Like most, I’ve witnessed the loss of local businesses during the fallout of the COVID-19 pandemic. While it’s sad to see restaurants go, my region’s bike shops almost wholly disappeared. I once had multiple stops nearby for repairs, including national chains, all of which have moved or shuttered within the past two years. Therefore, I’ve had to do repair work to fill the gap. While this was fraught with some expensive purchases (and occasional failures in the field), it’s also forced me to become more reliable in my repair work. Now I’m confident handling all but major repairs on my bike. In other words, an upfront investment that was less economical but encouraged by necessity paid dividends given enough time.
Of course, local stores and services like these were far from the only industries impacted in recent years. Whole production facilities have had to adapt to severe throttling of availability of materials and products worldwide as every region struggled with varying levels of shutdowns. Even with manufacturing currently unabated, large backlogs in critical industries have severely impacted long-term forecasts, market deals, and the pace of technological development. Many regions have renewed interest in onshoring manufacturing to combat this issue. Onshore manufacturing is the inverse process to offshoring that many developed countries underwent as protectionist policies gave way to cheaper labor markets. However, with massive government reinvestment in some key industries, electronics manufacturing looks to return to prominence domestically.
Onshoring Manufacturing Offers Significant Supply Chain Improvements
The fragility of global supply chains was on full display two years ago, and many industries have yet to recover from the fallout. What was for many years seen as an inevitability – global manufacturing due to reduced overseas labor costs – has received some significant pushback.
Domestic manufacturing holds many key advantages compared to overseas:
- Reduced turnaround times: Sea travel is lengthy and port congestion, though improving, still poses some time-to-market risk. For domestically manufactured and marketed goods, cutting out nonessential steps can help improve both the availability and the speed at which end users can access their products.
- Fuel prices: Air freight is a workaround for sea transportation, but it is not without significant drawbacks. Escalating costs in the energy sector have made an already cost-prohibitive option even more of a financial impediment. Moreover, air freight cannot compete with shipping by sea on a volume basis, compounding the incurred costs.
- Communication: Engineering change orders can be enacted in a matter of hours instead of days when reached during business hours. In general, it’s easier to get a hold of local manufacturers and foster relationships.
Design, Manufacture, and Do Business Locally
Perhaps the biggest value of onshoring manufacturing is the ability to foster relationships with local industry. Clients can better understand the facility where their product will be designed and manufactured, which alleviates any trepidation before agreeing to a work order.
Some benefits include:
- Clients can see the professionalism of the manufacturing floor, granting confidence that the shop in question can treat its design with the care it deserves.
- Technology and machinery are on display; clients can determine first-hand if the facility can meet the demands of a particularly cutting-edge board.
- A local tour is more welcoming to newcomers in the electronics space. With the increased infrastructure outgrowth arising from significant investments for the industry, designs for both boards and chips may tend towards a decentralization where products are more narrowly focused and marketed. Walking through a facility, potentially one nearby, provides newcomers with a gentle introduction to the process from beginning to end and builds strong partnerships.
Your Contract Manufacturer Is Set Up for the Shift in Manufacturing
Onshoring manufacturing is a long-term investment strategy that looks to circumvent some of the inherent chaos of a global supply chain. In theory, the more of the manufacturing process that can be brought “in-house” (so to speak), the better the supply chain in question can be insulated from pressures caused by global weather patterns, foreign government policy, or other unpredictable issues. Moreover, omitting to onshoring helps push careers and the industry’s stability, improving the health and technology of the field.
Electronics manufacturing will continue to build within the decade and coming years, and we here at VSE are ready to grow alongside it. With manufacturing facilities in San Jose and Reno, we’re prepared to continue building electronics for our customers through our team of engineers. Alongside our valued manufacturing partners, we’re ready to assist you in your board’s design, fabrication, and assembly at any level of product development.