Most industries have their share of nuances to consider as they carry out day-to-day operations. Manufacturing companies, for example, must adhere to local, state, federal, and even international regulations. This article by the University of Southern Indiana provides a comprehensive overview of some of the legal considerations facing the manufacturing industry.
One of the biggest issues our manufacturing clients have encountered in recent months boils down to two words: supply chain. Depending on what they make, their product may contain hundreds of component parts. In a perfect world, there may be dozens of vendors with whom they need to negotiate contracts or enter into an NDA; logistics to consider; OSHA compliance to oversee; and other legal concerns. However, in today’s post-pandemic world, the supply chain is precarious at best, and a downright minefield in terms of contract negotiation.
Let’s Look at an Example
Let’s say the client, Acme Sprockets and Cogs, manufactures … well, sprockets and cogs. Steel is sourced domestically from steel plants and transported via rail to the Acme factory. Acme’s sprockets and cogs also feature proprietary O-ring gaskets made of premium latex rubber, sourced from Asia and South America. These gaskets are transported to the United States via ocean containers. With skyrocketing fuel costs, the transportation companies are imposing fuel surcharges not included in original contracts. The rubber shipments are experiencing unprecedented delays, which now means they’ve breached their contracts for timeliness of delivery.
From a financial standpoint, Acme should lay off workers as they await these components, but they unionized a few years back and Acme would breach their labor contracts. Acme also needs to demand overtime to complete its orders as quickly as possible, which comes at a hefty price tag. Acme needs to renegotiate customer contracts or risk breaching delivery windows. Depending on the verbiage of the contracts, Acme should renegotiate the price due to the increased cost of raw materials.
A plate of starchy spaghetti would be easier to untangle at this point. Nevertheless, each of these examples in this scenario illustrates the need for a seasoned business attorney with manufacturing experience.
If you’re considering hiring legal counsel, look no further than OGC. Contact us today to schedule your consultation and see how the OGC Difference can make protect and grow your manufacturing business.
