Many American businesses are reevaluating their offshore business plans because of increasing labor, production and transportation costs. In fact, business experts are predicting the number of companies that move production back to the US will increase over the next five years. This is great news for American workers, and for the US economy. Approximately 225,000 new manufacturing jobs have been created during the last year alone. This is the largest increase in manufacturing jobs since 1994.
Leading The World In Manufacturing
The US is far and away the number-one manufacturing company in the world and will produce close to $2.2 trillion worth of goods in 2012. China is ranked number two in manufacturing, but the country produces 40 percent fewer goods than the US. In addition to leading the world in total manufacturing production, the US sets the standard for efficiency. US factories produce far more products with fewer workers. While the US is the top-ranked nation when it comes to overall manufacturing, there are several key sectors that we’ve lost our number-one ranking in. These include the steel, cotton, coal and automobile industries.
The True Cost of Outsourcing
US companies that outsource manufacturing to other countries have to deal with complicated supply chains, factory setup/equipment costs, intellectual property issues and shipping and distribution costs, to name a few. Additionally, employee wages in other countries continues to rise each year. Once all of these costs are factored in, the financial advantage of outsourcing is becoming less apparent than in years past.
Next, companies can operate more efficiently by keeping their manufacturing in the US. For example, if a product that is being produced overseas has a problem, or if the equipment needed to make it malfunctions, time is of the essence. The parts and supplies need to be readily available to ensure any downtime is kept at a minimum. Having to ship these items overseas can put a roadblock in the production of any factory or manufacturing plant.
Every business owner knows that top-quality products mean satisfied customers and increased sales. Having total control over all aspects of manufacturing allows for better quality assurance, and this can prove difficult for companies that outsource to other countries.
Even with the right supervisors, employees and quality processes and procedures, there is always the possibility that something can go wrong, and being able to address the situation right away is very important. Being able to oversee and manage all of your operations can lead to consistent quality of the products being made, increased sales and decreased chance of litigation.
Equipment Financing: Another Benefit for US Manufacturers
Manufacturing companies can reduce their operating costs without compromising on quality by leasing their equipment and technology. Leasing allows companies to acquire equipment for an affordable monthly payment that is designed around their specific budget parameters. This eliminates the need to use up business capital or credit lines. If you are the owner or CFO of a manufacturing company and want big savings on your equipment or technology, Balboa Capital can help.
Since 1988, Balboa Capital has been providing small and medium-sized businesses with the equipment financing solutions they need. Balboa Capital has worked with a number of companies in a variety of manufacturing industries, so you’re getting experience along with our fast and easy equipment financing capabilities. Use our free online equipment lease calculator today and then submit your online lease application to get started.