Home Made: Considerations for Domestic Manufacturing

By: Abby Svitana | On: July 1, 2020
domestic manufacturing

Where’d You Get That?

These days, it comes as no surprise that a significant portion of purchases in the United States come from imports. In 2019, the United States imported $617 billion more in goods and services than it exported1. Compared to the total amount of all goods and services produced in the U.S., foreign imports represented 15.33% in 2018, with the majority of goods coming from China2. Increased trade can benefit a country’s economy- allowing access to a larger variety of goods, services, efficiencies and specialization in domestic production. However, there are concerns that can arise with non-domestic sourcing and need to be considered to evaluate the comparative benefits of utilizing domestic manufacturing.

Some Considerations for Domestic Manufacturing

Time Efficiencies

One of the first issues that comes to mind with international sourcing is the issue of shipping. While shipping via air from China (for example) can take only a matter of days, this method becomes expensive for larger and heavier shipping volumes. Generally for orders larger than 1,000 lbs, shipping via ocean freight is the most economical3. However, it can take over a month for orders to arrive this way, providing they don’t get stuck at customs. For routine stocking orders this may not be an issue, but when dealing with situations like emergency downtimes or specialty items, these lead times can result in serious losses in revenue.

Regulations for Government Suppliers

There are some instances when it may be required to utilize U.S.-originated components in order to comply with customer specifications. A key example of this is seen in government contracting and the Buy American Act. If a contract requires compliance with the Buy American Act, products will be required to have at least “50% of the cost of components” be of U.S. origin4. However, with proposed changes to the Federal Acquisition Regulation (FAR), this threshold could be increased to 95% U.S. origin parts or material for steel end products4. Contracts requiring compliance with the Buy American Act will generally require a Certificate of Domestic Origin in order to show proof of domestic sourcing and manufacturing.

Visibility of Domestic Production

When utilizing non-domestic production, visibility and control over the design and manufacturing process can be much more challenging. Not only can working around vastly different time zones be challenging and inefficient for communication, it also restricts the customer’s ability to fully assess and qualify their manufacturer’s capabilities at the ground level. When working with a domestic manufacturer (especially a local one) it better empowers the customer to be fully integrated into the design and manufacturing processes and even allows for visiting the production site. These possibilities allow for a much more controlled and customized customer experience.

Choosing a Domestic Manufacturing Partner

Hose Master is well-equipped to be a superior value-added partner for domestic manufacturing. With our headquarters in Cleveland, Ohio and branch locations in Houston, TX; Reno, NV; and Atlanta, GA we are able to ship efficiently to anywhere in the US. Our widespread footprint gives our customers a greater level of control and accessibility in regards to design, service, manufacturing and training. If needed, we can also supply Certificates of Domestic Origin to comply with the Buy American Act and federal sourcing regulations upon request. Just give us a call– we’re happy to help!

 

Sources:

1 https://www.thebalance.com/u-s-imports-and-exports-components-and-statistics-3306270#:~:text=U.S.%20Imports,27%25%20of%20all%20goods%20imported.

2 https://www.statista.com/statistics/259096/us-imports-as-a-percentage-of-gdp/#:~:text=This%20statistic%20shows%20the%20imports,GDP%20amounted%20to%2015.33%20percent.

3 https://www.freightos.com/shipping-routes/shipping-from-china-to-the-united-states/#:~:text=Shipping%20Time%20from%20China%20to%20the%20US,40%20days%20for%20ocean%20freight.

4 https://www.governmentcontractslawblog.com/2019/07/articles/baa-and-taa/baa-buy-american-again/

 

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