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On shore vs Off shore manufacturing

Which is best for you?

It's a question we all have to ask at some stage in the product development process; do I tool up and manufacture with a local crowd who I know and can go and talk to, or do I allow the dramatically reduced manufacturing costs of Asia and Eastern Europe to lure me away? Most everything appears to have a Made in China stamp on it these days so surely that's the best way to go, right?

Well maybe.

Buying on-line is always a risky business, and let's be honest - when you're ordering production parts from abroad that is affectively what you're doing. Most of us would insist on at least one member of the development team inspecting an off-shore manufacturers premises, but how much can really be learnt from that? From personal experience I say that those nicely trimmed and finished samples may bear little resemblance to the mismatched, wonky and strangely ill-fitting production run that will arrive late a few months down the track.

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Manufacture abroad or at home?

All that aside, the price benefits of buying overseas can be dramatic. Eastern European tool makers can produce beautiful CNC'd tooling. And although you'll have to ship their tools here, a New Zealand tool maker would probably have to ship in a raw billet of material before they can make anything anyway. Labor costs in Asia are a fraction of what they are here which is why many well-known New Zealand brands find they need to go off shore if they are to remain competitive.
Recurring Costs
The key to deciding whether or not to go off-shore is to consider your recurring costs, not just the tooling costs. How much is the part going to cost you per unit? Sometimes manufacturers quote an appealing tooling cost but try to make more money on the piece part cost – so you're production runs are going to be expensive. Of course there's nothing wrong with that necessarily, so long as you understand the costs before you commit. Another consideration is tool maintenance. If your total production run is going to be less than 10,000 this may never be an issue, but if you're tooling up for 100,000 or more then your tooling may require some serious T.L.C if you want to avoid increased flashing and ugly surface finishes. Often New Zealand manufacturers will build that into their original estimates, off-shore manufacturers sometimes don't.

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Manage your risk by doing your homework and talking to an expert

Risk Management

One area in which a Kiwi manufacturer has a definite advantage is their ability to give you face to face time. Being able to cost-effectively go and see a tool maker or moulder and ask them if your design will suit their machinery is invaluable. If you're at all unsure about design for manufacture then off-shore is a big risk. Of course there's a good way to get around that; good design and engineering consultancies have a list of preferred manufactures and tool makers, both off-shore and on-shore. They can advise you on which will suit your needs best.

When considering whether to go abroad or stay in New Zealand it's important to take advantage of the wealth of experience available to you in the New Zealand design and manufacturing industry.

Andrew Sinclair
Product Development Manager
andrew.sinclair@motovated.co.nz
+64 3 382 5282