China Manufacturing – Now Returning to the U.S.

July 14, 2011

I was recently speaking with another customer of ours, and I heard still more China stories about some of their experiences and the efforts they had made, and some of their results and ensuing decisions.

They had decided that they needed to pursue sourcing some of their parts – both plastic and metal – as well as some of their tooling – overseas in an effort to save money.

Now they did not just do this lightly.  They did take a “naïve” approach to this and simply find a firm in China on the Internet and send some drawings and a purchase order over there “blindly.”  They searched for companies with the correct capabilities, sought out referrals, found several companies, and then went and visited these companies in China.  After having selected the companies with whom they wanted to work, they truly attempted to enter into a “partnership” with them and emphasized that – a “partnership” – in all their discussions.  They made all of their technical people available to advise them so as to make sure they got what they were looking for, made several trips, etc.  Then they even had representatives from these Chinese companies visit them here in Minnesota so as to see a lot of their technology here, made sure they understood how they were using these components and tooling, and made a real investment in an effort to establish this true “partnership.”

This customer shared two very specific outcomes with me, with which they were very dismayed.

The first was in the area of Injection Molded Tooling that they wanted to have these Chinese companies make for them.  The specifications from this Minnesota company were that the tooling must be made from 420 Mold Quality Steel.  Why 420 Mold Quality Steel?  Because they had found, over the years, that if they ran into a situation where they wanted to modify the tooling after it had been made that this 420 Mold Quality Steel lent itself very nicely to being welded (i.e. build up an area of metal inside of the molding, then machine that area into the exact size & shape of the modification that they wanted to make).  This material was good, they felt, for how they wanted to work with this Molding Tooling in the future.  One day they tried to do this with one of their tools – weld onto it.  And it would not weld.  They were perplexed and started to investigate why.  They came to find out that this material was not a 420 Mold Quality grade of material.  An inferior grade of material had been used, and had been used on many of their tools, unbeknownst to them.

The second problem they encountered was with a metal part that they were sourcing.  It was to be made of a mild steel, nothing really too special, and the part was then powder coated.  So the material surface was not showing when parts were received.  They were not happy with some aspects of the parts, and they started to go through the basics in checking these parts.  The first thing they discovered was that the material in these parts was not even magnetic!  It was not capable of holding their test magnet!  Clearly it was not a grade of material that matched their request.

And this is with a “Partner” company with whom they had invested a lot of time and effort, not to mention money, at the very beginning of the relationship, and they were not providing product as per the agreed upon, and well communicated, specifications.

This customer of ours has decided, while they are not completely abandoning all of their suppliers and parts/products that they buy over in China, he did tell me that approx. 50% of the metal parts that they had decided to source in China were now coming back to the United States.  They had had it!

 Bill Remes, Vice President, Sales & Marketing, AmeriStar Manufacturing  ( www.ameristarmfg.com )

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