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0 1 2 3 4 5 6 7 United States South Korea Poland Mexico Germany China ArgenƟna Transfer risk džƉƌŽƉƌŝĂƟŽŶ risk War risk 0 50 100 150 200 250 300 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 (Recalls) China All Other United States Canada and Mexico $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (U.S. dollars/million BTUs) United States: natural gas spot price, Henry Hub, Louisiana Russian border price in Germany Indonesian liquid natural gas in Japan 80 100 120 140 160 180 200 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (2000 = 100) China (economy-wide) South Korea Germany United States Canada More an Just Labor Costs Businesses operating outside the USA may incur unexpected expenses and hidden risks. Assess Costs Everywhere (ACE) provides manufacturers with the top reasons for investing and sourcing in the United States. ACE provides case studies and links to public and private resources to help businesses assess total costs more accurately and enable informed decision making. Manufacturers who are considering locating plants overseas or sourcing their products should weigh the full array of travel costs, from direct costs like flights and lodging to indirect costs like time away from the office. Customer demand often fluctuates unexpectedly, which makes maintaining the ideal inventory levels difficult, especially when relying on an overseas supply chain with long lead times. Stock outs as well as excess inventory can drain the savings that companies hoped for when offshoring. New research from the University of Lausanne in Switzerland estimates that the long-lead-time suppliers may need to be 20 to 30 percent cheaper, if not more, just to compensate for inventory mismatch costs. Overseas supply chains may require special financing, such as letters of credit, as payment is usually required before taking delivery of goods. Other costs include taxes, surety bond premiums, customs broker fees, and storage expenses. U.S. business regulations are among the least burdensome in the world, with the United States ranking fourth out of 189 economies in the World Bank's 2014 Ease of Doing Business Index. Political & Security Risks Regulatory Compliance Costs Intellectual Property Inventory Trade Financing Costs Product Quality Documentation, customs clearance, handling, and inland shipping can add 17 to 33 days to the total shipping time from most emerging market regions and another 6 days once goods reach the United States. Shipping Takes Time Travel & Oversight Labor Costs Can Change Over Time Business travelers went abroad an average of 4.7 times in 2012, and the average length of each trip was 16.9 days. Recalled goods account for $0.64 of every $100 of goods imported from China. In contrast, recalls account for just $0.11 of every $100 of goods made in the United States. The United States has the world's strongest IP infrastructure, with the clearest and most cost-effective system for obtaining and enforcing IP rights. Natural gas is an important source of both energy and raw materials in manufacturing, and booming domestic production has greatly lowered the price of this important input. Indexed Unit Labor Costs in the Manufacturing Sector of Selected Countries, 2000-2012 Recalls Under Consumer Product Safety Commission Jurisdiction by Country or Administrative Area of Manufacture, 2002-2013 Examples of IP Breach Costs China Total High-tech & Manufacturing Trademark Infringement Patent and Trade Secrets Copyright Infringement $48.2 b $18.5 b $6.1 b $2.4 b $23.7 b Thailand Software Pharmaceuticals Film Piracy $344 m $221 m $125 m Southeast Asia Software Losses Singapore & Philippines Malaysia & Vietnam Indonesia $100 m $200 m $480 m Time Required to Comply With All Procedures to Export Goods by Country Political Risk Rating in Selected Countries (1 to 7, with 7 being the highest risk) Other Inputs 3 Distinct Risks Source: http://acetool.commerce.gov U.S. Department of Commerce Assess Costs Everywhere Total Number of Documents Required per Shipment to Export Goods by Country
