When the executives at Master Lock Co. evaluated manufacturing they had outsourced to China, they came to a conclusion that would have surprised many people: It was better to make some of those products back home in Milwaukee.
Even with lower labor costs in Asia and Mexico, Master Lock and other companies have found that outsourcing isn't always the best solution and, in some cases, it's laden with problems and disappointments.
"We have been looking at pulling work back for about the past three or four years," said Master Lock spokeswoman Rebecca Smith.
The Milwaukee-based lock manufacturer, which has shifted production from here to places such as Mexico and China, still stands by its decision to outsource some products. But the common business practice is no longer considered a panacea for U.S. manufacturers trying to lower costs.
That's clear from a new business survey from Milwaukee-based American Society for Quality, which polled more than 300 companies to find what they liked and didn't like about outsourcing.
The survey, done in October, found that 55% of the companies were "substantially dissatisfied" with their outsource provider in the areas of innovation and making process improvements. Only 34% said outsourcing provided a good value.
Fewer than half of the companies, 41%, said outsourcing met their performance metrics.
While outsourcing can be a quick fix to lower costs, in the long run it can backfire - sometimes badly.
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