There was a time not long ago when it seemed that every factory in the United States was doggedly determined to set itself up anew in China. After all, the price of labor was astronomically cheap; there were no OSHA requirements. As a result, our manufacturing sector took a monumental hit from which it is still recovering. That being said, there’s good news to all this: while not all of the factory jobs that powered this nation in the 50s – 70s are ever coming back, a lot of them have already returned, or been “insourced,” as the terminology goes.

Part of the reasoning behind this decision of American companies to insource manufacturing jobs back to the States is because of the shorter, more cost-effective “lots” involved. It’s beginning to make better sense for “higher-end” lots to be sourced locally – say, an order of 500 units where the overall material and workmanship quality is higher, and the shipping costs remain astronomically lower. In the meantime, if a cheap product requires a larger production run with less costly materials (say 10,000), then it makes good sense to outsource the lot to an overseas company where the overall labor costs match the larger, less customized volume required.

The fact is that at PMI, we’re masters at both insourcing and outsourcing, certainly when it comes to reducing a client’s costs while still maintaining the quality of product. Recently, we were bidding with a competitor for a contract with an agricultural client. The client originally wanted their product to be made from grade-5 steel – something both our company and our competitor were able to deliver on – but that particular material proved too costly. This might have been the end of it for some companies. But instead, we sorted through our supply chain, taking a look at other materials that would cost less and still provide the necessary workmanship required.  We found a supplier who could provide us with SAE 1541 steel, a cheaper material and one that would still meet all client specifications. Once we discovered that loophole solution, the rest was easy: the client ordered from us, and we provided them with exactly what they needed.

Navigating the ins and outs of insourcing and outsourcing is never an easy proposition in today’s marketplace. It requires experience, savvy intuitions, and a long-time list of connections. At PMI, we bring all of these to the fore when going to bat for any given customer of ours.

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