A steady reduction in domestic industrial activity has eroded confidence, but the environment is beginning to change
The reduction in domestic industrial activity has spawned growing feelings of anxiety and unease that are felt across many segments of the United States. By revisiting history we see how the proud claim of “Made in America” began a slow but persistent back slide beginning in the 1960’s and 70’s.
In the 1970’s the global manufacturing landscape had changed, and the disruption for most Americans became most apparent in the automobile industry. If the average American consumer wished to purchase an economical new automobile during that era, one had a choice: Purchase a Chevrolet, Ford or Chrysler and pray that the car achieved a lifespan approaching 60,000 miles, or choose a Toyota or VW and enjoy safe, comfortable, dependable transportation for the next decade or more. Clearly, manufacturing in America was being challenged in a very real way.
Changes crept into the American economy over the following thirty years that were both damaging and pernicious. Management had awoken to the economic benefits of moving operations to lower cost regions of the world. Building products in the US had become relatively expensive and “technology” in one form or another had taken the place of skilled labor. This trend catapulted traditional US manufacturing hubs like Cleveland, OH; Detroit MI and Pittsburgh, PA into a state of disbelief and despair.
Today, conditions are changing in American manufacturing
With a hand-up from the government, we have seen signs of change. Even with the influx of ever-cheaper imports from Asia, America’s appetite for, and ability to afford quality is on the rise. While it is true that imported automobiles remain popular, American brands are now once again counted among the best products of their type available.
In many ways, the tables have turned: America has the highly skilled labor force required to design and make great products. And this is reflected in the growing number of small, entrepreneurial manufacturers that dot the nation. In some cases, “Made in America” will equate to marginally higher prices, (compared to Asian imports) but the price differential is counter-balanced by exceptionally high quality – among a number of other very important factors.
Advantages that extend beyond cost
A recent Boston Consulting study shows that there really isn’t a huge difference in the cost of manufacturing in the US vs. China anymore. Over the last decade, the cost savings have diminished measurably. This is because of the increased labor cost associated with higher employee wages, improved working conditions and increased cost of materials and energy. Just over a decade ago, a product that would cost $1 to make in the US cost about 86.5 cents in China (13.5% savings). Today, a $1 part made in the US will cost 95.6 cents to make in China (4.4% savings). The US has quickly closed the gap by virtue of advanced manufacturing techniques and increased productivity.1
In addition to cost, there are significant advantages for turning to domestic resources that were previously overlooked in the rush to outsource to South Asia and China. Access to qualified technical support comes to mind as a benefit that was once underrated if not completely overlooked in the push to outsource. Increasingly, American manufacturers are closing low cost, offshore call centers and replacing them with domestic operations, where service personnel can both understand questions better and dispense actionable advice and solutions (in the vernacular that most Americans understand) over the phone. The benefit of returning service organizations to America is clear: frustration decreases while confidence and brand loyalty soar.
In contrast to what is often provided by offshore suppliers, properly written operations and maintenance documents, as well as detailed electrical, mechanical and pneumatic systems documentation, deliver a huge advantage when setting up, maintaining and servicing a machine. In addition, domestic manufacturers are held to a higher quality standard for components and are far more likely to abide by health, safety and environmental standards for the equipment they make.
Fast access to repair and replacement parts can be crucial, as many facilities rely upon their machines to be fully operational two to three shifts per day – every day. To these businesses, spare and consumable parts, plus repair expertise is essential to ensure business continuity. When required, onsite training and repair can be obtained quickly and efficiently on a machine manufactured and serviced in North America. Product testing is another challenge for Asian manufacturers. Considering travel expenses, language barriers, etc., offshore factory acceptance testing is nearly impossible. The cost of freight and the extended time-to-delivery figures significantly into the calculation as well. For these reasons, consumers are looking for products that are quite simply, made in America.
PAC Machinery: Made in the USA
The PAC Machinery family of brands (Packaging Aids, Clamco, Vertrod, Rollbag Systems, PacMed and Converting Technology) understands and values these fundamental advantages. 90% of the flexible packaging equipment offered by PAC is proudly manufactured in the United States – and the majority of components and sub-systems involved in their manufacture are sourced domestically as well.
Automatic baggers, heavy-duty impulse sealers, medical pouch sealers and sophisticated shrink packaging equipment are manufactured at the Clamco-Vertrod-Rollbag Systems facility in Berea, Ohio. There, designers, engineers, and product marketing experts envision and build the next generation of packaging equipment. Steeped in manufacturing history, this Northern Ohio region has an abundant, qualified labor force.
Though not known as a manufacturing Mecca, the Marin County city of San Rafael, California is home to Packaging Aids, PacMed and PAC Machinery headquarters. There, the company designs and builds bag sealers, industrial vacuum sealers and medical sealers. San Rafael is the home to the PAC Machinery customer support group as well. There, a team of highly experienced, bilingual (Spanish & English) service and support professionals’ field calls from across the U.S., Canada, Europe, Mexico, South America and beyond.
Positioned strategically in the heartland of America, Converting Technology is located in suburban Milwaukee, Wisconsin. There the company manufactures polyethylene bags on a roll, folded bags, mailer bags, poly tubing and other products used on automatic bagging equipment.
TCO: the final frontier
Regardless of where a piece of capital equipment is manufactured, one of the most important challenges the purchaser faces is formulating a realistic Total Cost of Ownership (TCO). While the purchase price of equipment manufactured in Asia may be attractive, the actual TCO may be much higher. A calculus must be made for peripheral costs including: spare parts, access to timely training and service, upkeep and maintenance, freight, set-up costs and much more. As we seek to determine the TCO of imported equipment, we may find ourselves working across cultures, time zones and industries – plus the vocabulary we use to communicate may sound the same but may not mean the same thing to everyone involved. Today, for many products that are “Made in America” the upshot is a lower TCO, plus buyers can enjoy the pride of supporting our domestic economy and keeping the American workforce the most capable in the world.