Hidden Costs of Sourcing Precision Machined Parts Overseas
As recently as the early 2000s, there was a big push for manufacturers to outsource operations overseas, with the promise of getting parts made significantly cheaper in countries like China—pennies to the dollar compared to the cost of American-made parts.
However, we’ve observed a clear turn of events in recent years. Companies once lured by the ostensibly cheap cost of outsourced manufacturing have re-embraced American manufacturing after finding out the hard way that cheaper typically does not equal better. In many cases, it can mean significantly lower quality—among other drawbacks.
While we would never tell buyers or engineers where to source their parts, we urge anyone reading this article to consider all the hidden costs of overseas manufacturing.
6 Factors to Consider before Sourcing Parts Overseas
Here are six factors to consider before sourcing parts overseas:
1. Quality
When you order a cheap part, you’re likely sacrificing quality. We’ve seen customers order the same part 3-4x overseas to get it right when they could have come to our domestic precision machine shop and gotten it right the first time.
It’s also important to keep in mind that poor-quality parts wear down faster and break more easily, which can mean paying for a replacement part sooner than anticipated. Investing more in a high-quality part up front often saves money in the long run.
2. Lead times
Many overseas manufacturers quote customers' lead times of up to 6-8 months. In contrast, American manufacturers can often deliver parts in just a few weeks. At Area Tool & Manufacturing, Inc., we can even achieve a same-day turnaround for certain projects.
3. Logistics and transportation
International transport can contribute to increased costs and lead times—especially in this current era of post-pandemic supply chain disruptions. Additionally, far more risk is involved when parts pass through multiple channels to reach their destination.
Working with a domestic precision machine shop significantly reduces these risks and allows for any issues that occur to be resolved much more easily.
We’ve experienced the downsides of shipping parts overseas firsthand. One of our customers who outsourced some of their manufacturing operations to China ordered a critical part from Area Tool & Manufacturing, Inc. We sent them tens of thousands of dollars worth of parts, which disappeared after going through customs in China.
Of course, domestic shipments can get lost, too, but it’s less work to track them down and recover the parts.
4. Communication
Communication issues such as time zone differences and language barriers complicate manufacturing partnerships, resulting in time-consuming back and forth. Some overseas manufacturers may even use different terminology than you, leading to costly miscommunications. For example, we’ve learned that when we use the term “hard milling” with manufacturers in China, they aren’t always clear about what we mean. You don’t have to worry about those issues when you work with a domestic precision machine shop.
5. Machine downtime
As you know, when a machine goes down, every minute of production time lost affects your company’s bottom line. It’s important to receive fully functional replacement parts quickly to get operations running again.
Ordering parts from an American manufacturer mitigates issues related to quality, lead times, logistics, and other factors so you can resume production ASAP.
6. Material purity
Overseas manufacturers tend to source materials from the countries where they are located, and those materials aren’t always as high quality as materials sourced in America. For instance, a solid bar of Chinese steel might have varying densities throughout.
American manufacturers are more likely to source pure, high-quality materials from American materials suppliers, ensuring that customers receive better parts. In fact, at Area Tool & Manufacturing, Inc., we refuse to buy materials from anywhere other than here in the US.
High-Stakes Parts Require High-Quality Precision Machining
Some companies choose to source simple parts (such as brackets) from overseas manufacturers and order critical parts from American shops.
While basic parts may seem low-risk enough to entrust to a cheap supplier in China, we always encourage customers to think about the bigger picture. Many of our OEM customers build high-stakes automation machines to produce medical equipment, which means that even something as simple as a bracket must fit perfectly into larger assemblies. Having the same shop machine all of the components in an assembly is the best way to prevent quality issues and ensure that the assembly functions as intended.
If you’d like to work with an American precision machine shop with a track record of delivering high-quality parts, request a quote from Area Tool & Manufacturing, Inc.
