America, and there is even an official name for it … “ON SHORING”.
On shoring refers to the return of North American manufacturers procuring their outsourced components from other North American manufacturers, rather than “offshore” sourcing from “Low Cost Countries”, or LCC as they are often referred to.
As a proud Canadian manufacturer of high quality investment castings, we work hard to provide competitive pricing, and a high level of service for our Customers, yet we understand that our newest prospective customers literally have a world of choices for their casting requirements.
For our North American clients, on-shore sourcing of castings from Niagara Investment Castings means you are keeping a key supplier of critical product close at hand, and receiving all the benefits of the latest in technology, a stable and skilled workforce, ease of critical information exchange, and fast and dependable shipping options, all at competitive prices.
Further to these more obvious advantages we can offer, one of the most common comments we hear from our clients is that it is difficult if not impossible to procure castings from offshore sources capable of being certified to the ever changing and increasing quality standards for pressure vessel components, high corrosion applications, military, aerospace, and many other extreme applications. As a result, we see our business with these critical castings increasing year after year, as providing difficult to pour alloys and certifying our castings to a wide range of difficult specifications is something we excel in.
When it comes to low cost country manufacturers, there is a wide variety of choices and a wide range of cost structuring, but also a higher chance of detrimental risks to your business. Careful consideration of the following concerns … identified as some of the greatest risks, and shared with us from those experienced with LCC manufacturers … is strongly recommended.
We encourage you to discuss these issues with us, to help you gain a better understanding of how Niagara Investment Castings can provide the value you expect when it comes to your outsourcing requirements, with none of these risks.
What will it cost you if your designs or products are copied or sold?
Patent laws in many LCC can be virtually non-existent, and if they exist, they are generally not as enforceable as in many other countries. We have been made aware of more than one example of where our customers have had product copied, stolen, or resold to competitors. (Please click on our Case Studies link ABOVE for a discussion on a specific case)
Is your overseas pricing going to fluctuate upwards after the first order?
What was an attractive price when the order was first placed, many times will rise with every new order placed. The fact is that prices are rising in low cost countries, especially China. As China progresses from a low-cost manufacturer dependent on exports to a service-oriented economy driven more by domestic demand, wages are rising. Their Yuan is getting stronger, their workers are demanding more suitable working conditions, and government subsidies seen over the past 20 years are all but gone. We know of examples where pricing was quoted artificially low to get a job in-house with the intent to sell the design to other LCC manufacturers, then raise the price to the customer.
Are your product’s specifications going to be followed?
Ensuring quality is as high as possible can be a monumental challenge in a low cost country, especially in the technically demanding world of metal casting. The low cost country gains a pricing edge due to low labour and operating costs, however what is often overlooked is that todays investment casting is highly dependant on modern technologies to ensure proper metallurgies and casting integrity. Metal casting specifications and quality standards in LCCs are vastly different, and believe it or not, deviating from the standard is quite normal and acceptable at many LCC factories. Can you afford to have your metal castings used in the products you manufacture and put your name on when they’re not done right?
Are you comparing apples to oranges?
Many LCC casting manufacturers do not use the same high grade raw materials for the critical shelling stage which is at the heart of investment casting. In many cases, they use a process known as “Water Glass” or “Sodium Silicate” investment casting. This process is different than the conventional high quality investment casting process. An offshore supplier needs to start with high grade materials if they wish to make investment castings of equal quality to an onshore supplier, but typical cost cutting often means compromising in this area. Make sure you know the supplier, their equipment, and their process before making any decisions.
Where are you accounting for freight costs and risks?
Shipping of castings from overseas is not only very expensive, it is incredibly time consuming, with typical ship deliveries as much as several weeks or longer. Sometimes when smaller volumes of products are manufactured in a country like China, it is difficult if not impossible to find cost effective yet timely transportation. There are many documented threats to global shipping : political instability, natural disasters, dock strikes, poor vessel quality resulting in fires and sinkings, communication and tracing problems, and even terrorism and pirates, can render that great deal a total loss.
Are you safe dealing with a domestic based representative for a LCC foundry?
Domestic based reps often find that they have significant expenses, including the cost of frequent travel to the LCC foundry to oversee their clients projects. In many cases, the reps have to constantly find new manufacturers for their clients’ products as their LCC foundries close, increase their prices, or drop the account altogether. These ongoing costs, added together with their day to day costs of wages, rent for office and warehousing, and other fixed costs, often mean that the domestic based rep finds themselves losing in pricing competition with other reps, as well as often times finding they are selling against their own principal LCC foundry. That translates to the rep calling it quits for lack of sufficient profit, or long and difficult periods for the customer due to no LCC manufacturing capacity when the rep must find a new source for the castings. Many of our returning customers simply tell us it was a nightmare to deal with the constant instability when using domestic reps for LCC manufacturers, and not worth the hassles.
How difficult will it be to develop the casting, or make the necessary design changes you, your customer, or the market demands?
Investment casting is not the type of manufacturing process where a simple purchase order and a drawing are sent and the product shows up a few weeks later. The casting process is a technical undertaking requiring a combination of skilled foundrymen, knowledgeable metallurgical and design Engineers, proven processes, and strict quality control systems. An open and effective exchange of dialogue is always a key element of the development of a casting that will meet the combination of price, quality, and compliance to material specifications, including the ability for the foundry and customer to physically meet to achieve this in many cases. Our customers have told us this is one of the greatest frustrations and why they prefer working with Niagara Investment Castings for investment castings …. it simply is not easy to get it right the first …. second …. or third time when dealing halfway around the world and with people speaking different languages.
Do you know who is actually making your castings or providing the secondary services?
It is difficult to be sure that the company that you hire will be the company that does the actual work since it’s very common for companies to subcontract services from other foundries or subcontractors without your knowledge or approval when things get busy. One of our clients put it to us this way …”Loyalty to a customer is not how business is done in many factories in Asia …. but we think we deserve at LEAST that.”