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Ray Malley remembers something his late father used to say to him whenever the elder Malley made a purchase.
“He’d say, ‘if it’s made in the USA, it’s good for the USA. Closer to home is better,’” Malley recalls. Now, the advice that the former Californian received from his father may be in step with that of several local manufacturers who’ve started a new trend—bringing their manufacturing back to the state from abroad.
“Not only have I been hearing that it’s going to happen, it’s a fact,” says Lew Cramer, president and CEO of the World Trade Center Utah. “Manufacturers in this state, and in several other states, are asking themselves what makes the most sense to do. They no longer say, ‘Hey, I’m going offshore no matter what,’ because that is short-sighted. I’ve talked to several local manufacturers who are no longer interested in going to China for their products, and that’s a great thing for Utah.”
A number of Utah manufacturers discussed the subject at a Utah Business roundtable earlier this year (see our April issue). Companies such as Orem-based Mity-Lite and Bountiful-based Orbit Irrigation have expanded their local production efforts and have been importing less and less from Asia. Other Utah companies such as Little Giant Ladders and BlendTec are doing the same.
There are several reasons for the shift in strategy—customer loyalty being among them.
“We have noticed in the stores and through visits with customers that pro-ducts that say ‘Made in the USA’ sell better here, as well as in foreign countries,” says K.C. Ericksen, president and CEO of Orbit. “We’ve found ways to make the move back to local manufacturing more strategic, and it’s helped us on many fronts.”
Cramer, who visited China as part of a state-sponsored trade mission trip in April, observes that “thousands of [Chinese] companies have gone out of business” over the past couple of years, due largely to the fact that manufacturers are choosing to bring their production back to their native countries.
“There are many advantages for doing that,” Cramer says. “Among them are more quality control, employee morale and motivation, and reducing costs by incorporating more and more automation into the process. Price alone [by importing products from China] is becoming less of an incentive for companies who want to keep production at home.”
Mity-Lite is a great example.
“Our decisions [on importing] have gotten clearer over the past few years,” Mity-Lite COO Brian Bowers says. “There are some products that we’ve brought back in-house, the most successful ones like our Mesh-One and Flex-One products. We had intended to outsource them, but our operations team asked if they could bid, on behalf of our employees, against foreign pricing. We concluded we could probably do it less expensively here than overseas.”
The highly popular Flex-One folding chair is the company’s first entry into retail, and it’s now selling in more than 400 Sam’s Club stores nationwide. The chair is made entirely at the Orem plant. What made in-house production preferable to importing the chair?
“One reason is that shipping costs are rising,” Bowers says. “We’ve seen our [shipping] container cost go up by 33 percent in the last two years from China. Then there’s the unfavorable currency issue in China, where it’s changed negatively by 25 percent for them, which has made pricing difficult for them to get hold of. We used to have all of our table legs made in China, but by making some adjustments, we started bringing the manufacturing of those legs back to the U.S. two years ago. Now, 95 percent of our legs are made here.”
Lag time is another issue, as the old proverbial phrase “it’s on a slow boat from China” is more reality than metaphor.
“Almost all of our standard products can ship within two weeks when we make them here, and that’s outstanding for our industry,” Bowers says. “You can warehouse a lot of product you get from overseas, but that costs as well. And because so many of our products are custom made, we’d have to hold lots of different SKUs.”
Chinese manufacturers won’t start working on a product until it’s ordered, and shipping takes at least four weeks. So it might be seven to eight weeks from start to finish to get product from overseas. “It’s painful,” he says.
The Home Team
Bowers and Ericksen agree that as more and more product is made at their plants, employee morale and motivation has improved.