Chirch Global® Manufacturing, LLC (www.ChirchMfg.com) makes metal stampings and sheet metal fabrications in Illinois, and like many manufacturers across the United States, they are continually fighting against low labor rates from other countries. After trying a variety of strategies to maintain their cost competitiveness in the metal fabrication industry, they found that investing in automated sheet metal fabrication equipment was the key to fighting low labor rates, by eliminating labor rates all together.
Many manufacturers have asked their customers to look at the total opportunity cost of manufacturing overseas, with hopes that seeing the big picture would keep more work here domestically. Over the past four years, labor rates in China have risen 20%, so there is a strong case to show that manufacturing is making its way back to the United States. However, when it comes down to the purchasing decisions, low cost seems to often prevail.
As history often repeats itself, where wage rates rise, they also fall in other countries. A recent study has shown just last week that labor rates in Mexico are now 20% lower than in China. Waiting for wage rates to lower to level the playing field will likely never happen, and it was only by eliminating the wage rate all together that Chirch Global Manufacturing found they could be most competitive against competition.
“We already have an advantage to compete domestically as we have increased responsiveness and very short lead times. By eliminating labor from the equation, there’s really not a cost advantage for shipping parts overseas,” says Jeremy Hahn of Chirch Global Manufacturing."By investing in automation, Chirch Global Manufacturing can now compete against anyone, anywhere in the world, by operating lights out for many fabrication projects. After a job is setup, it can run unattended at night, automatically loading material and unloading finished parts (see the video of the automated sheet metal fabrication equipment). By not physically needing an employee to run these parts, they have eliminated the labor cost across most of a production run.
Regardless of where labor rates are going, automation and ingenuity will always help to keep work here in the United States. Regardless if your company manufactures metal stampings, sheet metal fabrications, or really any type of manufactured good, keeping ahead with technology will always be the key to sustainability.
