Overseas Manufacturing Costs Drive Business Home

Staying Home

In response, some entrepreneurs are considering moving their current manufacturing operations to U.S. soil. In 2008, finding a manufacturer is not nearly as straightforward as it may have been just a few years ago. Of course that's good news for U.S. manufacturers. While they still can't normally compete with overseas manufacturers in labor costs, they can offset those costs by providing companies with more manageable shipping and freight and no duty charges.

And there are other advantages to producing goods domestically. Without a language barrier and with minimal time zone challenges, working with an American company can reduce the frustration factor.

In addition, delivery time frames are shorter, there is no involvement with customs and freight-forwarding, and order minimums can be lower. Plus it can be comforting for a young company to work with another party that is subject to the American legal system, with all the caution and understanding that goes with it.

If you are currently evaluating where to manufacture your product, it's worth considering the following factors:

1. What's your manufacturing run? Overseas manufacturers generally require larger runs. If you're producing a first run of your product -- and you still need to alter your product or packaging in the future, or you are leery of purchasing -- and storing -- too much inventory -- starting with a U.S. manufacturer makes sense. Once you begin to scale up manufacturing, you may want to re-evaluate cost per unit.

2. What is the nature of your product? Higher shipping costs will affect larger and heavier product shipments than they will lighter, high-volume shipments. For example, you will feel the pain of current freight costs much more acutely if you are importing, say, baseball bats than if you are importing baseball hats.