Bringing manufacturing home only works if products are designed for local costs: higher labour, different suppliers and more automation. How to redesign products so local manufacture is competitive.
After the supply shocks of early 2020, a manufacturer decided to bring the assembly of a small appliance back to Australia. The first costing was sobering: assembled locally in exactly the same way, the product would cost more than 40% more than the imported version. The design was the problem. It had been optimised for a high-labour, low-cost environment: 31 parts, 14 screws, three manual soldering operations and several adjustment steps.
Reshoring a product without redesigning it usually fails. Reshoring a product designed for local manufacture can work.
Why products designed for offshore assembly struggle locally
Products assembled where labour is inexpensive often carry a lot of manual work: many parts, many fasteners, adjustment and hand operations. In Australia, the UK or the US, every minute of assembly costs several times more. The same design that was competitive offshore becomes uncompetitive at home.
Design for local manufacture
- Reduce part count aggressively, applying the Design for Manufacture and Assembly questions to every part.
- Replace screws with snap fits, welds or integrated features, sized using correct snap-fit strain.
- Design for automation: parts that feed, orient and assemble from one direction, with features that robots or simple fixtures can grip and locate.
- Eliminate adjustment and manual soldering by designing tolerance and connection into the parts.
- Use local material and process capabilities: what local moulders, metal fabricators and electronics assemblers do well.
- Consolidate parts through moulding, including metal-to-plastic conversion where it fits.
Look at total cost, not just unit price
Reshoring decisions should compare total landed cost: unit price, freight, duty, inventory carrying cost, quality costs, lead time, minimum order quantities and the cost of supply risk. Shorter lead times and lower inventory locally can offset a significant part of a higher unit price.
Use local advantages
Local manufacture offers advantages that are hard to price but valuable:
- Faster response to demand changes and customisation.
- Easier engineering collaboration and faster problem-solving.
- Lower inventory and shorter lead times.
- Stronger protection of intellectual property.
- Market and sustainability benefits from local production.
Automation and Lean together
Automation helps local competitiveness, but automating an inefficient process locks in its waste. Simplify the product and process first, then automate the steps where it pays.
A staged approach
- Assess which products are realistic candidates for reshoring, based on volume, labour content, size and supply risk.
- Redesign the best candidates for local manufacture and automation.
- Develop local suppliers.
- Pilot production, measure the real cost and refine.
Reshoring is not a return to the past. It is an opportunity to make products better than the ones that were sent offshore in the first place.
