Reshoring plastic manufacturing back to Australia
Reshoring plastic manufacturing back to Australia
Over the last few years, we have seen an increase in demand with businesses bringing back their manufacturing to Australian shores.
In this article we explore why this makes sense, and in particular to plastic injection moulding services, providing further insights into the huge benefits that reshoring brings to your business.
Why reshoring injection moulding services makes sense?
The pandemic kicked off an unprecedented chain of events, and one that impacted organisations on a global scale. We are now seeing the after effects of this now. Challenges such as lockdowns, broken supply chains, world disasters and economic uncertainty have contributed to businesses re-thinking their supply chain operations and business strategy entirely.
Furthermore, with recent developments with rising living costs, increase in materials, labour, interest rates, gas, fuel, freight, transport and logistics, it makes sense for businesses to seriously consider their manufacturing and production operation back to Australian shores.
What is Reshoring?
Reshoring is a term that refers to the process of bringing back the production of injection moulding services to a local or domestic location, rather than outsourcing it to another country.
In other words, if a business has relocated some or all of its manufacturing activities overseas, most commonly referred to as offshoring, to lower manufacturing costs, reshoring is relocating some or all of their activities back to the primary location of the business.
Why do businesses offshore in the first place?
Companies choose to offshore for a variety of reasons. The primary goal is to reduce an organisation’s labour costs and overall cost of production. There are other advantages such as having access to raw materials and entering new markets.
However, with recent developments discussed above, the costs of offshoring are not as lucrative as they used to be. Below are some of the challenges that companies are now facing.
Rising costs in developing countries: As countries develop, labour prices rise, and shipping and freight costs become prohibitively expensive. The cost difference between operating onshore and offshore is significant for certain enterprises, with the gap shrinking yearly.
Instability of international trade: Because the geopolitical situation has altered substantially over the last decade, having foreign activities now poses a significantly more considerable risk to your business and its supply chain network.
Regulatory aspects: Conforming to material requirements, quality control challenges, and losing intellectual rights when working abroad can cause business issues.
Challenges with production: Certain challenges can arise with the production process and the supply chain network. Issues such as longer lead times and genuine issues with production can regularly surface.
Drawbacks such as language barriers and cultural differences can also impact your business, and as a result it’s important to note that offshoring manufacturing is not always the best option for companies.
Why does reshoring then make sense?
Given the hidden challenges that many companies encounter as they offshore their production process, the following outlines key advantages of reshoring injection moulding services, and how they will benefit your business.
1. Cost savings
While outsourcing injection moulding services to countries with lower labour costs may seem like a cost-effective option on the outset, it often comes with hidden costs such as shipping, freight, communication, and quality control.
Reshoring can eliminate the majority of these costs and make the overall process more efficient.
2. Increase in product quality
Foreign producers typically operate with less expensive solutions. For example, they may include low-cost labour, technologies, tools, manufacturing processes, and materials.
Reshoring bridges that gap. Industries adhere to meet higher quality standards focusing on customer satisfaction, production efficiency, social responsibility, risk management, relationships, and product quality. With local production, businesses have more control over the quality of the products being produced. This allows for faster problem-solving and ensures that products meet the desired specifications and standards.
3. Improves supply chain resilience
Businesses are more efficient when they can monitor, manage, control and oversee their employees, capital equipment, raw materials, the production process and their supply chain, in order to provide customers with goods and services.
Having a supply chain that is closer to home is more effective to manage within the same region. Reshoring combines essential parts of the supply chain, such as shipping, customs and tariffs as well as deliveries. Local production allows for faster turnaround times, which can be crucial to industries with fast changing product cycles.
Reshoring can also make supply chains more resilient to disruptions such as natural disasters or political instability. This can reduce the risk of supply chain disruptions and the associated environmental impacts.
4. Ability to maintain countries’ innovation and competitiveness
Recent technological advances have been happening exponentially, with 3D printing, artificial intelligence, the Internet of Things, and blockchain being some of the most important. Integrated teams use Design for Manufacture and Assembly (DFMA) software and operations approaches. Because of their extensive manufacturing capabilities, heavily industrialised countries such as China, Japan, Korea, and Singapore are competitive.
All of these ideas are brought back home by reshoring. Reshoring promotes intrastate competition in addition to increasing global competitiveness. Companies are investing more and more in research and development (R&D) in these areas. Governments also, are encouraging businesses to reshore, and bring back manufacturing and production to local shores, and they also provide funding in some instances.
5. Lower transportation costs
One of the challenges with offshore production are the high costs associated with transport and logistics, namely shipping and air freight. This has been evident over the past few years. Disruptions to shipping, freight, transport and delivery has a knock-on effect, with late delivery to the customer, and costs that spiral out of control.
Reshoring helps simplify logistical management and lowers your transportation costs. For example, working with trusted partners locally to deliver goods, and using a reliable shipping expert in your home country who knows your business, enables you to deliver to your customers on time and with no delays.
Reshoring can also be more environmentally friendly by reducing the carbon footprint associated with international shipping, which is a major contributor to greenhouse gas emissions. By producing goods locally, transportation emissions can be minimised.
Reshoring can encourage companies to adopt sustainable practices in their manufacturing processes, such as using renewable energy sources, reducing waste, and conserving natural resources. All contributing to a more sustainable and resilient economy.
7. Providing employment in the local market
Reshoring can create new jobs in local communities, which can help to reduce unemployment rates and stimulate economic growth. This in turn can provide opportunities for workers to develop new skills and gain experience in high-tech industries. This can help to build a more skilled workforce and increase the competitiveness of the local economy.
Reshoring can have a positive economic impact on local communities, as increased employment and higher wages can lead to increased spending and investment in the local economy. This contributes to higher GDP and a more robust economy, creating a virtuous cycle of growth and prosperity.
8. Allows for the construction of smart factories
Reshoring can provide companies with greater access to advanced technologies, which are often developed in the home country. This can help to build smart factories that are equipped with the latest automation, robotics, and artificial intelligence tools. Whether building a new facility or updating an old one, reshoring lets you upgrade to smart manufacturing infrastructure.
This can facilitate collaboration between manufacturing companies, local tech companies, and with support from the Government. All help to develop and implement innovative solutions for companies to build smart factories. Creating intelligent, automated, digital factories enhances manufacturing and supply chain performance. This is an essential factor for businesses wishing to return home and to become competitive at an international level.
Ready to Reshore your injection moulding services? SDI Plastics can definitely help with your vision.
SDI Plastics have the expertise and knowledge to help bring your production back to Australian shores. Having worked with numerous companies with reshoring, SDI Plastics provides injection moulding services onshore, at their production facility in Brisbane, Australia.
Contact us on (07) 3807 8666 to learn more about how modern manufacturing methods transform production and how we can assist Clients looking to reshore their manufacturing capabilities back to Australia.