Setting Up a Manufacturing Relationship in South Carolina

Before establishing a manufacturing relationship in South Carolina, research state-specific regulations that may affect your operations. This includes understanding the South Carolina Manufacturers Responsibility and Consumer Convenience Information Technology Equipment Collection and Recovery Act, environmental regulations from SC DHEC (Department of Health and Environmental Control), and any industry-specific regulations that apply to your products.

Register your business with the South Carolina Secretary of State and obtain all necessary business licenses and permits. Manufacturing operations typically require local business licenses, zoning approvals, and potentially specialized permits depending on the nature of manufacturing (e.g., food processing, chemical manufacturing, etc.). Contact your local county and city government offices to determine specific requirements.

Create a comprehensive manufacturing agreement that outlines the terms of your manufacturing relationship. Include production specifications, volume commitments, pricing structures, delivery schedules, quality standards, and termination conditions. Ensure the agreement complies with South Carolina's Uniform Commercial Code (UCC) provisions and includes choice of law clauses specifying South Carolina jurisdiction if desired.

Prepare a non-disclosure agreement to protect confidential information shared between parties. South Carolina follows common law principles for trade secret protection and has adopted the Uniform Trade Secrets Act. Ensure the NDA clearly defines what constitutes confidential information, the permitted uses of such information, the duration of confidentiality obligations, and remedies for breach.

Develop a quality control agreement that establishes quality standards, testing procedures, acceptance criteria, and remedies for non-conforming goods. This document should align with industry standards and any applicable South Carolina or federal regulations for your specific products. Include inspection rights and quality assurance protocols.

Create a supply chain agreement that addresses logistics, inventory management, delivery terms, and risk allocation during transit. Ensure compliance with South Carolina transportation regulations and include provisions for supply chain disruptions. This agreement should clarify responsibilities for shipping, warehousing, and distribution.

Prepare an IP assignment agreement that clearly establishes ownership of intellectual property created during the manufacturing relationship. South Carolina follows federal IP laws, but state contract law will govern the agreement. Specify ownership of patents, trademarks, copyrights, and trade secrets, as well as licensing terms if applicable.

Secure appropriate product liability insurance coverage that meets South Carolina requirements. South Carolina follows a modified comparative negligence rule for product liability claims, so adequate insurance is essential. Request a certificate of insurance that names all relevant parties and meets the coverage limits specified in your manufacturing agreement.

Obtain documentation of your product liability insurance coverage. This certificate should detail policy limits, covered parties, policy period, and any special endorsements. Ensure the certificate meets the requirements specified in your manufacturing agreement and South Carolina law.

Register with the South Carolina Department of Revenue for applicable state taxes, including sales and use tax, income tax, and any industry-specific taxes. Manufacturing equipment may qualify for certain tax exemptions in South Carolina, so research potential tax incentives available for manufacturers.

Ensure compliance with South Carolina employment laws if hiring workers. This includes registering with the Department of Employment and Workforce for unemployment insurance, obtaining workers' compensation insurance, and understanding state-specific employment regulations. South Carolina is a right-to-work state with specific requirements regarding employment relationships.

Create a compliance certification document that confirms adherence to all applicable South Carolina and federal regulations. This should include certifications regarding environmental compliance, workplace safety, product safety, and any industry-specific requirements. This document serves as evidence of due diligence in regulatory compliance.

Develop a tooling agreement that addresses ownership, maintenance, and use of manufacturing tools and equipment. Specify whether tools are owned by the manufacturer or the client, responsibilities for repair and replacement, and end-of-relationship disposition of tooling. South Carolina property law will govern ownership aspects of this agreement.

Prepare a termination and transition agreement that outlines procedures for ending the manufacturing relationship. Include notice requirements, wind-down periods, handling of work-in-progress, return of materials and intellectual property, and transition assistance. This agreement helps prevent disruption if the relationship ends.

Ensure compliance with South Carolina environmental regulations administered by the SC Department of Health and Environmental Control (DHEC). Depending on your manufacturing processes, you may need air quality permits, wastewater discharge permits, hazardous waste management plans, or other environmental approvals. Document your compliance efforts.

Compile documentation demonstrating compliance with South Carolina environmental regulations. This should include copies of permits, environmental impact assessments, waste management plans, and records of any required environmental testing or monitoring. This documentation may be required by regulatory authorities and should be maintained for potential audits.

Develop and implement an Occupational Safety and Health Administration (OSHA) compliance program specific to your South Carolina manufacturing operation. South Carolina operates under the SC OSHA program, which has adopted federal OSHA standards with some state-specific requirements. Document your safety protocols, training programs, and hazard assessments.

Create a system for ongoing monitoring of regulatory changes affecting manufacturing in South Carolina. Assign responsibility for tracking updates from relevant agencies including the SC Department of Commerce, SC DHEC, SC Department of Labor, and federal agencies. Establish a process for implementing necessary changes to maintain compliance.