Product Genius, the Podcast for Inventors, Entrepreneurs, and Startups

Want to Manufacture in the USA? You May Not Have to Start There

For inventor entrepreneurs, “Made in the USA” can be an important goal.

But goals and starting points are not always the same thing.

In this Flash of Genius follow-up to the Product Genius discussion about manufacturing in China versus the United States, Noah McNeely and Steven Julian explore a practical strategy for inventors who ultimately want to manufacture domestically but cannot make the economics work at startup volumes.

The idea is simple: begin with the end in mind—but give your company time to become strong enough to reach it.

Use Overseas Manufacturing as an Incubator

A startup product business often begins with limited capital, uncertain demand, and relatively small production runs.

Those conditions can make domestic manufacturing difficult. A U.S. factory may be technically capable of making the product but may not be structured around orders of only 1,000 or a few thousand units.

Instead of treating that as the end of the Made-in-USA goal, Noah suggests treating overseas production as a temporary manufacturing incubator.

Make the first run overseas.

Maybe make the next few runs there too.

Use those early production cycles to prove demand, build revenue, improve the product, establish distribution, and strengthen the business.

As volume grows, the manufacturing equation changes.

A company ordering 50,000 or 100,000 units has very different options from one ordering 1,000.

Reshoring Can Be a Milestone

Once the company has stronger sales and more capital, reshoring becomes a realistic strategic milestone.

That might mean moving production to an established domestic contract manufacturer that previously could not justify taking on the project.

But there is another possibility.

You may eventually become the manufacturer.

Some products require only one or two specialized pieces of equipment. At sufficient volume, an entrepreneur might rent or purchase industrial space, acquire the necessary machinery, hire a small team, and bring production in-house.

That creates domestic jobs while also giving the company greater control over manufacturing.

The important point is timing.

Trying to build your own factory before proving the market could bury a young company in overhead.

Building one after the business has demonstrated demand may be an entirely different proposition.

Reshoring Does Not Have to Happen All at Once

Manufacturing is not necessarily an all-or-nothing decision.

Steven raises the idea of what might be called “last-mile manufacturing.”

Suppose your finished product is large and expensive to ship once assembled.

It might make sense to manufacture compact components overseas, ship those parts efficiently in bulk, and perform final assembly in the United States.

That approach could reduce freight costs while beginning to create domestic manufacturing jobs.

Other hybrid approaches might include:

• Overseas components with domestic assembly
• Overseas subassemblies with U.S. packaging
• Domestic production of selected high-value parts
• U.S. customization or finishing
• Gradually transferring individual manufacturing processes domestically

The right sequence depends on the product.

What matters is recognizing that manufacturing strategy can evolve.

Begin With the End in Mind

Steven connects Noah’s strategy to Stephen Covey’s familiar principle: begin with the end in mind.

If your long-term vision includes American manufacturing, define that goal early.

Then build a realistic path toward it.

That path might look like:

Stage 1: Overseas production allows you to launch affordably.

Stage 2: Growing sales provide more purchasing power and better manufacturing options.

Stage 3: Selected operations move domestically.

Stage 4: Most or all manufacturing is reshored—or your company establishes its own production capability.

The exact path will differ for every product, but the principle remains useful.

Your first manufacturing decision does not have to be your final manufacturing decision.

Protect the Business That Makes the Goal Possible

There is an important entrepreneurial lesson underneath the manufacturing discussion.

If insisting on domestic manufacturing at the very beginning makes the product too expensive to sell, the company may never survive long enough to create any jobs at all.

A strategic overseas launch can sometimes be the thing that eventually makes domestic manufacturing possible.

That may feel counterintuitive, but product entrepreneurship frequently involves making decisions based on sequence rather than ideology.

First, create a viable business.

Then use the strength of that business to pursue larger goals.

The Product Genius Take

If manufacturing in the United States is important to you, keep it as a goal—but do not assume you must accomplish the entire goal on day one.

Think in stages.

Use the manufacturing solution that gives your product the best chance to launch and grow. Build revenue. Build demand. Build your war chest. Then revisit the supply chain as your leverage improves.

You may eventually move to a domestic contract manufacturer, bring final assembly home, transfer individual processes one at a time, or even build your own small factory.

Sometimes the best way to manufacture in America tomorrow is to build a strong enough company somewhere else today.