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Outsource-welding is generally considered a profitable alternative.

It may be useful for meeting temporary requirements of surge in demand.

Or for enjoying the benefits of some specialized new technology.

That, even before acquiring the expertise and the equipment to perform it.

It may be a route to think of for regaining competitiveness.

In all cases there are clear trade offs that should be thoroughly examined.

There are however barriers to outsource welding production.

Therefore the implementation of such a policy should be regarded as a complex project requiring well understood tools and resources.

Among the hurdles are:

  • feared loss of intellectual property,
  • giving up gain of additional know how,
  • possible migration of production expertise,
  • building of potential competitors.

Another way for reducing costs and improving competitiveness involves focusing on innovation and exploring automation and robotics.

By selecting this option one can find more cost-effective and profitable alternatives.

Cost savings can be achieved while improving quality and control, if the transition is mastered correctly.

However, to succeed, automation and robotics must be based on strong in house welding engineering and expertise.

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Outsource-welding for
filling Orders when Overloaded

Outsource-welding is probably best applied when it can be implemented selectively and gradually.

Especially for processes that require extensive manual labor provided that the quality needed is assured.

However this is not the case:

  • for automated processes,
  • for items needing final finishing steps and
  • for heavy constructions where labor savings cannot compete with logistic expenses and transport penalty.

Before undertaking Outsource-welding activities one should study another possible alternative.

For filling temporary additional welding equipment requirements, maybe leasing or renting such means could be an option, without the need to finance the cost of purchasing them.

Maintenance would become less of a problem, in that the leased equipment should be operational for the period of lease.

A company's decision to own or rent equipment would become a cost analysis problem.

New features or capabilities may then become available in new versions of the same machines when the time comes to invest in improved facilities.

Even if willing to grow by hiring additional welders, suitable workforce of needed skills and expertise may be not easily found, at least at shortage times like these.

When outsourcing, welding becomes a fixed cost, provided in time delivery, quality and price are assured and maintained as agreed beforehand.

Otherwise the promise may become a liability.

Outsource-welding can be proposed to relatively near production facilities.

Or it may involve complete industrial migration overseas, more complex economically and much more emotionally charged.

In this last case different business cultures of suppliers and customers, lack of resources to study the market, too high expectations for cost reduction may undermine the economic success hoped for.

The press reports cases where overseas outsourced production, was finally called back home, because of dissatisfaction with the results.

As with many other decisions having an impact on the bottom line, Outsource-welding options should be studied thoroughly and implemented gradually for maximizing potential benefits while limiting negative results.

An Article introducing Contract Welding and Resources on the same subject was published (8) in Issue 145 of Practical Welding Letter for September 2015.
Click on PWL#145.

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