"It is a necessity, but it must be done wisely. I have seen a number of companies offshore much of their manufacturing requirements, but end up greatly weakening their product development capabilities. When you no longer buy many components through distribution, the technical support routinely delivered by those companies dries up. The engineering department loses valuable resources. New technologies come along and the company no longer has the ability in-house to pursue and develop them. No one can, or wants to design or build the prototypes, or suggest the best new components or methods, or assist in anyway. (There's nothing in it for them."
So, offshoring usually leads to lower production costs in the short term, but done wrong, it also leads to reduced competitiveness (and even viability) in the long term.
A successful formula used by some companies is to offshore production when it becomes mature production, and keep leading edge production here until it becomes mature (and you are working on the next).That way, your engineering and product developments stay healthy and adequately supported by the leading manufacturers and distributors.
So we can stop panicking...
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