TRAVERSE CITY, Mich. -- Outsourcing parts production isn't the cost-cutting panacea some thought it would be, and some companies are bringing work back in-house, a supplier executive said.
In fact, farming out production of one part ended up costing Cooper Standard Automotive Inc. more than making it itself, said Edward Hasler, president of the suppliers global sealing systems.
Novi-based Cooper Standard produces weather seals, noise and vibration seals and fluid-handling parts. In one instance, the company decided to buy a plastic part from an injection molder in Mexico.
But the subsupplier shipped 12,000 defective parts to Cooper Standard, and Hasler had to fly engineers to Mexico to fix the problem.
"If I go another four years, I'll never recover the money I spent on the outsourcing," he said.
One problem with outsourcing parts, Hasler said, is that a company can't control the quality. But the automaker holds Cooper Standard responsible for the entire system.
"So I end up troubleshooting on the fly," he said.
Hasler said companies still can save by outsourcing other corporate functions such as marketing and legal. But his experience in farming more work to tier-two suppliers hasnt been good.
"You still have to do the design and the testing, and unless (the tier two) has a better way of doing that, it doesnt create a better end product," Hasler said. "Most of them are just low-cost. They have no quality department, no engineering department, so youre stepping in and doing it."