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Have you checked your imported component costs?

Supplier: Anchorage Group
02 February, 2015

Does the downward trend of the Aussie dollar mean it's more cost-effective long term to obtain pressed metal parts and components in Australia than from offshore manufacturers?

From its high of 110 cents to the US dollar in July 2011 down to recent lows of 78 cents to US Dollar, the little Aussie battler has seen a 30 per cent increase in costs in round terms for importers.

Australian metal stamping and pressing specialist Swift Metal Services, advises local manufacturers to explore all avenues in Australia before placing their next order for products or parts offshore.

Complete cost cycle

The staff at Swift Metal Services has received feedback from existing clients who use both locally and imported componentry, that nasty surprises await those who simply place repeat orders overseas without double-checking what the currency devaluations entail.

The fact is that short to medium runs of metal components, pressed steel parts and stamped componentry can be produced on automated machinery in Australia for similar net costs, with greater accuracy, consistent quality and vastly shorter lead times than some imported components.

Australian and New Zealand manufacturers need to consider the complete cost cycle when using imported parts.

In addition to the exchange rate fluctuations, costs that may not be obvious include: international payment charges, freight including road freight from wharf to customer, import duties, customs clearance charges, additional warehousing expenses and increased inventory required to ensure imported parts on inevitable long lead times don't adversely impact production.

Faulty imported parts

In addition to the escalating import costs there is the dilemma that often occurs if the parts or metal components arrive faulty or out of specification.

Experienced metal pressing and stamping companies like Swift are aware of many companies that have trialled importing components from countries with lower labour costs than Australia and have had the inevitable batch of faulty parts – typically after two or three shipments of good components.

Established Australian manufacturers provide a three-way guarantee called DIFOTIS, or Delivered In Full On Time In Specification.

According to Swift spokesman Greg Haak, the secret to producing quality Australia components includes is "using qualified trades personnel, LEAN manufacturing techniques combined with on-going training and investment in technologically advanced machinery".

To read more about component costs please click here.

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