How and Why Your Startup Should Consider Onshore Manufacturing

It has become cool to build things again. Products like the Pebble watch, MakerBot, and the Nest Thermostat have captured the imagination of the consumer world. New platforms like Arduino and Raspberry Pi make it easier than ever to prototype a hardware idea, and more companies are trying to manufacture those ideas stateside.

Tesla Motors, one of the most provocative companies in the world right now, is a marquee example. One of the most striking features of the company is their vertical integration; its Fremont, California, manufacturing facility houses the production team as well as the engineers and designers. While very common in traditional manufacturing, that practice had become unusual since the late 1970s, when the offshoring movement began to place the designers and the producers of any given widget further (and farther) apart, both geographically and culturally. It has become increasingly common to “design it here, build it there.”

Yet, since the Great Recession, perceptions around manufacturing have shifted significantly and today more and more of it is being reshored nationwide. All of the advancements and interest have produced a nasty side effect, however: Many entrepreneurs without previous manufacturing experience make huge assumptions about the process and its many complexities. From the outside, it seems pretty easy — Wal-Mart and Best Buy are teeming with plastic toys, consum-er electronics, and devices for just about anything. Entrepreneurs can be pretty surprised to learn the vast differences between shipping code and shipping a physical good.

So, how can a hardware startup benefit from the resurgence in American manufacturing? When my co-founders and I started Beam Technologies (makers of a connected toothbrush) in early 2012, we had never developed and mass manufactured anything before. We made tons of mistakes, and learned a lot about the process. Perhaps most importantly, we realized that we could learn from Tesla — we too could use vertical integration to our advantage, even with a product far less complex than a car. We decided to bring our entire supply chain within a day’s drive of our office, which came with some distinct benefits, both to us and to the suppliers, such as:

• In-House Quality Control. Instead of waiting on a shipment to come in from thousands of miles away, our own employees can do quality control in real time. Entrepreneurs can learn directly from industry experts on how adjustments — many of them very low cost — can vastly improve the consistency and quality of the parts coming off the line. Being able to physically meet and compare drawings and prototypes allowed us to resolve simple fitting issues that plagued the first toothbrush.
• Speed to Market. Any startup is going to have an irregular and awkward early growth. Changes to parts, molds, and packaging will inevitably need to be made. Having suppliers in the same time zone who can react to your needs quickly can be the difference between a smart pivot to grow faster and a failed business.
• Build Better Relationships. In-person meetings with manufacturers lead to familiarity with, and excitement for, your products. It leads to a congratulatory dinner when the commercial parts roll off the line. And when things go wrong on either end, mutual respect is much more likely to survive. It may also lead to lower upfront costs, delayed payments, payment plans, or other mechanisms to make the financing issues easier. It gives manufacturers a reason to work with you instead of dedicating machine time to a more established player.

Even naïve startups can learn how to build things more efficiently from experienced manufacturing and tooling experts. If the developers and the producers of a product are interacting directly, all of the advantages of quality, communication, and speed should ultimately lead to a better product for your company, and for your customers.