Where the Real Savings Are in Metal Fabrication

Labor, Process Integration, and Value Stream Control

Metal fabrication costs are not driven solely by steel prices.

In 2026, OEMs face margin pressure from various sources: rising labor costs, uncertainty about tariffs, fluctuating freight rates, longer supplier lead times, and the need to lower working capital. Many procurement teams are still focused on negotiating piece prices, but the real cost factors run deeper in the value stream.

The companies that are succeeding now are not just buying cheaper parts — they are rethinking how and where those parts are produced.

Here are the places where savings can be found in metal fabrication today.

1. Labor: The Largest Controllable Cost Lever

Material costs change. Energy prices change. Freight rates go up and down.

But when comparing manufacturing in the U.S. and Mexico, labor stands out as the most significant ongoing cost difference.

When companies look at manufacturing in Mexico using the IMMEX / maquiladora model, their main savings come from labor — not from utilities or real estate, which can be similar to U.S. costs.

The more labor-intensive your process — such as welding, assembly, finishing, or manual handling — the greater the savings opportunity.

However, it’s not just about “low wages.” It involves:

• Reducing the overall labor burden

• Sharing administrative costs (HR, payroll, compliance)

• Using fractional indirect labor through shelter structures

• Scaling the workforce without long-term risk

Prince’s Shelter PLUS model allows programs to start in as little as 6–8 weeks, giving OEMs a speed advantage without capital investment.

Strategic takeaway: If your product requires significant manual labor, geography matters more than raw material pricing.

2. Process Integration: Eliminating Hidden Waste

The second major cost driver does not appear clearly on a purchase order.

It is the waste that occurs between suppliers.

When stamping is performed by one vendor, welding by another, coating by a third, and assembly somewhere else, companies absorb the hidden costs of:

• Transportation between facilities

• Packaging and repackaging

• Excess work-in-progress inventory

• Scheduling delays

• Quality variation

• Administrative overhead of managing multiple suppliers

Prince consolidates multi-process manufacturing under one roof:

• Metal stamping (40–800 ton presses)

• Fabrication (lasers, turrets, press brakes)

• Welding (MIG, TIG, spot)

• Powder coating and liquid paint

• E-coat in both Mexico and the U.S.

• Assembly, packaging, and sequencing

The result is fewer supplier transfers, shorter cycle times, and stronger quality control.

This supports Prince’s commitment to maximizing the extended value stream and minimizing waste.

Strategic takeaway: The biggest savings often come from reducing supplier fragmentation — not from negotiating a lower piece price.

3. Cycle Time Reduction = Working Capital Advantage

Cycle time affects far more than delivery schedules.

It impacts:

• Inventory levels

• Cash flow

• Customer satisfaction

• Forecast flexibility

• Production agility

Case Example:

When one of our automotive customers partnered with Prince to produce a recoil assembly requiring stamping, welding, riveting, and powder coating, their cycle time ranged from 10 to 14 days.

After transitioning to Prince’s integrated manufacturing system, cycle time dropped to 1.5 days — an 89% improvement.

That reduction did not result from cheaper steel. It came from optimizing and integrating processes.

Shorter cycle times reduce:

• Safety stock requirements

• Storage costs

• Expediting expenses

• Forecast error risk

Strategic takeaway: Speed reduces cost. Velocity increases margin.

4. Risk Mitigation Through Dual-Country Manufacturing

Many OEMs today are not choosing between the U.S. or Mexico. They are building flexibility into their supply chain.

Prince offers:

• Contract manufacturing in the United States

• Shelter manufacturing in Mexico

• Hybrid models combining both

This allows companies to:

• Produce tariff-sensitive items in the U.S.

• Move labor-intensive operations to Mexico

• Diversify production to reduce risk

• Expand capacity without capital investment

Operating in Mexico under U.S.-based contracts and billing structures further reduces regulatory exposure.

In uncertain economic conditions, flexibility is a strategic advantage.

Strategic takeaway: Manufacturing optionality is now a competitive differentiator.

5. Total Landed Cost vs. Piece Price Thinking

Procurement teams often ask:

“What is your piece price?”

Strategic supply chain leaders ask:

• What is my total landed cost?

• How does this impact working capital?

• What is the cycle time?

• How many suppliers am I managing?

• What is my operational risk exposure?

Prince provides transparent, open-book billing and piece-part pricing models that give OEMs cost clarity and predictability.

The real savings come from:

• Optimizing labor structure

• Consolidating suppliers

• Integrating finishing and assembly

• Reducing logistics costs

• Shortening lead times

• Simplifying administration

Not just from cheaper stamping.

The Bottom Line: Where the Real Savings Are

In today’s manufacturing environment, savings in metal fabrication come from:

• Strategic labor positioning

• Process integration

• Value stream control

• Speed to market

• Risk flexibility

Companies that treat manufacturing as a strategic advantage — not simply a transactional purchase — outperform competitors.

Prince Manufacturing has provided contract manufacturing and Mexico shelter solutions for nearly 60 years, supporting global OEMs in industries such as industrial equipment, transportation, agriculture, power distribution, and technology.

Considering a Strategic Manufacturing Shift?

If you are evaluating:

• Consolidating suppliers

• Reducing cycle time

• Establishing operations in Mexico

• Lowering total landed cost

• Implementing a dual-country manufacturing strategy

We invite you to request a customized cost model session.

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Explore Further

• Learn about Prince Manufacturing in the USA & Mexico

• Explore Shelter Manufacturing under IMMEX

• Review our contract manufacturing capabilities

• Try our Mexico savings calculator

Or contact our business development team at: +1 803-918-5599