Renaud Anjoran, owner of Sofeast and an MTG partner, has sent me another great article about manufacturing in the United States. Sharpie Found a Way to Make Pens More Cheaply—By Manufacturing Them in the U.S. from the Wall Street Journal (WSJ) gives another great example of how manufacturers can return production to North America and produce better and more cost-effective products. The process of doing so is not cheap or easy but can pay long-term dividends for companies not to be afraid to put in the work and do the planning to make it happen.
Newell Brands made the decision to spend the time, energy, and resources to manufacture their flagship product in Maryville, Tennessee. The road to becoming the most efficient manufacturing location in the company was a long one but it started simply enough.
It Starts with a Question
“Can we make it Maryville?” was the questioned asked by CFO when the team pitched outsourcing the manufacturing of the new gel pen. That question set off a chain reaction. Rather than dismiss the possibility out of hand, the team saw possibilities to change their business model and keep manufacturing of a low-cost high-volume product in the US. It took half a dozen years but now the 37-year-old factory manufactures 1.8M sharpies a day. How did they do it?Ask "Can We Do It?" not Proclaim "That It Can't Be Done"
Newell Brands started with understanding how the manufacturing would need to change to meet the manufacturing challenges posed by the move. The factory needed new equipment, and the employees needed more training. The company supported career-training for long-term employees. The new equipment needed to be designed and installed.
The investment paid off, and the factory was able to manufacture pens three to four times faster and the quality was better. The decision was a clear winner for Newell Brands. It could rapidly respond to market conditions and had much more control over its products and its quality.
Too many companies do not follow Newell Brand’s lead: they focus on why something can’t be done rather than how it could be done. All too often, clients (and even sometimes our own staff) will say that there is no way to make a product in North America. Those kinds of statements shut down discussion and innovation. It is not to say that production should occur in the United States (or in another location) but that you need to understand the challenges and decide if they are worth the effort to overcome.
Over the course of the shift to North America, Newell Brands close to $2 billion to make the shift. Many companies may decide that the price is too high. That is not necessarily the wrong decision. Investment funds and time are both finite resources and there might be better use for it. The best choice depends on the situation, the product, and the company goals.
What Should My Company Do?
This question is more relevant than it has ever been as the US is dealing with the highest tariffs in close to a century. Companies are starting to seriously consider relocating operations. All too often they fall back on the “It can’t be done” type of thinking. It is self-defeating. You should conduct a Feasibility Study on the viability of the move. Only then can you make an informed decision.
The results will vary depending on the company. We have found that many companies prefer to stay in China despite the tariffs because the cost of moving is too great or the ramp up time was too great. Those are good reasons not to make the change. Don’t move because that’s what every other company is doing. Move because that’s the best choice for you and your company’s goals.
Having trouble figuring out the best manufacturing strategy or implementation? We would be happy to speak with you.
What can MTG do to help you improve your operations?
