their customers’ business needs are well equipped to prove the cost effectiveness of sourcing domes- tically vs. offshore. During cost negotiations, it is worth reminding the end user they should factor into their TCO analysis not just the current price of a component, but how its cost over the course of its life may change. As a default, Moser
recommends calculating the cost over a five-year period, but that can be adjusted part-by-part. Factors to consider in multiple year projec- tions include wage increases and currency appreciation compared to the dollar. For a general part with moder- ate labor content, the U.S. base unit price might be $100 compared to a
Chinese base unit price of $70 in year one, but by year five, Moser estimates U.S. TCO to settle around $110, while the Chinese TCO reaches more than $120 (Fig. 1). Hubbardton Forge hopes to have identified a domestic die casting source in time to produce parts for its 2013 product cycle. But Wiegers said not all components—diecast or otherwise—will be taken away from its overseas suppliers. “Every part is different. In some
cases [reshoring] might not make sense,” he said. Evaluating TCO for parts on a
case-by-case basis can be cumbersome, but after a few estimations, a company may start to notice trends in pricing based on part type. “We introduce 500 total parts (not
just castings) a year,” Wiegers said. “It might not be reasonable to plug every single part into the calculator, so it’s good to develop some guidelines.” For Hubbardton Forge, prime can-
didates for reshoring include higher valued and heavier parts. Parts that are highly visible in the final assembly also are considered for reshoring. “When parts are larger, they take
up more warehouse space. Freight costs more,” Wiegers said. “And consumers have perceived value in the parts of the fixtures they can see. Tey like to know when they are made in the U.S.” Rather than investing in new
tooling for existing die castings now produced overseas, Hubbardton Forge is focused on calculating the total cost of ownership for the 25-30 new castings added each year and securing a domestic supplier willing and able to produce its low volumes. “I feel like we are really close. I’m
hopeful,” Wiegers said. “We see there are certain advantages to having our parts made closer.”
ONLINE RESOURCE
Show customers the free total cost of ownership estimator at
www.reshorenow.org.
42 | MODERN CASTING November 2012
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