A sweat shop in China where clothing is manufactured.

Offshore Manufacturing

A sweat shop in China where clothing is manufactured.

Offshore manufacturing is a very common business practice that refers to moving one business function from a certain location to another in a different part of the world.

What Is Offshore Manufacturing?

Offshore manufacturing is a way of producing and manufacturing items in a cheaper location. Offshore manufacturing often closes down local places of work and manufacturing in North America and Europe. This is usually done because labor can be sourced cheaper in another country. Offshore manufacturing is often a profitable way for a company to produce items by minimizing costs including labor. Offshore manufacturing can allow for inexpensive labor and parts by sourcing out and comparing prices abroad. Taxes, distribution and shipping are all other important finance and logistics considerations to determine if a company will use offshore manufacturing. Building proper working relationships with those overseas are very important so that companies can feel secure in their transactions.

What Industries Use Offshore Manufacturing?

Many different industries use offshore manufacturing as a way of cutting labor costs and other expenses. Most companies will do this to increase profits and decrease costs associated with running a business whenever possible. Common areas of business that are moved to other parts of the world include manufacturing. This can be because materials are cheaper, more accessible or that labor is less expensive because of the current living conditions in that area of the world. Offshore manufacturing can be part of the development cycle of any product. It is extremely common to purchase items that were manufactured overseas without even realizing it. Often parts of the product may have been sourced from other global manufacturers. Common products that are manufactured offshore include car parts, electronics, furniture and more.

Benefits

Offshore manufacturing can allow companies to remain competitive in an ever-changing market. It can help to keep labor costs down and other expenses. It can also allow for different materials to be sourced easily. Offshore manufacturing is a way for companies to mass produce products in a less expensive way.