In a recent address before Congress, President Obama reiterated a promise from his campaign that the government would go after more tax dollars from U.S. companies doing business overseas, with the goal of raising an additional $210 billion over 10 years. One would assume also that an incentive would be to keep–or rather, begin again–more jobs at home.
How that would all work remains uncertain. At first glance, Mr. Obama’s vow might evoke populist cheers of “’bout time!,” but the impact of trying to rein in U.S. manufacturers using overseas resources as part of their business plans is more complex than what is seen and felt most immediately in a weak economy–the loss of U.S.-based jobs due to often less expensive overseas labor and the overall cost of doing business.
An alternative to using tax penalties might be exhorting more companies to weigh the high cost of losing timely, efficient, quality customer service to sometimes cumbersome, much-delayed third-party solutions in other parts of the world.
One need look no further than high-rel connector maker Harwin, which has U.S. facilities in Salem, NH, and has recently determined that for its Portsmouth, U.K. headquarters, it is more cost-effective–and also a competitive advantage in a fledgling worldwide economy–to keep services typically subcontracted overseas in the mother country. The connector manufacturer announced in late February that it will now offer stamping, plating, molding, and turning capabilities at its Portsmouth facility, thereby retaining all key connector manufacturing processes in-house.
The advantages, say newly appointed subcontracting sales manager Mick Osborne, include “that we can offer very short lead times, and be very flexible and responsive to our customers’ needs.” In an interview with U.K. subcontractor publication Engineering Capacity, Osborne added, “To compete with Chinese and Eastern European producers, we must have the latest production equipment–and a highly skilled and flexible workforce. That combination of capabilities is also very attractive to other companies who are looking to outsource, but who don’t want to risk incurring hidden supply chain costs that are often experienced when working with a manufacturing partner on the other side of the world.”
Meanwhile, the current and January issues of Connector Specifier include stories mulling where connectivity manufacturers might be focusing their resources and markets in a worldwide recession. While, not surprisingly, there seems to be a lot of cards being held close to the vest for the time-being, some likely targets in the months ahead include hybrid automobiles and their aftermarket needs, industrial automation, and military–especially increasingly sophisticated communications systems.
Indeed, narrowing product focus in tough economic times is an essential course of action for maintaining hopes of profitability, if not survival. At the same time, however, one of the best profitability weapons may be the one being used by Harwin. And it’s not that the U.K.’s economic climate is any more favorable than that of the U.S. Instead, it would appear that Harwin is willing to take a risk and has simply determined that the road to maintaining health during a recession is to adopt the old saying, “if you want a job done right, do it yourself.”
Easier said than done, of course. But in times like these, maybe it’s not so much why your mousetrap is more “robust” than the other guy’s, but being able to say with confidence you know exactly where the parts to that mousetrap came from, what they’re made of, who will back it up, and then delivering it all in a timely, cost-effective fashion.
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Patrick McLaughlin
Chief Editor
Patrick@pennwell.com
