Nearshoring is becoming an important initiative for global manufacturing companies that haven’t already established a strong North American supply base. It’s making more sense to “make where you sell and buy where you make” given ongoing freight challenges and shifting economics (mainly labor costs and exchange rates) that have made sourcing to Asia a less compelling business case for U.S and Canadian manufacturers. The question is, are there capable suppliers with capacity for the commodities you source in the North American region?
We recently completed a comprehensive sourcing project to identify suppliers for machined parts, addressing the specific needs for automotive, aerospace, and electrical applications. Our client was seeking established, financially stable suppliers with open capacity that are willing to share cost details. Our search focused mainly in Mexico with a secondary focus on U.S. suppliers.
Three different industry sectors for machined parts were targeted, each with application-specific details include:
- Manufacturing capabilities (VMC vs. Swiss machining vs. grinding)
- Additional technologies (heat treating vs. plating)
- Open capacity (low volume/high complexity vs high volume/low complexity)
- Quality systems (IATF vs. ISO)
- Prior industry experience (automotive vs. aerospace vs. electrical)
- Materials (steel vs. copper vs. aluminum)
- Location (near client’s manufacturing facilities)
The APD project team identified 35+ suppliers that appear to meet the needs for at least one industry sector. After getting client feedback, 23 Mexico-based suppliers and 8 U.S.-based suppliers were interviewed by APD consultants (in Spanish or English depending on supplier location). We were pleased to find that most suppliers we interviewed fulfilled the requirements for at least one industry sector and had the relevant open capacity. The number of suppliers in each region that met the required attributes were:
- Automotive (high volume, low complexity): 11 Mexico and 2 U.S.
- Automotive (low volume, high complexity): 5 Mexico and 2 U.S.
- Aerospace: 6 Mexico and 2 U.S.
- Electrical: 6 Mexico and 3 U.S.
These findings are consistent with other recent sourcing projects. In the past 6 months, APD has identified suppliers meeting client-specific needs – including available capacity – for over a dozen commodities, including:
- Aluminum castings and extrusions
- Aluminum coils
- Copper tubes
- EPDM/rubber seals
- Injection moldings
- Stainless steel tanks
Watch our on-demand webinar “Finding Suppliers in Mexico”, where we describe our proven approach for identifying capable, willing suppliers that have the capacity to meet your needs: