But we assemble it here

Twice this week I heard Colorado based companies proudly say, “We assemble our widgets right here in Colorado.”  The first was at a meetup for local manufacturing executives.  The second was at a technologist confab.  In both cases what the respective companies actually meant, however, was that they do final assembly locally of components and subsystems manufactured in China.

Not that I am against Asian manufacturing–in fact we have spent a lot of time setting up supply chains, production lines and test systems for products being built in Asia.  And often this is the right solution, all things considered. But I bristle when I hear about a product built from a China supply chain wrapped in an American flag.  For the real challenge for us in America is not really doing final assembly here–there are always reasons to do that–it’s about having a local supply chain.  Once the supply chain moves overseas, assembly will follow.  This has already happened in many industries–consumer electronics being an obvious example.

A China supply chain is also not always the right choice.  The advantages in labor cost can be offset by IP risks, shipping costs, cash flow issues with having inventory on the water.  There is also an ROI aspect of the costs associated with setting up and qualifying a China supply chain vs the savings.  Still for many businesses it’s the right choice.

But if you want to wrap a flag around your product,  then please design it locally, use a local supply chain, and assemble it locally.

Chuck

2 Comments

  • Ski Milburn

    My company designs and assembles cathode air supply blowers for the global fuel cell industry. We currently have product in 25 countries, including China.

    I’d like to say our products are American made, but our actual domestic value-added probably isn’t much better than a new Chrysler (“Imported from Detroit”, and everywhere). Some days I think we should just put a “Made on Planet Earth” sticker on them at be done with it.

    We actually have a preference for American suppliers, but we don’t have any control over where they source their stuff. For example, we buy motor control electronics from an American company that just moved production to China. We buy American motors, that are mostly assembled in Costa Rica. We buy other parts from a large American supplier that manufactures them in India. Most of our machining is done locally, but some of our rapid prototype and injection molded parts are “Imported from Minnesota”.

    Some of this is the inevitable result of decades of globalization, some of it is the result of government trade policy derived from lobbying by foreign and multinational corporations than have at best a passing interest in the health of the US economy or the US middle class.

  • Chuck

    Ski, your analogy to car makers is very spot on. It’s a problem they have struggled with for years, both the actual supply chain part and also in explaining this to consumers. A domestic brand car assembled in Detroit that was designed in Japan and using 90% imported parts may be a lot less American than a foreign brand car designed and built in Tennessee using 80% American parts…

    And of course as you illustrate, it’s called a supply “chain” for a reason–it’s not just direct suppliers it is the whole chain, back to raw materials and even the design and engineering content.

    Totally agree that controlling aspects of complex supply chains is difficult but its great that you are thinking about it even while making the right decisions for your business.

    Cheers

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