Reshoring to the U.S.: Reactive or Strategic?—A Medtech Makers Q&A

By Sean Fenske, Editor-in-Chief

Going back to the pandemic, a spotlight was put on just how fragile some companies’ supply chains were. Those managing extended sourcing strategies that wrapped around the globe struggled to receive critical components and had manufacturing slowed or even halted. Meanwhile, organizations that maintained close relationships with more localized supply partners faced much fewer challenges.

In recent years, there have been a number of concerns that have further highlighted the fears from long supply chains. Due to everything from logistics issues to natural disasters, medical device manufacturers are taking a long, hard look at their suppliers, where they produce components, the total cost, and the related benefits.

To add the perspective of a U.S.-based manufacturer to the discussion, John Faulkner, President of BMP Medical, responded to several questions in the following Q&A. In this interview, he speaks to why U.S. manufacturing may be an attractive alternative to companies, the drivers of the decision, and what some of the most important factors to consider are.

Sean Fenske: What’s driving interest among medical device manufacturers to reshore to the U.S.?

John Faulkner: I think the number one thing that drives companies to reshore back to the U.S. is a complicated equation comprised of many different variables. However, one of the primary factors included in this decision is tariffs. Tariffs can substantially affect a company’s margins and force OEMs to consider moving away from offshore vendors to seek domestic solutions in the U.S.

Another significant contributing factor is quality and control. Medical device OEMs want to be able to easily visit the facility where their components or products are being developed, produced, packaged, and/or sterilized. They want to have the opportunity to see their products on the production line, running through the different manufacturing steps, and ensuring they are in control through close communication and collaboration with the partner.

With a company like BMP Medical, we may be the first in a lengthy supply chain. As such, maintaining an “open door” policy with our customers provides the ability to communicate and enable collaboration with them. This type of relationship gives them peace of mind, knowing they are going to get a quality part when it leaves our facility.

Fenske: What advantages can be realized from moving manufacturing to the U.S.?

Faulkner: It really goes back to what I said about that opportunity to communicate and collaborate more easily. When you work with a partner halfway around the world, not only can logistics and shipping become a challenge, as we’ve seen in recent years, but you’re also dealing with time changes, language barriers, and other potential obstacles. Establishing a relationship with a supplier that’s only one state over or perhaps even several miles away makes a remarkable difference when it comes to that relationship. Having the opportunity to “pop over” for an afternoon or bring them in early on a new, potential project is a tremendous asset that isn’t always realized with a supply partner that’s not as geographically close to you.

Fenske: What are the primary challenges involved with manufacturing in the U.S.?

Faulkner: Pricing is really the beginning and the end of the answer to that question. You have to realize that these companies moved production away from the U.S. years ago. As a result, when they feel they don’t have another option and must reshore manufacturing to the U.S., the lost margin is significant. While they may enjoy a better level of quality and maintain more control over their local supply chain, as I spoke to earlier, their margin may look substantially different than it had previously. This can be a tough pill for some companies to swallow.

Fenske: In your opinion, is reshoring manufacturing to the U.S. a short-term solution to current factors or is it a strong, long-term strategy that will continue to offer benefits?

Faulkner: Obviously, no one can predict the future. I think ultimately, the answer to that question will vary for each company on a case-by-case basis. However, I will share my own experience relevant to this question. BMP Medical has been in business for close to 50 years and has weathered the storm over this period. At the conception of our company, most manufacturing was still performed here in the U.S. Over the years, while that dynamic transformed and saw more manufacturing moving overseas, we continued to grow. We know there will always be medical device manufacturers seeking the highest quality standards and a partner they can easily visit via a short flight or drive. Those are the companies with whom we want to work.

Fenske: How might medical device manufacturers address current headwinds instead of reshoring?

Faulkner: Leveraging secondary manufacturing sites in sanctioned nations is an approach we have taken. We partnered with another company and helped them obtain their ISO certification. Currently, they manufacture one product line for us to help mitigate costs that would otherwise land on our customers.

Fenske: As companies consider reshoring, what are the common omissions? What do they most often neglect to consider in a reshoring move?

Faulkner: That is a tough question since I am on the side of trying to get them to bring their project back to the U.S to our facility. However, each company should determine what the most important factors are for them, how costs will be impacted by each of those aspects, and compare the main differences between manufacturing abroad versus in the U.S. They need to keep in mind logistics challenges, scaling production, delivery times, and a variety of other variables. Again, this is going to be different for each company evaluating this decision.

Fenske: Do you have any additional comments you’d like to share based on any of the topics we discussed or something you’d like to tell medical device manufacturers?

Faulkner: I think companies like BMP Medical are in a tough position as U.S.-based manufacturers. The work BMP Medical performs daily holds up against any of the largest manufacturers in the medtech space. We can handle smaller, low-volume projects through to endeavors with pieces in the hundreds of millions. However, we’re located in a state that drives medical innovation but doesn’t always understand what it takes to fabricate the products it is incentivizing. High taxes and minimum wage, along with a host of other factors, drive up overhead costs and can take a supplier from being competitive to being sent off the list.

As a result, we have to be innovative in our offering to customers. We pride ourselves on the efficiencies we create on a daily basis to continue to remain competitive while delivering the highest quality standards. We strive to keep BMP Medical known as a supplier that will always welcome a challenge and open its doors to the next customer.

Click here to learn more about BMP Medical >>>>>