The bottom line rising material and logistics costs, along
with currency factors and speed of turnaround, are dimming the
shine of offshore sourcing by U.S. parts suppliers. But whether
an all-out shift in gear is looming remains to be seen.
In a trend whose progress has been marked mainly by anecdote
and example, one recent experience by Jerry Zeitler, president
of Die-Matic Corp., serves as a typical illustration that
"reshoring" is for real, at least for part of U.S. industry.
Zeitler late one Friday received a request for quotation (RFQ)
from a so-called Tier 1 automotive supplier for work then being
sourced in Asia for one of the Detroit-based Big Three
automakers. But "escalating material, logistics and currency"
factors were prompting the supplier to review the possible
recall of the work back to the United States, and it was asking
for domestic companies to bid on the job.
Moreover, it wasn't likely to be just a one-off inquiry. The
customer, who is looking to "localize" additional production,
told Die-Matic, based in Brooklyn Heights, Ohio, to expect
Die-Matic, which provides metal stampings and specializes in
progressive dies and assembly fixtures, had been losing work to
Asia for the past 10 years or so. Not only were the prices
charged by the Chinese for tooling cheaper than domestic, but
at times "they just threw it in" with the aid of subsidies as
export tax rates, Zeitler said. "A lot of that has gone away,"
he said of the subsidies.
The trend has been increasing in the past six to nine
months. "There are probably a half dozen jobs I have now and a
half dozen that are in the works," said Zeitler, who thinks
"this is just the beginning" of work returning to the United
States. Customers are returning because of quality, currency
and logistics, he said.
One contract shop that itself tried outsourcing tools and
instead found it could "do it faster and easier" at home is GR
Spring & Stamping Inc., which about seven years ago hired a
Chinese engineer to source tools in that country but eventually
decided that it was "faster and easier" not buying
"The only time we place a tooling order offshore is when our
customers request it," said Jim Zawacki Sr., chief executive
officer of the Grand Rapids, Mich.-based automotive parts
supplier, which hasn't gone back to China for tooling in two
Zawacki acknowledged that GR's tooling shop wasn't initially
up to the challenge of turning things around. But it adopted
the concept of lean manufacturing, the production strategy
geared toward achieving the shortest cycle times by maximizing
value and eliminating waste.
"We weren't competitive to start with," he said. However,
the company achieved its goal of slashing turnaround time from
16 weeks to 12 weeks and then to eight weeks or better to
design a large tool, while some smaller tools for a domestic
automotive transplant were done in two to three weeks. This has
helped support GR's stamping business, and in the process of
increasing its speed "we've also lowered our cost."
Two years ago, GR was asked by a Japanese automaker to
design a part and deliver it to Japan in five and a half weeks,
Zawacki said. Due to the quick turnaround, the customer at
first thought the tools were samples instead of the finished
products. "They couldn't believe it," he said.
While tooling represents just 10 to 15 percent of GR's
overall sales, it also is the foundation of its business,
Zawacki said. "If you're building the tool, you know you have
(the rest of) the business coming," he said.
The environment that spurred reshoring also has helped some
manufacturers grab work from overseas. One company that turned
the tables by actually moving into a domestic market formerly
dominated by foreigners is 37-year-old Texarkana Machine Co.
Since 1988, the Texarkana, Texas-based company has specialized
in replacement parts and subassemblies for equipment used in
the finishing departments of paper mills that cut, wrap, label
and palletize such products as copier paper. The original
equipment is manufactured mainly abroad, especially in Germany
but also in Italy. But the equipment is used heavily and
certain parts must be replaced on a regular basis, said Steve
Petty, Texarkana's president, and it can take as long as six
weeks to deliver those parts. Petty's company took some of the
parts, applied reverse engineering, put Texarkana's own spin on
them and sold them at lower prices than the original equipment
manufacturers (OEMs) on a replacement basis. Petty emphasized
that the advanced capital equipment used by his company would
cost pretty much the same whether purchased in China or
anywhere else, but Texarkana's trained labor force is able to
operate two or three machines per man. "And that's a selling
point," he said, citing the company's computer numerical
control machinery and lathes, which he said helps his company
Zeitler noted that Chinese shops generally have smaller
presses than their U.S. counterparts-in the 100- to 200-ton
range, with smaller beds that aren't able to run a five- or
six-foot progressive die. Die-Matic's presses go up to 1,000
The global recession had an impact on Chinese companies
along with everyone else, as indicated by one job won by
Die-Matic, he said, noting that manufacturers in that country
forced to cut back weren't able to immediately call back
experienced workers when conditions improved. And when
production volumes returned, not only did lead times extend but
Meanwhile, foreign OEMs haven't been happy about the
competition they've been getting from Texarkana. "They told me
that they'd run me out of business," Petty said. He's still
waiting. FRANK HAFLICH