Hardware products are often seen as cheaper when you can have them made in a foreign factory. You can get away with paying workers less and you may be able to build your own facility due to cheaper land and materials. Manufacturing output has already increased by 38% since the recession. But if you are already preparing to go away to the developing world, you may want to think again.
Here are the ten most common mistakes that come from manufacturing hardware products overseas.
It's Actually More Expensive
The sad fact is that it can actually turn out to be more expensive. If you are manufacturing specialist hardware, the workers may be cheaper, but you have to pay to import expensive parts to that part of the world. In many cases, it can actually be more expensive than importing those parts into the US.
In the long-term, it can turn out to be the same price, or usually higher.
The fact is that other countries have far lower standards when it comes to the quality of the parts produced. A lot of these workers are not used to adhering to strict western standards. In many cases, the hardware you receive will be of inferior quality.
No Safety Standards
Health and safety is a huge priority here, but in other countries health and safety needs to be improved. There are no inspections and no regular checks being carried out. The chances of an accident happening are much higher, and that can cause severe setbacks. If something happens, everything will have to be shut down.
If you are making your hardware half way across the world, you're going to have to wait much longer to actually receive those parts. This can cause big problems if you have to stick to a strict schedule. Even the slightest delay can add days on to the time it takes to deliver the parts.
Keep in mind that you are functioning under a different legal system. These different laws can lead to problems because you may have to change your entire setup in order to meet the requirements of those laws. A lot of countries have zero tolerance rules on foreign businesspeople that they believe are attempting to bend the law.
Your corporate culture makes up an essential part of your organization. You want that to translate throughout your entire web of operations. Failing to make it translate may mean that you may lose efficiency, productivity, and morale. And sometimes your western culture may not be compatible with other cultures.
For example, the 110% attitude of an American worker may not be compatible with a heavily religious Indian community. As you can see, corporate culture matters.
It's expensive to move your operations overseas. If you wanted to expand in the US, it may not be a problem to secure small business funding, but elsewhere it could be impossible. The lack of funding means you are working with a less than efficient trading arm.
Low Standard of Training
There are many jobs that you take for granted in the US. If you need to hire someone to do that job, you can find someone within a day. But in a developing country these skills could be in short supply, and the chances are if those skills did exist in abundance they are now being plied in the west, where they can be better used.
Finding skilled workers can be difficult in certain parts of the world. Manufacturing hardware overseas can be time-consuming for that reason.
Executives that Don't Understand
When you manufacture hardware products overseas, it's just like starting another company. You need to make sure that your executives understand the local culture and the country. Unfortunately, most companies making an international move tend to install someone from the west, which is a huge mistake.
You Have Better Prospects in the West
Hardware is all about quality. A lack of quality could cause someone to lose a hand. This is one area you must never compromise on. In such a tight market where loans to get started aren't exactly in abundance, you cannot afford to make mistakes.
The west may come with higher costs at first glance, but in the long-term you are going to make more money than you would by dealing with the hassle of transplanting everything overseas.
Consider these major mistakes and whether you want the hassle of expanding internationally. You may just find that you gain more by staying right at home.