The $2.3M-an-hour problem hiding inside modern manufacturing

The next manufacturing crisis may not begin with tariffs, inflation or another global supply chain disruption. It may begin with a single missing part. According to one report, the world’s 500 largest companies lose nearly $1.4 trillion annually to unplanned downtime, equal to 11 percent of their revenues. That reality is reshaping procurement priorities as manufacturers increasingly judge suppliers not only by price, but also by whether they can keep production running when every hour counts.

Brian Dengel, founder of KHK USA Inc., believes this shift reflects a broader realization that availability has evolved from a purchasing consideration into one of manufacturing’s most important risk-management strategies.

KHK USA Inc., based in Mineola, New York, is the North American subsidiary of Kohara Gear Industry Co., Ltd., the Japanese gear manufacturer founded in 1935. The company supplies metric gears, including spur gears, helical gears, bevel gears, worm gear pairs, gear racks and gearboxes. Its 2025 catalog includes approximately 200 styles of metric gearing in more than 27,000 configurations, while KHK USA provides factory-direct access, engineering support, CAD resources and stocked products for customers across machinery, automation, robotics, packaging and medical machinery.

Dengel explains that price often dominates purchasing conversations because it is easy to measure at the point of order. The more important number, he suggests, appears later. The report shows that an hour of downtime now costs large automotive plants $2.3 million, or more than $600 a second. In fast-moving consumer goods (FMCGs), the lower end of the surveyed range still reached $36,000 per lost hour. Against that backdrop, Dengel says the sourcing question changes quickly when a machine is down. “If you don’t have the product, it doesn’t matter what the price is,” he says.

Availability also shapes how engineers design and how quickly manufacturers can respond to demand. According to Dengel, stocked components allow engineers to move from selection to integration without waiting for custom production. He notes that this matters in prototyping, demonstrations, repair situations and equipment builds where a single component can determine whether a project continues or stalls.

The supply chain environment has made that point urgent. A report shows that 86.2 percent of manufacturers surveyed by the National Association of Manufacturers in 2024 had worked to de-risk their supply chains in the prior two years. Deloitte also noted that the average lead time for production materials in April 2024 was 79 days. Although that was below the July 2022 peak of 100 days, it remained higher than the 2019 average of about 65 days. Dengel believes those numbers explain why sourcing conversations are moving toward certainty rather than simple discounting.

Consistency is another part of the value equation. Dengel says manufacturers often need assurance that the same component will be available months or years after an original build. When parts vary in material or specification, he explains, companies may face redesign work, maintenance complications or premature replacement.

“There is definitely a correlation between price and quality,” Dengel says. “When a product is made with better materials, better processes and more detailed inspection, the customer is buying confidence as much as a component.”

That confidence becomes especially important when materials or processes face constraints. Dengel points to situations in which certain engineering plastics or heat-treatment inputs are in limited supply. In those moments, he says, a supplier relationship becomes more than a transaction. A knowledgeable provider can help identify alternative materials or processes that still meet fit, form and function requirements.

“For global manufacturers, availability is also tied to serviceability,” Dengel says. “Machinery may be designed in one country, built in another and supported across several regions.” He notes that standardized, internationally recognized components can simplify maintenance because teams can source known parts rather than reengineering around uncertain substitutes. From his perspective, that continuity reduces risk across the equipment life cycle.

The new procurement mindset, Dengel suggests, is about fully understanding cost. A lower purchase price has limited meaning if it results in downtime, uncertainty or repeated replacements.

“Manufacturers have spent years chasing lower costs,” Dengel says. “Today, the companies that stay competitive are the ones that keep production moving. When the right component is available at the right time, you’re not just buying a part. You’re protecting revenue, customer relationships and the business itself.”