Manufacturing’s Next Global Challenge

With engineered imports reaching an all time high in industrialized nations, maintaining adherence to contracted standards is now more challenging than ever before and carries much potential for hidden liabilities.

According to independent engineering firm Soto Consulting Engineers (Wollongong, New South Wales, Australia), this challenge as faced in Australia is likely to mirror the challenge across the globe as low-cost labor nations offer engineering design services over the Internet. Managing director Frank Soto believes that not enough attention is being paid to this matter, especially when considering how outsourcing from international suppliers is growing every year.

“There are many pros and cons which genuinely should be addressed by the engineering and manufacturing communities just to stay ahead of a potential minefield in contractual issues and litigation drama,” he says. “Because we are importing more and more engineering, any component or substance in question may be created to specifications habitual to another country, but ultimately may not be done to the relevant Australian Standard.

“There are European Standards, American Standards and many others,” he continues. “Everybody does things just a little bit differently. There are even subtle differences in specifications within states of a single country. But ultimately, if you are not using the material specified by the relevant Australian Standard, you could become stuck in a breach of contract issue, which means any other industrialized nation could face the same problem.”

For example, one of the more recurring issues appears to be when an overseas metal fabricator might find and use cheap steel from within its own economy, only to compromise a contractual arrangement that was made in Australia. Reputable fabricators must keep the bill of receipt associated with that and every product and show traceability throughout.

Basically, because the highly specific engineering expectations of Australian Standards can’t often be matched by overseas standards, it has never been more important for Australian engineering companies and fabricators to be able to disclose the source from where every single component originates.

“The general rule with steel, for instance, is that if you are not supplied with documentation, the default 140 grade steel title is applied – an Australian Standards token load – which basically ranks the component as very, very ordinary,” explains Soto. “Apart from providing a safeguard against inferior and unsafe components, this method is also a deterrent against illegal dumping and re-badging of substandard material.

“But this issue doesn’t point only to steel,” adds Soto. “It also applies to any component or material, including cement, fasteners, adhesives, coatings, fire retardants, etc. If any indication was needed as to the importance of this issue, many of the bigger companies have personnel based in overseas manufacturing plants purely to oversee that quality standards are being met.”