Customer "has" to quote products in "low-cost

[indiana dave]

UUUGH!!! We've put a lot of effort into a group of projects for large automotive supplier. We've done all of the design work, had prototype SLA parts built, and are preparing to have the prototype molds built with the design changes implemented. now he says purchasing wants him to source the parts from Asia, India, etc...
We've been payed for the SLA parts, and he was paying for the prototype molds, but we have a lot invested in design, concept and R&D. We were planning on producing the parts here and that's where we make our money. There is no way we'll outsource production to Asia.
How do we respond to this???
Our company is known worldwoide for quality, sophistication, and being able to solve difficult packaging and shipping needs. We will not stoop to compromising quality by going this route, and we do not have time to babysit a low-cost supplier.

[Skip]

I guess your "customer" already has possession of the SLA parts?? Probably too late to retreive them----however, if I were in your place, I would put a screeching halt to the prototype mold
production!! Tell the customer to have his outscourced vendor produce his own damn molds!! When the Asian scource fails to deliver--either in terms of quality or reasonable time, my guess is they will be back to you with "hat-in-hand"!!

[Bader]

David

I can understand how you feel. IF you are doing a job, dont marry your company. Give youe best services but do not give your emotions.

Skip has rightly said that everything should have been sorted out first and mistakes are always lessons in wisdom.
If it were ME, i would never outsource a tooling job to anywhere in the world without having "confidence" in the abilities of the tool maker.

I am based in Asia (Pakistan) and it is a fact that we get a lot of development work from abroad. As the liquid would take the path of least resistance, the outsourcing will also find its way to the more economical sources (without compromise on Quality and Time).

Let me tell you that work comes to us 'not' because we are cheap but because the companies find USA to be expensive for that particular job.

There is no way we (atleast myself) can match my molds with those made in USA but for simple tools, we do a fairly good job.

Dont use a Mercedece to fetch grocery when you have Mini Austin parked outside!


Regards,


Bader

[indiana dave]

The parts being shipped in the containers are being produced in India. Maybe that should've told us something. I think, if anything they will source the parts in India, and have theym being produced close to where the parts are produced.
In our company, we do most of the development work before we even have a p.o. just to "sell" ourselves and get the projects. Fortunately, I am adimant about not giving out CAD data, so all they have to work from is some prints with only a few overall dimensions and, in this case, the SLA parts, which are not the complete parts. They're just one corner of each.
Being layed off after ten years as a mold and product designer a couple years ago, I have fealt the pain of outsourcing to low-cost countries before, but I was hoping not to have to deal with it again. Guess (without getting political) it's just the way it'll be for the next few years.

[Bader]

David

There are two aspects of this business:

1) design and development
2) supply of parts

I suggest that you keep these two separate and quote for each separately. Make the first part 'expensive' enough to cover your innovative skills and keep the second 'competitive' enough so that the customer will not have to look for another source.

Like this, even if they walk out after getting the part designed you already have been paid.

You cannot stop outsourcing - period!


Bader

[indiana dave]

And the good news keeps coming!
I just delivered a bunch of product to another customer. I found out that they are getting ready to move their manufacturing to Mexico. This plant will become just a distribution center...

[Louis]

We have had these conversations off and on for a few years now; stop buying the products and they won't sell. It's as simple as that. But let's face it - not one of us is prepared to do that.

Besides, I'm not convinced that it would work. We are not the only market in the world, and certainly not the largest anymore . . .

Compete - that is the answer. How to do that is the $64,000 question!

[Bader]

Compete - that is the answer. How to do that is the $64,000 question![/quote]

Louis is RIGHT.

"compete" is the right answer and how to do that is a difficult question to answer but "i" were faced with such situation, i'd diversify my business to more value added nature and let go the molding jobs if they do not meet your criteria.

The problem is when you dont have a choice. When you have to decide between the two bads. Keep the machine idle or take the molding job at marginal cost!

Once you have a third choice...you will have more options.
In order to compete...diversify your business for a more niche market/product.

Let me tell the world out there that a few years ago, this country was flooded with chinese products and during the last 2-3 years, there has been significant decline. The reason being, people have started making the same things locally and china is no more competitive for such products.

On the other hand, the chinese have stopped the productio of those items and moved over to 'more' valued added goods.

Following the same analogy, USA needs and other western countries need to do the same, I think!


Bader

[indiana dave]

Well, We do have a "niche" product. We cater to high-end packaging solutions. not retail, but international and plant-to-plant.
We have talked extensively about this, and i think we are going to revise the way we handle new projects. We will draw up a quick concept, show it to the potential customer, and have a quote ready for the complete design. Then we'll have a seperate price for prototypes, production pieces, etc.
Thanks for all of your input, and for listening to me vent.

[Russ Burke]

This is not exactly an answer a US mfg wants to hear but there is a problem created by our own EPA that has opened the door bigtime to the non U.S. Manufacture of Fiberglas/Resin open molding of parts for the Boating Industry.
The state of Florida for example is singularly responsible for the closure of nearly every Florida Fiberglas boat builders production when they made the regulations regarding Styrene use and emissions so strict that there was no way they could be met with todays common tech.
I am now in La Ceiba Honduras where I have no problems with emissions and the product we produce can be shipped to the U.S. with no duty or taxes under the "Carribean Basin Inititive". YES, that is a program that encourages Mfg. in this and other C.A. countries.
I know a bit about the HAPS etc. standards from having worked closely with Indiana EPA as a trainer charged with reducing Styrene emissions from open Fiberglas Molding in the State.
I think the powers that be in the states have lost sight of the fact that the jobs they are killing belong to themselves eventually.

[indiana dave]

EPA, which I don't deal with beyond keeping my car emisions legal, is a necessary evil...
I am an environmentalist, (although not hard-core), and do believe in manufacturing with as much regard for the environment as possible... within reason. Sometimes I see the timeframe in which a poluting factory has to clean itself up, and just shake my head. "The river will be dead by then" are my thoughts... or something similar. This is just an example from my town, where water poution is more of an issue than air polution.
Also, the smells coming from some factories are just sickening. It is detrimental to the surrounding property value (both commercial and residential) to have "stinky" factories.
Although it's a factor, I don't think this has as much to do with companies moving production abroad as the low in other areas, such as wages, material, land, etc...

[Russ Burke]

About 10 years ago I retired from a well known RV producer where I served as Engineering head at their Plastics / Fiberglas production Division. I was very much involved in environmental issues and was and still am a supporter of keeping the environment clean and safe. After retirement I joined a group based at Purdue where clean and safe manufacturing were the issues we addressed. Unfortunately I discovered the styrene emissions as opposed to certain other chemical compounds were being targeted because the Fiberglas industry was not as powerful as oil, steel and others who could afford to put up a real fight. As you stated, in the meantime, the rivers die and ie, copper hill Tenn near the plant, will probably not see another green tree for a generation.
I agree that cheap labor, loose controls and factories that do not require heat in winter all contribute to the lure of overseas plants, let's face it we live in a capitalistic society and the bottom line is the driving force. When a person can receive $18/20 per hour for doing a job that raised the price of an item above the competition, outsourcing becomes the only way to hang on. Incidently how many things were bought for Christmas that were made in another country because they were less expensive.
This is the time to get serious about the economic whirlwind that has put the U.S. in this pickle.
Love ya for caring, hope you are heard!!!!!!! Russ

[indiana dave]

Unfortunately, it's hard to find anything that's not made in China.
As an observation, only 2 of my 2 year olds toys she got were from anywhere but China / Taiwan. I think Mexico and Japan were the other countries. None made in U.S.A.
I went to WalMart (YUCK!) because it was the only place open on new years day. I needed some zip-ties, picture-hanging hooks, and some duct tape. Zip ties said "Contains contents from U.S. and China" os somethiing like that. Wall hangers were made in China.
The Duck Tape brand duct tape was the only thing made in the U.S.A.
Ironically, the $6 plastic sled I almost bought was made in Conneticut, or soe it implied...
Anyway I try when I can to avoid supporting the China trade, but it's almost impossible.

[solinc]

Here in Korea we are facing the same issues as you guys. Walking along the sidewalks you'll see people selling disgustingly cheap plastic products from China. I use the word' disgustingly' in reference to some other postings on lack of job safety there.
The impact China is having on the environment is getting pretty bad too. They don't have to worry about regulations. Every spring we get the 'Yellow Dust'. A big cloud of pollution from china covers pretty much the whole peninsula, making spring in Korea very unhealthy. Despite the nice weather everyone gets sick from it.

An interesting sidenote... a few years ago it was discovered that merchants in a tourist area were selling 'Korean Handicrafts' that were found to be made in China. Big stink was raised. Now they have regulations about that kinda stuff.

To help us deal with the China competition we had to open a training and 3D design center in Hanoi. You may have to look at moving some of your processes offshore to keep your company alive. It helped us a lot.

Good luck out there.

[Larry A.]

We have had these conversations off and on for a few years now; stop buying the products and they won't sell. It's as simple as that. But let's face it - not one of us is prepared to do that.

Besides, I'm not convinced that it would work. We are not the only market in the world, and certainly not the largest anymore . . .

Compete - that is the answer. How to do that is the $64,000 question!

Compete is hard, when the question payoff is as much as the operators make (I have 3 that make in excess of that amount).....

It can be dine, but we have to be innovative.