Is ‘Made In Amer­ica’ Primed For A Come­back?

Luxe Beat Magazine - - Contents - Busi­ness

More Com­pa­nies Could Man­u­fac­ture In The U.S. By In­vest­ing In Au­to­ma­tion, Says In­ter­vac De­sign Founder

The de­cline in Amer­i­can man­u­fac­tur­ing and the rise of prod­ucts made in China have frus­trated Amer­ica work­ers and been fod­der for po­lit­i­cal com­men­ta­tors for years. But more re­cently, signs have emerged that a re­ver­sal of for­tunes is in the making.

Ris­ing la­bor costs in China have prompted many man­u­fac­tur­ers to look else­where to pro­duce their goods. Some upped their pro­duc­tion in other Asian coun­tries, such as Viet­nam, but the stage also was set for many busi­nesses pro­duc­ing over­seas to re­turn to the U.S.

Of course, some never left th­ese shores to be­gin with.

“In many cases, com­pa­nies can man­u­fac­ture in the United States if they are will­ing to in­vest in au­to­ma­tion,” says Susan Sch­lap­kohl of In­ter­vac De­sign, which makes built-in vac­uum cleaner sys­tems for boats, RVS and small homes.

“A lot of busi­nesses were drawn over­seas be­cause they felt the cost-sav­ings as­so­ci­ated with for­eign pro­duc­tion made sense. Now that stud­ies show the cost gap be­tween the United States and China is shrink­ing, they are start­ing to see the ad­van­tages of com­ing back home.”

Sch­lap­kohl un­der­stood those ad­van­tages all along. She and her hus­band, Peter, an en­gi­neer who em­i­grated from Ger­many in 1964, were de­ter­mined to keep In­ter­vac’s pro­duc­tion in the United States when they founded their com­pany in 1998.

“We were cer­tain that with our au­to­ma­tion and de­sign back­ground, we would be able to make our vac­uum clean­ers in Amer­ica us­ing Amer­i­can work­ers,” Sch­lap­kohl says. “We were right.”

Sch­lap­kohl isn’t the only one who is high on Amer­ica’s odds of re­bound­ing on the man­u­fac­tur­ing front.

The Bos­ton Con­sult­ing Group, a global man­age­ment con­sult­ing firm, said in 2011 that China’s man­u­fac­tur­ing-cost ad­van­tage over the U.S. was shrink­ing rapidly. The firm pre­dicted then that within five years ris­ing Chi­nese wages, higher U.S. pro­duc­tiv­ity and other fac­tors would “vir­tu­ally close the cost gap be­tween the U.S. and China for many goods con­sumed in North Amer­ica.”

“We are start­ing to see that hap­pen­ing,” Sch­lap­kohl says.

She says in her view, “Made in Amer­ica” is more than just a slo­gan. It makes good busi­ness sense. She of­fers a few rea­sons why.

Qual­ity con­trol

It’s much eas­ier to main­tain qual­ity when you are over­see­ing the process your­self, rather than farming out the job to some­one in a for­eign coun­try, Sch­lap­kohl says. “In our case, we wanted to make sure we were ship­ping vac­uum clean­ers that meet our stan­dards as well as the stan­dards of Un­der­writ­ers Lab­o­ra­to­ries,” she says. “So we in­vested in au­to­ma­tion, be­cause that is the only way to de­liver a con­sis­tent prod­uct at a com­pet­i­tive price.”

Fi­nan­cial con­sid­er­a­tions

The rise in Chi­nese la­bor costs that made the wage gap less sig­nif­i­cant is just one fac­tor that is making do­mes­tic pro­duc­tion more en­tic­ing. Ship­ping costs also have jumped. Mean­while, a re­duc­tion in do­mes­tic nat­u­ral gas prices has helped keep elec­tric­ity costs from soaring. “Also, when you are im­port­ing, you fight the bat­tle of what prod­uct mix to bring in,” Sch­lap­kohl says. “If you guess wrong, you end up with higher in­ven­tory lev­els and that re­duces profit be­cause of slow in­ven­tory turnover.”

Eco­nomic boost

Amer­i­cans need jobs, so any time a com­pany can keep them here rather than ship them over­seas is a win, Sch­lap­kohl says. Those jobs help boost the over­all econ­omy, she says, which im­proves busi­ness for ev­ery­one.

“For any­one who says man­u­fac­tur­ing com­pa­nies can’t com­pete if they don’t go over­seas, my re­sponse is sim­ple,” Sch­lap­kohl says. “At In­ter­vac, we’ve been making our prod­ucts in the United States for 17 years. So don’t tell me it’s not pos­si­ble.”

About Susan Sch­lap­kohl

Susan Sch­lap­kohl, who has a back­ground in fi­nance and in­vest­ment, is founder with her hus­band, Peter, of In­ter­vac De­sign, which man­u­fac­tures built-in vac­uum cleaner sys­tems for boats, RVS and small homes. Sch­lap­kohl pre­vi­ously had 30 years of bank­ing ex­pe­ri­ence, and also was pres­i­dent of JJFN Ser­vices Inc., which pur­chased model homes from builders and leased them back to the builder.

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