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Daily Transcript roundtable

Some local manufacturers bringing production back from China

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You hear it over and over again during discussions on the U.S. economy: America doesn’t make things anymore.

Well, some local companies would beg to differ.

At a recent Daily Transcript roundtable on manufacturing in San Diego, several companies said they have actually moved their manufacturing from China back to the local area for quality control and other reasons. California’s tough labor laws can add to extra costs and headaches, but ultimately they said it was worth it.

“I’ve had molds in China that have been there for 10 years, and I just brought 10 molds back,” said Bruce Browne, president of Advanced Plastics Inc. in National City. “After doing the math, I can make the parts for the same price they can, and my customer used to pay the freight, the duty, the inland, the brokers -- now they don’t have to pay anything.”

Browne said making his products locally also enables him to turn around orders for clients faster.

Another local plastics maker, Richard Manson, operating director at Plastics Engineering and Development Inc., agreed there are a lot of hidden costs in doing business with China. For him, the quality is a major problem as well. His company makes a lot of medical products that must meet FDA standards.

“They may make it extremely cheap, but the quality really leaves something to be desired, particularly if you’re in a higher-end product,” he said. “A lot of people are beginning to really look at bringing products back from China."

Michele Nash-Hoff, president of the manufacturing sales representation company ElectroFab Sales, reports on San Diego’s manufacturing industry and has written a book called, "Can American Manufacturing be Saved? Why We Should and How We Can." In the book, she chronicles several American companies manufacturing changes, including the Vista-based brace maker DJO, which brought some business back from China.

She said China’s changing labor laws, which are affecting labor costs, and ongoing quality issues are making some American companies change their minds about where they manufacture. Add increasing costs and risks in shipping as shipping companies reduce their routes, and you have a lot more challenges than companies used to.

“The cost differential between what we can do here and what China can do is shrinking,” Nash-Hoff said.

Of course, there are reasons Americans turned to China in the first place. California in particular has stringent labor laws that can make manufacturing in state difficult. Willie Morrow, president of the hair care products company California Curl Ltd., said he had to stop his process of silk screening labels onto his products because state laws about cleaning up the chemicals didn’t make it worth his while.

“It was just too much: ‘What do you do with the waste? Where did you put it? Did you weigh it?’” Morrow said, recounting all the regulations. “It was just such a headache that I had to get that completely out of my company.”

Rick Sunamoto, operations director for HM Electronics, which largely makes communications devices like headsets that can be used in theaters or in fast food drive-through windows, said his company tries to accommodate employees with flexible work times. Some want to come in as early as 5:30 a.m. But California’s laws on when employees can take a lunch break and for how long lead to less flexibility.

“(The employees) would prefer in many cases not to do that,” Sunamoto said. “If they want to take off a half hour, in the past you’d say ‘OK, take it off and make it up later.’ You can’t do that anymore.”

But still, when Sunamoto took over HM Electronics’ manufacturing processes, he brought most of its processes back to the United States from factories in Mexico and China.

“We found that vertical integration worked better for us,” he said. “Being a small company in a niche market we can control our sources, control our materials, and today we assemble about 90 percent of our product in-house.”

Nash-Hoff said that as lean manufacturing has become more prevalent at large companies in the United States, she hopes it will trickle down to smaller companies like those in San Diego. She said lean manufacturing, where companies only expend resources to create value for the end customer, could allow for more manufacturing in America.

“If a small company embraces it and goes through, it can make a big different in their competitiveness,” she said of lean manufacturing. “Innovation and American ingenuity (are) the keys too.”

The roundtable was sponsored by Strategic Development.

The attendees at the manufacturing roundtable were: Willie Morrow, president of California Curl Ltd; Richard Manson, operations director of Plastics Engineering and Development Inc.; Kevin Flynn, general manager of Complete Recycling; Jason Minter, director of products sector for Epsilon Systems Solutions; Mimi Nguyen, vice president of sales and administration at L&T Precision; Steve Enewold, vice president and deputy IPT leader, HALE systems, integrated systems at Northrup Grumman; Michele Nash-Hoff, president of ElectroFab Sales; Rick Sunamoto, operations director of HM Electronics; and Bruce Browne, president of Advanced Plastics Inc., and Don Zilloux, chairman and chief scientist of Strategic Development.

Video: Interview with Willie Morrow

Send your comments to Elizabeth.Malloy@sddt.com

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1 UserComments
arte nathan 10:38am December 2, 2009

Excellent article and a good representation of yesterday's discussion. This is a great theme that needs to be repeated often. Thanks.