- March 5, 2012
- 9:00 pm
- Maciek Nowak
- no comments
Outsourcing Oscar
I recently had a chance to talk to the local ABC News affiliate about R.S. Owens, the Chicago company that is best known for manufacturing the Oscar statues handed out at the Academy Awards, and the possibility of the production of these statues moving to China: Supply Side of Oscars. It was my first experience at the hands of an editor, as the overwhelming majority of our chat was left on the cutting room floor. I thought I could use this forum to present some of that material.
As I previously posted in this space, there are many issues associated with manufacturing in China, including rising fuel and labor costs, concerns over intellectual property rights, and a separation of design and manufacturing. When a company considers all of these factors, the option of bringing manufacturing back home is beginning to have considerable merit. We are now seeing a more significant wave of firms that are doing just that, as a shortened supply chain becomes more attractive than the low cost labor available in China.
However, the product that is to be manufactured, and the characteristics associated with that product, play a major role in making the decision over where to locate a manufacturing facility. A product that must be continually updated, dependent on an innovative design team, should ideally be manufactured close to the design team. Similarly, a product that has a short shelf life, whether perishable good or trendy clothing, should not be spending considerable time in transit from the manufacturer. Meanwhile, goods with a demand that is more easily forecast or products that are very labor intensive are likely to be manufactured abroad for the foreseeable future.
All of that said, the manufacture of the Oscar statue is a rather unique case. This is an item that requires high precision and quality care in production, where manufacturing cost relative to the intangible “value” may be minor. The inherent risk associated with outsourcing production of an item that demands such attention to detail is likely not worth any potential reduction in manufacturing cost. Imagine Jack Nicholson’s reaction when upon grabbing his next Oscar the brittle golden exterior came crumbling off. While likely humorous, the resulting media backlash would not be pleasant for the Academy or for R.S. Owens. As long as the company remains in business and production quality is maintained, I can’t imagine Oscar leaving the U.S. (unless carried by a foreign winner).