Businesses find pitfalls in making goods overseas

NEW YORK >> Danica Lause manufactured knitted hats in China for four years and struggled the whole time.

“I was unable to achieve the level of quality control our brand requires in any of the factories we worked with in China,” says Lause, whose company, Peekaboos, makes hats with openings for wearers to pull their ponytails through.

To begin with, the factories were unable to make the hats on machines. Lause then had the hats knit by hand, but the sizing was often off or the openings were in the wrong place — problems she only learned about when shipments of the hats arrived.

Small businesses have been drawn to manufacturing overseas for the same reasons as Fortune 500 companies: Labor costs are lower than in the U.S. But there are downsides and complications to making goods overseas and owners have contended with these issues for years, long before the Trump administration’s trade wars and tariffs added another layer of difficulty. Small businesses without the resources and bargaining power that larger companies have can struggle as they deal with issues like poor quality, missed production deadlines and legal disputes.

“It’s a vexing problem for anyone, but being small and offshore makes it harder,” says John Gray, a professor of operations at Ohio State University’s Fisher College of Business. The disparities can start during the process of finding a manufacturer, Gray says, noting “large companies will get more attention from the suppliers.”

Most companies soldier on and find solutions, but some end up moving their manufacturing to the U.S.

In 2016, Lause began moving the work to a facility in Germantown, Wisconsin. She found engineers who figured out how to get the hats knit on machines, and she discovered it’s not as expensive as she thought to manufacture in the U.S.

When the owners of beyond Green began producing their compostable plastic bags three years ago, it was a natural for them to manufacture in India. CEO Veejay Patel came from India and had already been involved in plastics manufacturing in his

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CHRIS CARLSON - THE ASSOCIATED PRESS PHOTO In this Friday, July 5, 2019, file photo Achyut Patel, Director of Operations, Rudy Patel, Director of Business Development and Katrina Hart, business development coordinator pose for a picture at beyond Green, a maker of biodegradable bags in Lake Forest, Calif.