In this era of tariffs and reshoring, we talk to a lot of manufacturers who are reconsidering American manufacturing and wondering about domestic production for parts that are currently being produced overseas. There is no one-size-fits-all answer: Some parts are great candidates for reshoring, while others may still be best for overseas production.
But at ReNEW Manufacturing Solutions, we always emphasize that the important step is to take a holistic view and compare the full cost and impact of each option, not just a quoted price per part.
When we discuss a legacy part with a prospective customer, one of our first questions is: Where is it currently being made? If the answer is overseas, we encourage the customer to make an apples-to-apples comparison as they consider domestic manufacturing. It’s the only way they can truly understand which contract manufacturing quote offers the best value.
An overseas supplier’s quoted unit price may look substantially lower than a domestic quote, but it doesn’t always include every factor in the price. There are also less quantifiable factors that can affect the true cost of a part. A complete comparison may need to account for:
Including these expenses and concerns can significantly undermine the apparent price advantage of overseas manufacturing.
It can be hard to assign numerical values to some advantages of domestic sourcing. For instance, one very real drawback is that communication across time zones can slow decisions, but that can be hard to fully quantify. Even so, it’s undeniably an important part of a sourcing decision.
Responsiveness also matters when circumstances change. If a manufacturer unexpectedly needs more parts, a domestic supplier can often secure material and schedule an expedited production run. But accelerating an overseas order and transporting it by air rather than by sea can become expensive very quickly.
A recent video from a Texas manufacturer provides a good example. The company compared one of its quotes for a certain part to a Chinese supplier’s quote for the same part. Based solely on manufacturing price, the domestic part appeared to cost more than twice as much.
But things changed when the manufacturer estimated the complete delivered cost of both options. For the Chinese part, that calculation included ocean freight, origin and U.S. port fees, tariffs, trucking from the West Coast to Texas, and the cost of carrying inventory during transit. Based on the analysis, the domestic part was actually less expensive.
This example is not universal; overseas quotes vary in which transportation and import costs they include, and domestic manufacturing will not always be the less expensive option. However, it shows why comparing total landed costs can end up with a very different conclusion than comparing the quoted price per part by itself.
ReNEW offers responsive domestic production with a multisite manufacturing network and broad in-house capabilities. Our structure lets us manage a variety of part requirements and provide the support customers need when schedules or demand change.
If you are evaluating whether to reshore a legacy part, ReNEW Manufacturing Solutions can help you understand the complete picture. Request a quote to start a conversation!