The $250 Billion Problem Lurking Around Your Factory
Counterfeits in manufacturing cost the U.S. economy more than $250 billion in lost revenue and 750,000 jobs annually. Chinese businesses have created an industry around electronic counterfeits, taking advantage of today’s “trusted supplier” networks, and the global trade in counterfeit electronics parts is growing at an accelerated rate resulting in higher costs and unreliable products.
Here are four recent examples of the $250 billion problem:
- Aston Martin recently was forced to recall 17,590 cars, resulting in added material costs of $2.45 million, after discovering their Chinese subcontractor was using counterfeit plastic to manufacture accelerator pedals.
- The U.S. Navy spends about $1.4 billion per year on counterfeit maintenance.
- Hao Yang created companies such as A-One Electronics and MS Technologies that imported counterfeit ICs and sold them as legitimate merchandise to the U.S. military. The issue was pervasive and Chinese officials refused to cooperate with investigations. If the problem had not been caught, this could have resulted in product failure, injury, and impaired military operations.
- In 2013, United Airlines engineers replaced counterfeit seal spacers on planes after only 600 hours in operation. The authentic spacers were manufactured for 20,000+ operational hours (33X longer).
Major OEMs are considering reshoring as a solution to increasing quality control. And with rising labor costs in China, the risks to total costs cause many operation leaders to pause and reconsider their supply chain strategies.
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