Expect the unexpected. Even with that mindset, it would have been impossible to predict what 2020 would look like. We have all been through the unexpected this year due to the COVID-19 pandemic, but this year has quickly taught us that while having control is powerful, creating control can be challenging.
In manufacturing, much of the supply chain has been disrupted by the pandemic, causing many to reconsider the previous benefits of offshoring their programs, and instead opting for control by reshoring, the process of bringing manufacturing back to the United States. As a result of continued growth, and thanks to previously planned expansion plans, Westec Plastics is well-positioned to accommodate these reshoring efforts.
The COVID-19 Effect on the Supply Chain
Over the years, more and more companies have chosen to offshore their programs for a variety of reasons, but most commonly, this move was made to save money. Over the last few months, however, companies have been forced to have serious considerations for reshoring, due to new tariffs and instability of the supply chain.
The COVID-19 pandemic caused the supply chain to become unstable, exposing many unprepared companies and their dependency on overseas manufacturing, as the world around us came to a halt. Companies that chose to focus solely on overseas manufacturing have experienced pandemic related disruptions, not only due to material and resource availability but also due to a reduction in available transportation options and an increase in lead times.
Deemed an essential business, Westec Plastics has been running without disruption since the COVID-19 pandemic began. Great relationships with all of our suppliers and customers, along with our most important asset, our dedicated employees, have allowed our supply chain and manufacturing operations to remain intact.
Reshoring – The Benefits, Challenges and Trends Westec Sees Today
Reshoring is not as simple as moving production from one place to another. When evaluating opportunities to reshore production, there are many factors often overlooked by companies which have a significant influence on the decision. When evaluating, companies should consider specific comparable metrics. These influencing factors include production pricing overseas vs. domestically, the cost of freight and travel, total lead times, supply chain risks, IP protection, and ease of access to the manufacturing facility.
Recently, research from Bank of America estimated that companies from the U.S. and Europe could pay up to $1 trillion over five years as a result of the growing reshoring efforts away from China. The study found that the reshoring initiative was already gaining momentum before COVID-19, and the pandemic has accelerated this movement. To help aid in the decision making, the Reshoring Initiative has introduced the Total Cost of Ownership (TCO) Estimator, a free online tool to help companies calculate the true cost.
Unsurprisingly, one of the biggest markets that has the most movement in reshoring is the medical sector – which is in direct response to the ongoing need for medical supplies. From Westec’s vantage point, other industries such as biotech, consumer goods and industrial products are also trending in reshoring efforts.
For companies deciding to reshore, several key factors can sway a decision, including the simplification of the supply chain, improving communication, and protecting IP. Another key factor that has companies returning to manufacturing in America is two-fold, control and pride. By moving programs back to the United States, companies gain enhanced control and easier access to the supply chain, along with hometown pride in being able to put a “Made in the USA” stamp on a product. Additionally, the mitigation of quality risks, tariffs, and an uncertain political climate all accompany this decision. Reshoring provides all of these benefits, all while providing an economic boost to the United States.
How Westec Plastics’s Expansion Helps Accommodate Reshoring
Despite the pandemic that has caused disruptions and cancelations across the world, Westec’s expansion plans have remained on-track. These plans are a result of Westec Plastics growing with customers after experiencing year over year growth since 2012. With strategic target market expansion, combined with organic customer growth, Westec’s expansion plans include increasing the size of our ISO Class 8 molding clean rooms, installation of an ISO Class 7 secondary operations clean room, and a 9,200 sq ft warehouse addition.
Due to new customer demand, Westec Plastics has also increased press capacity in 2020 by adding two new ARBURG single-shot molding machines, additional ISO Class 8 portable molding clean rooms, and we have expanded our secondary operations area by approximately 3,000 square feet. Westec Plastics’ growth also includes the addition of three new ARBURG, two-shot molding machines, scheduled for arrival in October 2020.
Fifty-one years ago, when Westec Plastics began, we built our reputation on providing industry-leading technical capabilities while delivering outstanding and responsive customer service. Today, we continue to hold these values at the forefront of what we do to provide the best technical solutions for our customers. By focusing on year-over-year growth, expansion of our capabilities, technologies and maintaining the standard of excellence our customers demand, Westec Plastics is poised and ready to use our experience to help companies reshore their manufacturing.