Production overseas can have a better sense if an overseas company is near where they have a higher percentage of the target market. For example, automotive companies like Toyota’s car makers set up a manufacturing facility in America where they have a huge market while exporting other units.
Production in a foreign country leads to job losses in the country of origin but generates additional incentives for workers who have lost jobs to work to a large extent to reduce the high value jobs their country has a comparative advantage to produce.
Similarly, foreign manufacturer pay costs such as delivery, inventory, communication, travel, training, permits, fees, tariffs, admission / export restriction and others that may not be incurred in their country. This will push production costs in the long run.
Indeed, it can be argued that production of much effort should be put in more frequent fashion than in other sectors to ensure that the skills are up to date. This is because employees not only need to know how to learn physical skills and how to manage various types of machines safely, but will also have to overcome the latest related software.
Attention to setting up all of the above are signs of top contract manufacturer or precision tool. By paying attention to qualifications and training of employees, producing only the finest materials and machines and ensuring an efficient process even in times of high demand, the top manufacturer will be able to consistently provide the best products.