In 2025, Original Equipment Manufacturers (OEMs) must choose between nearshoring—relocating production to nearby regions like Mexico or Canada for faster response times—and offshoring to cost-effective distant locations such as Asia. With tariffs escalating to 50% on key imports like steel, aluminum, and copper as of July, geopolitical instability, and rising demand for agile operations, pure models of either approach come with trade-offs. Offshoring delivers significant labor cost reductions, while nearshoring emphasizes resilience and speed—but a hybrid strategy, blending offshore production with domestic Just-in-Time (JIT) inventory, offers the optimal balance by capturing low-cost global sourcing alongside local agility and risk mitigation. This approach is gaining momentum, with 80% of chief operating officers planning to expand nearshoring or onshoring elements over the next three years, often integrated into hybrid frameworks (PwC CEO Survey).

This guide dives into current trends, comparisons, and hybrid solutions for procurement leaders searching for “hybrid supply chain strategies 2025” or “OEM offshoring with domestic inventory.”

Key Supply Chain Challenges for OEMs in 2025

As of July 2025, OEMs face intensified volatility from tariffs, labor constraints, and external shocks like climate events and trade wars. Here’s an updated data snapshot:

• Revenue impacts from disruptions affect 94% of companies, with average losses reaching 8% of annual earnings amid a 38% year-over-year rise in global incidents (Procurement Tactics).
• About 80% of organizations report high or very high supply chain risks, with major disruptions occurring every 3.7 years and often lasting over a month (RapidRatings 2025 Risk Survey).
• Tariffs starting at 25% on steel and aluminum have escalated to 50% as of June, disrupting Guangdong, Chinan production and adding 25–50%+ to landed costs in sectors like automotive and electronics (AP News – Tariff Impact).
• 78% of firms have adopted inventory buffering or supplier diversification for resilience, up 14% year-over-year as companies build strategic stocks to counter uncertainties (RapidRatings 2025 Risk Survey).
• Digital tools are surging, with 53% of leaders using AI to anticipate disruptions and 50% testing generative AI for forecasting, potentially reducing logistics costs by 5–20% (PwC Digital Supply Chain Survey; Forbes AI in Logistics).

These dynamics highlight the need for flexible strategies that leverage offshore efficiencies without exposing OEMs to full disruption risks, making hybrids a key focus for 2025.

Nearshoring vs. Offshoring: A Side-by-Side Comparison for 2025—with Hybrid Insights

Based on July 2025 trends, nearshoring is accelerating for risk reduction, while offshoring holds strong for cost savings—but hybrids combining both are emerging as the go-to for OEMs, offering 10–20% shipping cost reductions and enhanced scalability. Here’s a comparison, including how hybrids bridge the gaps:

Source: Aggregated from 2025 industry reports on tariffs, disruptions, and OEM trends (Financial Times, PwC Survey, RapidRatings, PwC Digital Supply Chain).

Nearshoring edges out for OEMs prioritizing speed, with many reshaping chains accordingly.

The Strategic Edge of Hybrid Models with Domestic JIT Inventory for OEMs

Hybrid supply chains—like offshoring production while maintaining domestic JIT warehousing—directly tackle July 2025’s realities, where tariffs average 18.2% and disruptions hit 80% of firms. By producing offshore for cost savings and stocking in the U.S., OEMs slash ocean delays, optimize duties via bulk imports, and build resilience without excess inventory. Key benefits include:

• Accelerated Fulfillment:Domestic shipments (e.g., from Guangdong, China) in 1–3 days reduce offshore timelines by up to 90%, enabling urgent adaptations amid volatility.
• Tariff and Cost Optimization:Bulk offshore shipments minimize per-unit duties (avoiding 50% spikes on copper/steel), with predictable landed costs and 20–30% lower holding expenses (AP News).
• Enhanced Resilience:Local buffers protect against port congestion and supplier issues, supporting the 78% of firms adopting similar strategies for faster recovery.
• AI-Driven Visibility:Real-time tracking integrates with platforms, leveraging 53% AI adoption to forecast risks and cut logistics costs by 5–20% (PwC Digital Supply Chain).

GreatLight Metal leads with this hybrid, using offshore manufacturing paired with Guangdong, China JIT to deliver global efficiencies with domestic reliability.

Why Partner with GreatLight for Your 2025 Supply Chain?

GreatLight’s offshoring-with-JIT model empowers OEMs in today’s high-tariff environment with:

• Custom Agility:Respond to demand surges or changes without overstocking, using AI dashboards for data-driven decisions that enhance productivity by 15–25%.
• Proven Efficiency:Bulk imports reduce tariff hits while ensuring ESG compliance and sustainability, turning 2025 challenges into advantages.

Ready to Strengthen Your OEM Supply Chain?

Request a Free Delivery & Cost Analysis from GreatLight

Discover how our hybrid approach can cut lead times, buffer against disruptions, and optimize costs tailored to your needs. Contact GreatLight International today or request a custom quote to blend offshore savings with domestic precision for a resilient 2025.

Key Issues: Tariff Volatility and Supply Chain Pressure

Rising tariffs hit procurement hard. A $100,000 shipment from a high-tariff zone like China incurs $10,000-$25,000 in duties per trip—multiply that across frequent imports, and margins erode fast. Lead times stretch as companies scramble to reroute supply chains, risking production delays. For industries relying on precision parts—think automotive engines or medical devices—cost spikes and shortages threaten operational efficiency. Taiwan and India counter these pressures with minimal duties (0-2%), leveraging favorable trade terms, advanced manufacturing in Taiwan, and India’s cost-competitive edge.

Manufacturing Relief from Low-Duty Regions

Sourcing from Taiwan and India offers a smart workaround. These regions produce high-quality components—machined castings, forgings, screw machine parts, shafts, and gears—without the tariff burden. A mid-sized order of 10,000 precision gears, for example, could see landed costs drop 15-20% compared to higher-tariff origins. This keeps budgets intact for critical applications like exhaust gas recirculation (EGR) valves or energy system shafts, ensuring procurement teams maintain supply without overstocking.

Inventory Edge: Guangdong, China Stockpile

Stocking components domestically adds another layer of control. Our Warehouse facility in Freehold, Guangdong, China, holds parts from Taiwan and India for up to two months, cutting lead times and dodging repetitive shipping duties. That $100,000 shipment with a 10% tariff? Storing it stateside saves $10,000 per avoided trip—potentially $20,000+ annually on 10,000 gears. This setup ensures parts arrive when needed, supporting lean operations and freeing funds for innovation or competitive pricing.

Trend Spotlight: Digitization and Sustainability

Recent trends amplify these strategies. Supply chain digitization—think real-time tracking and AI-driven forecasting—is surging, with 73% of logistics leaders adopting digital tools in 2024 (per SCMR). Pairing this with low-duty sourcing streamlines procurement decisions. Sustainability also gains traction, as 68% of manufacturers prioritize eco-friendly supply chains (McKinsey, 2025). Taiwan and India’s efficient production reduces waste, while domestic stockpiling cuts shipping emissions—aligning cost savings with green goals.

What If? Reciprocal Taxes on Low-Duty Regions

Could low-duty regions face reciprocal taxes? Imagine a hypothetical 5% tariff imposed on Taiwan and India imports as trade policies shift. Even then, total duties would hover at 5-7%, far below China’s 25% ceiling. For a $100,000 shipment, that’s $5,000-$7,000 versus $25,000—a 70%+ savings buffer. Procurement teams could still rely on these regions’ efficiency and quality, with domestic stockpiling further softening the impact. Flexibility keeps this a winning strategy.

GreatLight Metal: Your Partner in Tariff Navigation

Enter GreatLight OEM, a 30-year veteran in precision manufacturing. We source from Taiwan and India to deliver ISO-certified components—machined castings, forgings, shafts, gears, and prototypes—minimizing tariff costs. Our Guangdong, China hub stocks these parts, ensuring timely delivery and savings. Whether you’re in automotive, oil & gas exploration, or medical, we turn tariff challenges into opportunities. Contact us to optimize your supply chain—together.

GreatLight’s manufacturing solution to reduce product cost

The original design of the shafts was a single piece spline shaft, with the splines cut via a pinion cutting process. GreatLight suggested a two-piece design, with the front end splined by broaching, a less expensive process than pinion cutting. One key factor to help reduce production costs.

Broaching is especially good for odd shapes like keyways, non-circular holes and in this case splines. Because broaching is performed in a single pass it is extremely efficient and is ideal for high volume applications. Secondly, rather than using press fit or threading to fasten the mating parts of the shaft, we suggested using the shrink-fitting process to achieve the same result at a lower cost.  The enveloping female part was heated in a furnace and the enveloped male part was cooled by freezing.

A robotic fixture then assembled the two parts into position immediately, and the shaft was allowed to cool to room temperature, resulting in a strong locked interference of both parts. The shrink-fitting process has many benefits: process control, consistency, accuracy and speed. These benefits are what make this operation repeatable and accurate for high volume applications.

Final Result – Reduce Product Cost Significantly

GreatLight’s team was able to draw on more than 15 years of design and engineering experience to deliver an improved shaft design that yields a 35 percent cost reduction for the entire assembly. While still meeting drawing specifications and providing a consistent product in high volume production runs.

Gear train assemblies are used in almost every machine that deals with mechanical power, the most popular applications are: engines, clocks, gearboxes, automotive differentials, lathes and more. They ability to switch between plastic and metal gears in the gear train is important due to the mechanical and chemical properties both materials provide.

Plastic gears have good shock absorption as plastic is more forgiving than metal, this helps with misalignment, tooth errors and reduces noise. Some plastics are even more chemical resistant when needed in harsh working environments.

Here, the shaft in the center is the driver. The white plastic/nylon gear in the center is a hypoid gear that rotates the smaller plastic gear, and the 8620 steel gear at the bottom rotates the metal gear on the left. The entire gear train is housed in an aluminum casting structure.

GreatLight manufactures gear train assemblies for several Fortune 500 manufacturers in electric motors and industrial machinery industries. This knowledge helps guarantee no project is too small, too large or too complex for GreatLight’s manufacturing capabilities.

Counter Transmission Shaft

The counter transmission shaft is installed parallel to a drive-shaft and controlled by an input shaft (with assistance from pinion gears). In a regular manual transmission, the transmission gears are mating with the counter shaft. In FWD vehicles, counter and input shafts actually function the same way.

Input Transmission Shafts

This energy generated from an engine crankshaft must first travel into a gearbox before eventually reaching the tires. The initial part to receive the power is known as input shafts.

These shafts can engage or disengage through the the clutch functionality. In RWD drive automobile, input shafts are used to operate in conjunction with output shafting parts. Together, these parts create a main shaft assembly.

Output Transmission Shafts

Finally, the last part to transmit motion from the transmission into the wheels is the output shaft. This shaft is controlled by the counter shafts and gearboxes. The precision gears are shifted manually by the driver.

Learn more about GreatLight shaft manufacturing capabilities.

Shot peening is not a new process; evidence of mechanical pre-stressing dating back to 2700 BC has been found in Mesopotamia. Peening hammers were commonly used down the ages, but it was only in the late 20th century that the peening process began to evolve, with the increasing use of shot and more controlled impacting.

BENEFITS OF SHOT PEENING

The greatest benefit of shot peening is the improvement of fatigue life of the metal part. The manufacturing of a metal part via precision machining, forging, die casting, etc., or subjecting a part post-formation to dynamic loading, can cause internal stress concentrations, leading to fatigue failure, porosity, diminished strength and corrosion. By enhancing the compressive stress layer on the surface, the underlying tensile strength is also improved. Also, since cracks usually develop at the surface of a metal part, the strengthened surface prevents stress cracking and corrosion to a considerable extent.

Shot peening also has other benefits, such has producing a more uniform surface for platings and special coatings, reducing casting porosity, and straightening parts and distortions.

THE POSITIVE EFFECTS OF SHOT PEENING ON GEARS

Gears, due to their very nature, are constantly under stress and therefore benefit greatly from shot peening. Peening helps to improve the lubricity and oil retention of the gear, especially where used in engine pistons and cylinder walls. In addition, shot peening done in the ‘green’ state helps eliminate continuous machine marks on the gear tooth flank, thereby reducing stress risers. By increasing the strength of the metal, shot peening allows manufacturers to use alternative, cheaper materials to produce the same level of hardness desired for the application. This enables manufacturers to meet customer and federal requirements for high output, long life and lighter weight vehicles that improve fuel efficiency.

Given that a gear tooth is basically a cantilevered beam, it is but natural that most of the cyclical load would fall on the root fillets of the gear, and therefore that was usually the most important part of the gear to be shot peened. Peening the root fillets leads to reduced pitting and an extended gear life; it also improves the bending strength.

EXTENDING THE SCOPE TO THE ENTIRE GEAR TOOTH FACE

Recently, NASA conducted two separate tests that demonstrated how shot peening can extend the surface fatigue life of the tooth face as well. In the first test, carburized and hardened AISI 9310 spur gears were subjected to shot-peening at a gear temperature of 350 K (170° F), a maximum Hertz stress of 1.71 x 109 N/m² (248,000 psi), and a speed of 10,000 rpm. The shot-peened gears exhibited pitting fatigue lives 1.6 times the life of the standard gears without shot peening.

In a second test conducted a decade later, NASA intensified the shot-peening of the gears, both at a medium intensity of 7-9A and at a high intensity of 15-17A, other test conditions remaining the same. The residual compressive stresses for the high-intensity shot-peened gears were 57% higher than that for the medium-intensity shot-peened gears, with the former exhibiting a surface fatigue life 2.13 times that of the latter.

These findings encouraged auto manufacturers to begin to shot-peen all the gears, whether made of alloyed or moly steel, chrome, nickel, in the vehicles they sold. Not surprisingly, aircraft components such as landing gear, helicopter blades, gear teeth, drive shafts, torsion bars, axles, rotors, compressors, and turbine blades, are routinely shot-peened to improve their surface hardness and increase fatigue life.

Thus, while earlier, shot peening a machine part could be lead to the assumption that the part had at some time earlier demonstrated a certain level of fatigue failure that needed to be addressed, today shot peening is considered a de facto means to improve fatigue strength. In addition, with the increasing demand in the automobile and large vehicle industries for lightweight materials with excellent surface strength, we expect to see increasing use of shot peening in the years to come.

INCREASING THE LOAD CARRYING CAPACITY

Shot peening not only improves the fatigue life, but can also improve the load bearing capacity of the gear, by as much as 20%. Peening increases the bending strength of the tooth fillet area which in turn improves the load bearing capacity. Additionally, lubrication is applied to create oil reservoirs in the dimples created by the shot, which can help to eliminate bushing under some gears, and replace tin plating in other cases.

FACTORS THAT AFFECT SHOT PEENING OF GEARS

For shot peening to be most effective, factors such as shot composition, size and velocity, as well as area of coverage should be carefully controlled. While shot can be made of metal, ceramic or glass as mentioned earlier, hard steel between 45 to 65 Rc is the material of choice to peen gears. The shot should be spherical and non-porous, while the size of the shot should not be bigger than ½ the radius of the smallest filler of the gear, in order to ensure optimal coverage. Generally, gears require 100% coverage, but due to their complex shapes, a single shot peening pass is seldom enough. Hence, 200% coverage is usually prescribed for most gears.

The maximum peening intensity is when the shot stream is perpendicular to the surface to be peened. Again, due to the complexity of gear shapes, perpendicularity may not always be possible, and the shot stream is either directed from multiple positions around the gear, or the gear itself is rotated to ensure maximum and even coverage. Moderately sized spur and helical gears are normally stacked and peened in the indexed position, allowing for high volume peening. The main shot stream is horizontal to the gear stack. For bevel gears, the shot stream is horizontal to the root cone, while large-faced large gears are rotated on their own axes while the peen is directed at the root fillet and flank.

Bibliography

• Boosting Gear Life through Shot peening, by James J Daly
• Shot peening in the design of gears, by John C Straub, Chief Research Engineer
• Shot peening and its effect on gearing, by Mark D. Lawerenz
• Effect of Shot Peening on Surfacee Fatigue Life of Carburized and Hardened AIS1 9310 Spur Gears, by Dennis P. Townsend and Erwin V. Zaretsky
• Shot peening increases gear life, by Joe Brown, Machine Design

Best Splines Type for suppliers:

Parallel key – have equally spaced, straight-sided grooves that are parallel in both the radial and axial directions. These splines are similar to keyway drives, but differ in that in the former, the keys are not fitted into slots cut into the shaft but are instead an integral part of the shaft. In addition, the keys are equally spaced along the circumference of the shafts.

Involute – also have equally spaced teeth, but the teeth are involute and usually not as tall. The involute form and the lowered height increase strength by decreasing stress concentration as well as the possibility of cracks due to fatigue. Involute types are self-centering under load, and even a loose-fitting assembly will center itself when torque is applied.  They are also easy to cut and fit, and usually the internal spline is made to basic dimensions while the external spline adjusted to control the fit. For these reasons, involute types are the most common type of spline shafts in use but does not mean these are the best splines for shafts.

Crowned – are usually involute splines whose teeth are crowned or curved to compensate for angular misalignment. While straight-toothed splines can accommodate only small misalignments of less than 1 degree, crowned splines can handle misalignments of up to 5 degrees.

Serrated – have teeth that are in the form of a ‘V’.  This shape allows for more teeth on a smaller shaft circumference, thus providing greater contact area. These splines are usually used on small-diameter shafts, instrument drives etc.

Helical – have equally spaced teeth that form a helix around the shaft. The helix enables better load sharing of rotational torque along the length of the shaft and is therefore used in applications of high torque.  By using a helical male with a mating helical female spline, helical splines are also useful in applications that combine rotation with axial motion.

GreatLight Metal manufactures splined shafts for axles, power transmission, gearboxes and other motion control applications. Our state-of-the-art machinery paired with first class engineering capabilities allow us to manufacture the best types of splining for your shaft project needs.

Spur gears have straight-edged teeth that are cut parallel to the axis of rotation. These gears are mounted on parallel shafts to ensure that the teeth mesh together correctly. Spur gears mate only one tooth at a time, and the contact occurs instantaneously over the full face width of the mating teeth. This leads to loud operations along with high stress on the mating teeth.

Spur gears are of two kinds – external and internal. As the name suggests, external gears have teeth cut on the outside surface of the mating cylindrical wheels, and the teeth point away from the center. The input and output shafts move in opposite directions.

The teeth of an internal spur gear point inwards towards the center, and are cut on the internal surface of one of the mating cylindrical wheels. Both the input and output shafts rotate in the same direction — this eliminates the need for an idler gear. Since the centers of the mating wheels can be closer than those of external gears, internal spur gears are preferred in applications where space is a constraint. (However, these gears require complicated housing and support, since the external gear is contained within the internal gear.) Internal spur gears also make for a stronger drive, since there is more area contact and less sliding action than with similar external gears. Internal spur gears are an integral part of planetary gear drives and gear couplings.

GreatLight Metal manufactures high quality internal and external spur gears of various sizes and dimensions, in high quality stainless steel and aluminum alloys, with custom manufacturing options to meet OEM customer needs.

Drive shafts should be strong enough to take the torsion and stress caused by the torque. At the same time, they should be light enough to move the torque to the load being turned. Most vehicular drive shafts are made of steel, a cost-effective yet extremely durable material that ensures the drive shaft functions optimally throughout the life of the vehicle. Drive shafts can also be made of aluminum, composite materials, carbon fiber or combinations of these. The choice of material depends on the vehicle, its size, and the purpose for which it will be used.