Offshoring vs. Reshoring

Choosing where to manufacture your goods is an important part of a company’s business model. Many companies choose to to manufacture their products offshore in Asia because low labor rates made offset the increased transportation costs.

However, labor prices across Asia, especially in China, are rising, making the gap between narrowing the gap between Asian firms and US contract manufacturers, like Worcester’s the Coghlin Companies.

A recent study in The Economist compared the costs of manufacturing in America to those offshore. The study found that found that California was only about 10% more expensive than China. When companies add up soft costs, such as travel, the benefits of manufacturing in Asia quickly disappear.

According to the Coghlin Companies, there are many other factors to consider when deciding where to manufacture your goods. Contracting with a manufacturer in the United States provides legal coverage for your intellectual property and you can be certain that the manufacturer is in compliance with labor laws.

Choosing to manufacture in the United States also allows flexibility in the volume of product you need instead of producing high volumes to maximize the shipping rates. And you get your products more quickly, meaning they get into your customer’s hands faster.

New product lines or significant changes to a product often requires Engineering Change Orders (ECOs), sometimes in the final phases of production. With the product launch in balance, no one wants to have miscommunications delay production or have to wait to work through an issue because of time zone differences.

Reshoring your manufacturing by contracting with a United States firm, companies can get their goods faster and with less risk of mishaps along the way.


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