Charles Carter discusses how LVS Small Plastic Parts have successfully secured so much reshored injection moulding work in the last two years.
Many UK companies that currently import components into the UK believe that they should be looking at a reshoring programme. The right incentives are definitely there at the moment, so what is stopping the majority of projects coming to fruition?
Telford based LVS know what it takes to secure technical injection moulded work that was previously carried out in Europe or lower-cost economies. Since focussing their resources on acquiring this form of new business, over 100 tools have so far been transferred to their facility.
We asked Charles Carter, the company’s Business Development Manager, to answer three key questions and then provide a real-world example in the form of a recent and successful project:
- What are the main incentives for UK companies to re-shore their supply chain in 2019?
- Why does he believe that most UK manufacturers have struggled to win new business via reshoring?
- How has LVS successfully secured so much new reshored business?
In response to the first question, Charles commented:
“Whether importing plastic products from Europe or the Far East, the prospect of trade restrictions and import duties resulting from a ‘hard’ Brexit has been a major influence. A weaker Pound has also been a contributor, but in our own experience, logistical issues have been the major factor.”
As for the main reasons for reshoring project failure?
“There are usually one or more significant hurdles to overcome. In our particular case, we can easily demonstrate equal or superior technical competence. The challenge is in demonstrating to a potential customer the many real benefits that reshoring can bring, despite the initial pain of the transition period.”
“All too often, projects fail because of a lack of real understanding of the true cost of importing a product, coupled with the current supplier offering a last-minute price reduction! It then only takes a relatively minor concern, for example, a contractual issue or possible disruption to the supply chain to completely ‘write off’ the project.”
“In the case of re-shoring work from the Far East, the most common issue we see relates to ownership of the tooling. Chinese companies, in particular, are keen to help design products and manufacture the required tooling. The downside is that you don’t own either the tools or the drawings to manufacture replacements!”
So how has LVS managed such a high conversion rate?
“We now know that we have to make sure a client fully understands the real cost of importing an item, rather than only looking at a basic ‘piece price’. We then need to swing the scales even further by actively managing the project, rather than making this potentially daunting task the responsibility of our customer.”
“In the case of products currently manufactured in the Far East using tools provided by the moulder, we have facilities that allow us to reverse engineer an existing product and the ‘skill sets’ to enhance an existing design.”
“We can then organise the manufacture of new and superior tooling, before running the tools in highly automated Mould shop, housing 36 injection moulding machines with a clamp force of 22- 800T. Our customer gets a high quality, UK manufactured product with minimal labour content and lead-time!”
And finally, a real-life example of a difficult but successful reshoring project:
“There is an ongoing LVS project involving a German customer that supplies automotive interior components to JLR. They have a UK subsidiary that has historically importing plastic parts from Germany.”
“When the final product is being produced in the UK, it makes perfect sense to manufacture as many constituent components within the same geographical area. We were consequently asked to look at moving eight existing tools to our facility in Telford.”
“We initially worked with them to establish the true costs associated with their existing supply chain by factoring in costs associated with transportation and storage.”
- High fuel usage/costs and the associated environmental impact.
- Requirement to ship full loads to minimise these costs, which in turn leads to higher stocking levels and greater susceptibility to quality issues.
- The need to ship in cardboard due to the volumes involved and logistical issues of working with RTP.
The project ‘had legs’, but there were some difficulties to overcome!
“The existing supplier obviously wasn’t thrilled at the prospect of losing this work, so we had to work closely with our customer to make sure there were no contractual infringements. We also inspected the tooling in-situ to make sure we had the correct production equipment in place and advanced knowledge of any remedial work required.”
“In order to ensure a smooth transition and no interruption to supply, we coordinated our efforts with JLR. Tools were transported and ‘run out rate’ trials conducted during their two-week shutdown period.”
“During this time, JLR’s own quality department worked closely with our sister company, LVS Quality Measurement Services. Having recently gained IATF 16949 accreditation has definitely given us the confidence to undertake this time-sensitive and demanding project.”
A lot of dedication and manhours obviously went into this project, so do the rewards justify the journey?
“The transfer of the first eight tools was highly successful and soon led to additional work being offered to us. We have a third ‘wave’ of tools in the pipeline and are already shipping ‘product’ two or three times a week in RTP. This is in line with our customers ‘just in time philosophy’, something that wasn’t previously possible.”
If you have a re-shoring project that you would like to discuss, contact Charles Carter on 01952 290666 or email@example.com.