Thorley Industries LLC began planning several years ago to
launch a baby car seat with a set of electronic controls and a potential
novelty: The Pittsburgh-based firm considered making the seats in the U.S. Officials
at Thorley, which manufactures most of its infant-care line in China,
sought to avoid for at least one product the trans-Pacific flights and language
barriers that come with doing business overseas. They looked to lower shipping
costs and eliminate the months long wait for supplies to arrive and clear
customs. There also was the chance customers might prefer American-made.
For years, the U.S. has ceded more and more of its
manufacturing to lower-cost corners of the global economy. No one expects the
U.S. to again make most of the electronic gadgets, tools, toys, furniture,
lighting and other household products that tally more than $500 billion a year
in imports. But some companies contend the U.S. has renewed its attraction.
Wages are stable, for example, while China’s have soared. The U.S. energy boom
has reduced natural gas prices and kept a lid on electricity costs. Plus, more
companies want to protect designs from overseas copycats, keep closer tabs on
quality control and avoid potential disruption in supply chains that span
oceans.
As China’s cost advantages shrink, the U.S. has the
potential, with investments in automation, to retrieve a share of such imported
household products as TVs, vacuum cleaners and toasters. Any shift, no matter
how small, may well depend on the experience of such companies as Thorley,
which plans to begin selling its new infant car seat later this year.
A dozen Thorley managers began their quest with a tour of
prospective U.S. factories in four states to find a manufacturer—a mission
undertaken by other pioneering companies.
Capital Brands LLC of Los Angeles, maker of the Nutribullet
and Magic Bullet blenders, is considering moving production to the U.S. from
China. But Colin Sapire, chief executive, said his Chinese partners have
engineering skills and a work ethic that could be hard to match in the U.S. He
said the company has sold more than 20 million of the Chinese-made blenders in
the past two years.
Even so, Mr. Sapire said, his company would continue to
search for opportunities to make products in the U.S. More U.S. companies would
shift production from abroad if they analyzed the costs of overseas production
to include such things as the shuttling of executives abroad and holding large
inventories as a hedge against supply disruptions. Some of the hurdles are
practical. The U.S. needs to rebuild its supplier base, as well as invest in
more efficient manufacturing equipment. The average age of industrial equipment
in the U.S. has passed 10 years old, the highest since 1938, according to
estimates by Morgan Stanley & Co. economists.
A few big companies have returned some production to the
U.S., including WhirlpoolCorp., hand mixers; Caterpillar Inc.,
excavators; and Ford Motor Co., medium-duty commercial trucks. But
many U.S.-based designers of consumer products over the past two decades have
grown comfortable contracting with overseas manufacturers. Some doubt they can
get the same expertise, efficiency and flexibility in the U.S.
The 10-year-old Thorley company, which has annual sales of
about $50 million, had little experience with U.S. manufacturing, except for
its infant bathtub, which is molded in Erie, Pa. Its automatically folding
stroller, motorized baby swing and playpen are made in China.
One of Thorley’s main manufacturers in China is Jetta Co.,
which makes more than 100 products for foreign firms, including robotic toys,
vacuum cleaners and American Girl dolls. At Jetta’s factory complex in
Guangzhou’s Nansha district, halls are piled high with parts-filled plastic
boxes headed for dozens of production lines. On a recent day, a train of carts
loaded with 4moms boxes rumbled toward a warehouse. Women on a production line
assembled the 250 or so parts making up the 4moms mamaRoo infant seat.
But labor costs are rising as much as 20% a year. Jetta
workers in Nansha typically earn around 3,300 yuan, about $537, a month. Those
with more specialized skills earn more. The median wage of assembly workers in
the U.S. is about $2,600 a month, according to government data. Though Chinese
factories are known for flexibility, Jetta and Kin Yat officials said it was
getting harder to ramp up production to meet spikes in demand. Workers are
harder to find. Jetta still varies its workforce considerably. The Nansha
factory swings from around 4,500 workers to 8,500 at peak times.
Unlike China, the U.S. doesn’t have large numbers of
so-called contract manufacturers that specialize in producing finished consumer
goods. Mr. Yanov and his colleagues set up visits to potential partners in
Pennsylvania, Ohio, Illinois and Kentucky. Three companies bid on the project.
Thorley also got bids from manufacturers in China.
Once shipping and other expenses were calculated, Thorley
discovered it would cost about the same to make the baby seats in the U.S. as
in China. Mr. Daley, the CEO, thought it would be easier to monitor production
and maintain quality control with a local factory. On the other hand, Mr. Yanov said, his company
knew what to expect from Thorley’s Chinese partners, who expertly managed
frequent changes in design and specifications for new products.
The new car seat requires electronics parts from Asia, as
well as imported fabric. Mr. Yanov knew his Chinese partners were good at
integrating the electronics with other parts, but, he said, he wasn’t sure what
to expect from a U.S. factory. After reviewing the Chinese and U.S. bids,
Thorley decision makers began debate in the afternoon and finished around 8
p.m. They would make the car seats in China.
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