Contract Manufacturing: When an External Production Partner Pays Off

Companies that have components manufactured externally rarely do so out of convenience. Usually there is a concrete situation behind it: their own production is at capacity, a particular technology is missing in-house, or an order comes in at such short notice that it can no longer be accommodated internally. Whether contract manufacturing is the right answer then depends on a few points that can be clarified in advance.

We have been manufacturing steel and stainless-steel structures since 1994, both for our own systems and as standalone contract work. This article summarises what makes the difference between smooth cooperation and a drawn-out one.

What contract manufacturing means

In contract manufacturing, an external company takes over the production of components or assemblies according to your specifications. The design stays with you, as does the product and the responsibility for it. The manufacturer supplies the production capacity, the technology and the personnel.

Several terms circulate for the same thing or for partial aspects of it. Job production is mostly used synonymously. Assembly production describes the case where individual parts become a mounted unit. People speak of an extended workbench when the manufacturer is permanently and closely integrated, often with dedicated fixtures for a particular customer.

When contract manufacturing pays off

The most common case is peak capacity. In-house production is sized for the normal base load, not for the exceptional month. Anyone who keeps additional machines and staff on hand for peaks pays for that during the rest of the year. An external partner absorbs exactly these swings.

The second case is missing technology. A company that mainly does machining rarely has a fully equipped welding operation including welding supervision and certification. For a handful of assemblies a year, building that up does not pay off.

The third case concerns components that belong to the product but not to the core competence. A machine frame is rarely what a manufacturer wants to be judged by. The design stays in-house, the manufacturing goes out.

When it does not pay off

For components that are constantly being changed, contract manufacturing quickly becomes expensive. Every change goes through a drawing, a query and a revised quotation. Where internally someone walks over and sorts it out, externally it becomes a formal process.

The picture is similar when the component is safety-critical and coordination has to stay close, or when the quantity is so small that setup and fixture costs dominate the price. In these cases an honest calculation up front is worth more than a quick award.

What belongs in an enquiry

A solid quotation needs more than a drawing. Specifically: the technical drawing with all dimensions and tolerances, the required material, the quantity, the delivery date and an indication of whether the component is load-bearing. Where weld seams are involved, the requirements for seam quality belong with it.

What is missing most often in practice are tolerance specifications and information about how the component will later be installed. Both determine how complex the manufacturing becomes. Without this information, a manufacturer either calculates with a safety margin, or there are discussions later on.

Certification for load-bearing components

As soon as a component carries loads, the manufacturer's certification becomes relevant. For steel structures, EN 1090 governs the execution. The standard defines four execution classes, EXC1 to EXC4, based on the consequences a failure of the component would have.

For most load-bearing structures in mechanical and plant engineering, EXC2 is the appropriate class. Behind a certification are audited requirements for welding supervision, welder qualification and factory production control. Ask about it before you award the contract, not afterwards.

Where the order ends

The point where things most often get stuck is scope. Many manufacturing companies deliver the component raw, meaning welded and machined, but without surface treatment. Blasting, priming, painting and galvanising then run through third parties.

This is common in the industry, because these steps require their own facilities and permits. What matters is that you know about it before you plan your schedule. A component that still spends two weeks at the galvaniser will not be with you on the agreed delivery date.

Also clarify who handles delivery, who assembles if needed and how rework is dealt with. These points cost five minutes at the quotation stage and several weeks in the event of a dispute.

How we work

We design, manufacture and assemble steel and stainless-steel structures. Welding is mainly done with MAG and TIG, plus stick welding where the component situation calls for it. Our welding production is certified to EN 1090 in execution class EXC2, and for load-bearing components we can supply the corresponding documentation.

We do not handle surface treatment ourselves; for that we work with specialised companies. We say so up front, so that you can factor it into your scheduling.

If you have a specific component in front of you, send us the drawing. We will tell you whether we are the right partner, and if not, why not.