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Hello.
This debate is being waged because shipping costs, labor, and other costs when manufacturing in countries like China, are sky-rocketing. And then to top it off, as world conflicts heighten or continue, the probability is steadily increasing that U.S. Customs and Border Protection, a Dept. of Homeland Security, will increase product duty, lengthen approval processing time and/or deny entry of more imported goods.
Problems that businesses are experiencing from overseas production beside those previously mentioned are 1) having to carry excess inventory they may not be able to sell; 2) paying to store and maintain that excess inventory; 3) not having the right mix and/or volume of inventory necessary to satisfy customer demand in a timely fashion; 4) lack of cost control due to oil prices and other `runaway` or uncontrollable factors that rapidly consume what little profit and deliverability they have remaining; 5) competing against domestic companies who are more than willing to scoop up those businesses` customers; etc. There seems to be no one who has enough of a handle on this situation to advise businesses on how they can remain profitable under these circumstances (`as is`).
So far, many businesses who manufacture overseas have responded by passing a portion of their increased costs down to the consumer. But in many cases, depending on the product, the consumer is no longer willing to accept the revised pricing nor `rain checks` and are either going without or are seeking `Made in America` sources again. Those businesses who are producing those same goods, or versions thereof, in the States are becoming more attractive and are putting their plans together to be in a position to ramp-up production (increase their capacity) and enjoy the ride when the time comes.
~~~~~~~~~~~ QUESTIONS: ~~~~~~~~~~~~
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I. Should businesses, whether large or small, worry about creating a `Plan B` OR do you think those businesses will try to `ride it out` thinking that the oil prices will stabilize and Customs will add more resources to keep products flowing into the States at an acceptable pace even in the event of a security concern OR just not change course because they have too much invested in overseas production and not enough infrastructure and resources to manufacture in the States?
II. What if there is another security concern - do you believe Customs will continue `business as usual` e.g. maintain status quo on the percentage of containers inspected, etc.? What would those businesses do about cash flow if their product is not sold because they had not arrived on-time after Customs? They would still be obligated to pay on-time for raw materials, manufacturing, shipping, their own staff, et al. even if their customer cancels their order because of delays at the border. In some cases, expediting shipments from those distances or uncontrolled costs could produce negative profits.
III. What could `Plan B` be so that those businesses survive in the long run?
IV. Should new and prospective entrepreneurs build their business around overseas production similar to the successful ones of the past?
V. Are the glory days of overseas manufacturing becoming `a thing of the past?`
VI. Is nearshoring becoming more attractive? Is it really practical for U.S. companies?~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Also, read the article, Web - Common Misconception #1: "Build a website; they will come..."
See you again, soon!
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Also, check out these threads:
Intro Thread#1 Thread#2 Thread#3
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