While the benefits are plentiful, they aren’t limited to cost. They can lead to other uses, such as Duty deferral, Economies of scale, and Rapid prototype revisions. Here are five reasons why FTZs are valuable for companies looking to expand their manufacturing capacity.
Economies of scale
When an organization grows, it enjoys several benefits, including low cost country sourcing per unit. This can be achieved in many ways, including purchasing inputs in bulk at particular wholesalers. The greater production scale also reduces set-up costs, spread over a more significant number of shirts. Finally, economies of scale benefit the industry, as the lower prices can be passed on to customers.
Economies of scale often have their limits, and once they pass a point of optimal design, costs per additional unit will rise. For example, a low-cost product produced by a single company can saturate a local market by shipping it over long distances. Other limits may include energy efficiency, a higher defect rate, or the inability to sell to a larger market.
Duty reduction
If you’re interested in saving money on imported products, FTZs are a great option. A molder can become a critical part of international trade. They can reduce costs on imported products but reduce rework costs. One benefit of using a foreign trade zone is that you don’t have to pay local or state taxes on the products you import. In addition, unlike imports, FTZs don’t require businesses to pay taxes on products they manufacture overseas. To qualify, your company must install pressure transducers and sensors on your tools and recover waste from manufacturing or manipulation. Then, you need to apply for the FTZ program by filling out an annual report to the Foreign-Trade Zones Board.
Duty deferral
A molding tool manufacturer in the FTZ subzone might be eligible for duty deferral benefits on imported materials. This would allow the company to avoid paying duties on imported components, such as the nigrosine dye. In addition, the company could choose the duty rate for particular items. The duty rate for foreign status inputs ranges from zero to twelve percent. The manufacturer would save an estimated $2000 on the cost of imported materials but would still have to pay duty on the rest of the imported material.
The duty deferral benefits of FTZ in molding tool manufacture extend to materials imported by U.S. manufacturers. The materials are assessed at their value, and duty payments are delayed until the goods are withdrawn for consumption in the United States.
Rapid prototype revisions
IM tooling with rapid prototype technology is an excellent option for a quick check on changes made in a design. The fast prototyping process can provide instant feedback, allowing designers to modify the design before applying it to a product. In addition, it can save the designer time and money since they can quickly test the part before it is molded. This allows them to refine the design and determine the weak points of their initial plan.
Traditional manufacturing processes can cost a lot of money and lead to costly changes to the tooling later in the production process. FTZ in molding tools gives you a lot more flexibility for design changes than traditional tools. Rapid prototype tools often have limited modification capabilities, limiting their usefulness for revisions. The key to successful injection molding production is a well-designed design with a long process.
Improved flow of material
Improving material flow in a molding tool requires several different design elements. For example, flow leaders help balance the filling pattern in the molding tool. This results in a more uniform shrinkage and less warpage in the finished product. Flow leaders will also help reduce shrinkage differentials due to the side-filling sequence. The addition of flow leaders requires trial-and-error but is not nearly as costly as several iterations of the mold.
Before launching mold tool production, a flow analysis is conducted. Then, process simulation software helps determine how a part will fill during the molding process. Different data points like fill time, pressure, and melt temperature can be assessed before creating a tool. This allows a molding tool manufacturer to optimize the flow of the material while in the mold. The more complex the product, the more MFA analysis is required.
