How do you actually figure out the true cost of manufacturing overseas versus manufacturing locally?
In my industry a lot of people have their products manufactured outside of the country (mainly China) as there is a cost benefit once you go beyond a certain number of units. Printed circuit boards, electronic assembly and plastics can all be done outside locally or elsewhere, but how do you evaluate the true cost of moving your manufacturing overseas?
Right now I am having a large quantity of PCBs manufactured, and will do larger runs later this year. My local manufacturer (who also import boards if desired) says that you save about 1/3 of the price by having the boards made in China. In this particular case that is around R3/board. That obviously adds up when you start to make 5000 units, but is is really worth it?
Money exits the economy, and there are many different impacts of that. Our current trade deficit seems to ensure that our currency is volatile, especially in times of global turmoil. We also negatively impact on local jobs by sending the work elsewhere. Local companies have to be competitive, but where is the break even? Are we even able to measure the impact of these transactions?
My preference is to manufacture locally, as I think that is a more prudent move in the current global economy.
What do you guys think? How do we measure this? Is there a way to calculate a true comparative price?