We've written before about why more US OEMs are turning to offshore design and development partners. A shrinking domestic engineering pipeline, design and development teams stretched thin after years of lean hiring, and reshoring investment pushing up demand for the specialist talent that's left, all of it is making in-house design and development harder to resource.
Here's the point that follows from that, and the one we focus on in this article - design and development services can be sourced globally before physical production decisions are locked in. The two don't need to happen at the same time, or with the same partner, or in the same place. Getting that sequencing right is becoming just as important as the original decision to look offshore in the first place.
Two decisions, not one
Ask most OEMs when they decided where to manufacture a product, and the honest answer is often earlier than they'd like it to have been. A manufacturing partner gets chosen at the same time as a design partner, sometimes because it's the same conversation, sometimes because it's simply easier to sign one contract than two.
The trouble is that these are two different decisions with two different risk profiles.
Design and development risk is about capability: can this team deliver a product that works, meets spec, and is ready for manufacture. Manufacturing risk is about geography: cost, tariffs, lead times, component sourcing, and capacity in a specific location. For a US OEM right now, that second risk profile is moving faster than it used to.
Bundling them means an OEM absorbs both risks on the same timeline, often before either one is fully understood. A product that's six months from being finalised shouldn't need a locked-in build location today. But if the design and manufacturing decision were made together, that's exactly the position many US OEMs find themselves in.
Why tariffs change the calculation
For years, the offshore manufacturing conversation was mostly static. Costs moved slowly. Trade agreements held. A US OEM could reasonably plan a five-year production run around a single site without much fear that the ground would shift underneath it.
That's no longer a safe assumption. Tariff schedules affecting electronics and components have moved several times in recent years, sometimes with limited notice.
Just looking back over the last 18 months, in March and April 2025, the US reinstated section 232 tariffs on steel and aluminium and moved toward country-specific reciprocal tariffs - as we reported on in this blog post.
Less than a year later, in February 2026, the US Supreme Court ruled that a large number of those tariffs had been unauthorised, and within days, a replacement tariff took effect, with an initial rate of 10% rising to 15% by the end of that month.
Semiconductors are on their own separate timeline: a tariff suspension currently due to expire in November 2026, with a further increase already scheduled for mid-2027.
For an OEM part-way through a product's life, tariff changes are a real problem. The total landed cost of the same product, built in the same factory, can change significantly without a single design change.
Design and development work isn't exposed to this in the same way. None of it is taxed at a border. A schematic doesn't carry a tariff, regardless of where it's drafted or where the product it describes is built.
Separating the two decisions means a US OEM can start the design and development work straight away, at full pace, while leaving the manufacturing location decision open until closer to the point where it actually needs to be locked down, ideally with a clearer picture of tariff exposure by then.
What this looks like in practice
The OEMs getting this right tend to follow a similar pattern.
They start design and development with a partner who has the bench strength and track record to get moving quickly, often somewhere that offers strong engineering depth and reasonable time zone overlap, rather than waiting for a manufacturing decision to be finalised first.
They keep design for manufacture and design for testability principles built into the process from day one, regardless of where the build eventually happens. This matters because a design that's only ever considered against one specific factory's capabilities can be hard to shift later without rework.
They delay the final build location decision until it's genuinely necessary, informed by component costs, tariff exposure, and available capacity at the time, not assumptions made a year or two earlier.
Crucially, they work with a partner who can do both stages without a handover between two separate suppliers. Moving from an offshore design team to an unrelated offshore factory introduces its own friction: different quality systems, different points of contact, and design intent that can get lost in translation.
A single partner with sites across multiple regions, operating under one contract and one quality system, removes that friction and gives the OEM a genuine choice of build location rather than a default.
The IP and control question
Delaying a manufacturing decision only works if the OEM keeps full ownership and access to the design output along the way. Contracts should be explicit about who owns source code, schematics, mechanical drawings, and manufacturing data, regardless of where the design work happens.
This becomes more important, not less, in a sequenced approach. An OEM that wants the flexibility to choose or change a build location later needs design data that travels cleanly with the product. A partner that keeps that data closed off, or ties it too tightly to one production site, quietly removes the flexibility this whole approach depends on.
The risk of deciding too early
Locking in a build location before a design is complete can also shape the design itself, around a specific site's equipment, a specific region's component availability, or assumptions about cost that may no longer hold by the time the product ships.
If trade policy shifts after that point, the OEM is often left with an uncomfortable choice. They can absorb the new cost, or re-engineer a product that was built around a location it can no longer justify. Neither is a good position, and both are avoidable with a different sequence of decisions.
Get the sequencing right
None of this means treating manufacturing as an afterthought. It means recognising that design and development can, and often should, start well before a final build location is fixed.
For US OEMs navigating a less predictable tariff environment, that separation is becoming less of a nice-to-have and more of a basic risk management step. Start the engineering work with a capable partner now. Keep the manufacturing decision open. Make that final call when the picture is clearest, not when the contract was signed.
If you're weighing up how to sequence design and manufacturing decisions for your next product, get in touch with the ESCATEC team. We can talk through how our design and development capability, paired with manufacturing sites across the UK, Switzerland, the Czech Republic, Bulgaria, and Malaysia, can support that flexibility.
FAQs
1. Can design and development really be separated from manufacturing?
Design and development can be separated from manufacturing. This work, such as electronics design, mechanical design, and embedded software, isn't tied to a physical location in the way manufacturing is. It can begin with a design partner well before a final production site is chosen.
2. How do tariffs actually factor into an EMS sourcing decision?
Tariffs apply to physical goods crossing a border, including finished products and, in some cases, components. They don't apply to design and engineering services. Committing to a manufacturing location early can mean committing to tariffs before a product is finished, whereas delaying that decision keeps options open.
3. What happens if we need to change manufacturing location after the design is finished?
Changing the manufacturing location after the design is finished is far easier if the design wasn't built around a single site's specific equipment or component base, and if the OEM retains full ownership of the design files and manufacturing data throughout.
4. Does separating design and manufacturing decisions cost more upfront?
Separating design and manufacturing decisions doesn’t necessarily cost more upfront. It often reduces risk rather than cost, since it avoids the costs of rework or renegotiation if trade policy or supply conditions change after a manufacturing location has already been locked in.
5. Is this approach only relevant because of tariffs?
Tariffs are the most immediate driver, but the same logic applies to component shortages, capacity constraints, and shifting freight costs. Keeping the manufacturing decision open for longer gives OEMs more room to respond to whatever changes first.
