Fabrication Information

The Long Term Pitfalls of Overseas Fabrication

Posted on November 25, 2016

the-long-term-pitfalls-of-overseas-fabrication3

 

Modular fabrication is a benefit to projects that require cost-effective, quality fabrication and a team that builds your projects various elements to spec, designed to be installed in as little time as possible by disrupting your work site less.

Despite multiple cost savings, a reduction in scheduling inconsistencies, added safety benefits and fewer on-site billable hours, modular fabrication from Canadian owned fabrication companies continues to compete with the inferior products offered by many overseas manufacturers. This is due to the implied savings developers and stakeholders perceive to be of value to their project.

However, there are many long term pitfalls to an overseas approach to fabrication. We’ll investigate some of the main concerns that often come with choosing an overseas fabricator:

 

What Makes Off Shore Fabrication Attractive?

For decades, manufacturers have sought to increase profitability and reduce overhead costs by transferring the production of industrial and metal fabrication overseas. Typically, Asian nations like China, Korea, Taiwan and Malaysia have made overseas production look attractive to domestic builders and developers because of their ability to produce high volumes of materials and ship them back to project site at a lower price than fabricating domestically.

Most of these companies who use overseas production back up their decisions based on numbers. When done correctly, overseas metal fabrication can work best when legwork is done first – simply put, people who do their homework and visit the places responsible for the manufacturing tend to come out with a better understanding of the process and intense business controls it takes to manage a complex overseas fabrication operation.

 

The Hidden Costs

As the numbers begin to roll in once the fabrication is complete, this is where overseas fabrication begins to take its toll on Western developers and businesses.

Transportation is a massive industry that arguably represents the bulk of the overseas debate. This can be done by sea, or by air, and is usually dictated by the projects lead time schedule. When using ocean freight, expect your delivery times to be hugely extended – and up to the will of Mother Nature firstly and then secondly customs clearance – inevitably drawing out project schedules, making them inconsistent, and speculative at best.

Further, if you have no overseas management team in place, your materials may arrive on-site and not be built to North America’s rigorous quality and safety standards. Due to a lack of visibility, the pieces could also not be built exactly to spec, meaning you’ll be employing the services of a domestic fabricator to correct the mistakes made during production by your discount fabricator. In addition, an overseas operation can, of course, be quality-controlled by a qualified technician hired by the company, at an additional cost.

There’s also the additional overhead cost of maintaining and employing that overseas manufacturing management team and partner, and do not discount the costs of training new foreign workers to meet welding codes and standards if quality is an issue.

 

Issues with Quality

Different industries like oil/gas, mining and chemical developments, require high-grade materials and skilled labourers and welders to accommodate the high level of quality work associated with such high risk projects.

This can present a problem for a company choosing to manufacture its projects various fabrication requirements in less-industrialized regions with a lack of state-of-the-art equipment and applicable training. As a result, many of the products coming from overseas do not stack up in terms of overall material and build quality. These products in turn, can create issues for the business, who can be held liable for any damage in case of product failure.

The only way to ensure your company has full control over the quality of its fabricated products is to work directly with a local or national fabricator, either in a modular capacity, or on-site. This guarantees that you’re involved in the fabrication process, have an open and transparent relationship with your fabrication team, and receive a top-quality piece of equipment that meets your project specific demands.

 

No Longer a Secret

The quality issues and discrepancies between Canadian fabrication build expectations and their international counterparts is no longer a secret. In fact, a number of countries are under a direct investigation launched by the Canadian Federal government in 2016.

In September of 2016, the Canadian Border Services Agency (CBSA) initiated an investigation into alleged injurious dumping of “certain fabricated steel components originating in or exporting from the People’s Republic of China (China), the Republic of Korea, the Kingdom of Spain, the United Arab Emirates and the United Kingdom of Great Britain and Northern Ireland, and the alleged injurious subsidizing of fabricated industrial steel components from China.”

The CBSA’s analysis of the initial complaint, which was submitted by a Quebec fabrication company, as well as two Albertan companies, were initiated pursuant to section 31(1) of the Special Import Measures Act – which states “dumping or subsidizing has caused injury or retardation or is threatening to cause injury,” to the domestic industry.

In closing, the Federal Government of Canada is already investigating possible discrepancies and issues with the quality and dealings of foreign overseas metal fabrication imports, products which may “cause injury to the Canadian industry.”

The Canadian International Trade Tribunal is presently conducting a preliminary inquiry into the question of injury to the Canadian fabrication industry, and as of September 12th, gave 60 days’ notice of its decision. Like many other domestic fabricators who value quality, transparency and efficiency, we eagerly and respectfully await the response of the Tribunal.

You can learn more about this on CBSA’s website directly by visiting: 

http://www.cbsa-asfc.gc.ca/sima-lmsi/i-e/fisc2016/fisc2016-ni-eng.html