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Manufacturing Returning From China to California
CP Lab Safety was worried about escalating product costs. So it decided to move its manufacturing overseas — to California.
After more than seven years of using a contract manufacturer in China’s Guangdong province, the Novato company this spring shifted production of its Eco Funnel and some 80 other products in its portfolio to Wright Engineered Plastics in Santa Rosa.
It was a no-brainer for CP Lab Safety CEO Kelly Farhangi: “In the U.S., you can manufacture on a cost comparable to China.”
Companies are “reshoring” manufacturing — even to California and the Bay Area — for reasons that vary as widely as the types of goods returning to American factory floors.
Four Northern California companies in the past five months have reshored products from China to Wright Engineered Plastics, said President and CEO Barbara Roberts. Their reasons range from costs to vicinity to market and from quality to finance.
Chinese manufacturers, for example, won’t ship until a product is completely paid for, Roberts said, and then transportation could add another 30 days or more.
“That’s a double-whammy,” she said.
This is not your granddaddy’s smoke-belching, middle-class-securing manufacturing, but domestic manufacturing advocates say it represents an opportunity for jobs in a down economy.
“At the end of the day, everything else being equal, it’s always best to manufacture near your markets,” said Ken DeWoskin, a senior adviser at Deloitte in China. “But everything being equal has a lot of questions.”
Those swirl around a host of global economic factors like labor quality, cost and overall productivity as well as an unfolding regionalism — shaped by free-trade agreements and common currencies — that puts more emphasis on the proximity of supply chains.
“With the U.S., Mexico, into Central America and South America, you can integrate supply chains even more and at the expense of China-U.S. trade,” DeWoskin said.
Even then, whether it makes sense to reshore manufacturing depends on the product, he said. The supply chain for consumer electronics, for example, is well established in China.
It may make sense, however, to get components from other markets and site final assembly closer to a company’s market, DeWoskin said.
That’s precisely what Tesla Motors looked at when the San Carlos electric car maker opted to ship assembly of its battery packs from a pilot plant in Thailand to California. Those nearly 7,000 lithium-ion cells continue to be made in Japan and Korea, but it didn’t make sense for the assembled packs to sit on a ship for 10 to 15 days, said Diarmuid O’Connell, Tesla’s vice president of business development.
“Is it more expensive in some respects — in real estate and labor — to assemble battery packs in the U.S. compared to some other overseas markets? Yes,” O’Connell said.
But moving assembly close to Tesla’s R&D operations “makes a lot of sense,” O’Connell said, as the company continues to develop and make changes in its technology.
That plays into the thinking of much smaller companies, like Farhangi’s CP Lab Safety, as well. Although it continues to make the molds for its products in China, where Farhangi said there are significant engineering cost savings, the company can make production changes quickly by using a domestic manufacturer.
Whether more companies reshore manufacturing in California — as opposed to another state, Mexico or South America — is largely in the hands of policy makers, said Gino DeCaro of the California Manufacturers & Technology Association.
“California needs to show a deep understanding of manufacturing. We need an analysis of what policies will do to the manufacturing community in the state,” DeCaro said. “That would be a big signal to companies that have looked to California in the past and seen uncertainty.”
Why manufacture in China?
* Shipping costs are at a three- to four-year low.
* Integration of supply chain, especially for products like consumer electronics.
* Labor costs remain cheaper than in the United States.
Why manufacture in the Americas?
* Closer to American markets.
* Integration of supply chain, potentially for things like auto assembly.
* Ease of making changes to orders.
* Time. Products don’t sit on boats for weeks or months.
* Cash use. Chinese manufacturers can require full payment before shipment.
* Strength of currency. As the dollar weakens, the underlying cost advantage of China may dissipate.
Email Ron Leuty at rleuty@bizjournals.com / (415) 288-4939
Kinetic Die Casting manufactures die cast parts for their customers. If you would like to know more about what is die casting or if you would like a quote, please visit our website:Kinetic Die Casting Company
What is Magnesium?
What is Magnesium? It is usually depicted as a metal, second only to steel and aluminum in popularity. Aside from that, people don’t know much more about it, even though it has so many uses. So, what is magnesium?
Magnesium, with the chemical symbol Mg, is the ninth most abundant element in the universe by mass, and eleventh within the human body. Its many applications include making components for electronic devices, photoengraving plates for printing, paper manufacturing, and fireproofing wood. Ever heard of mag wheels? Those shiny high-grade car wheels which guys usually drool over in auto shops? They’re not called that because they’re always featured in car magazines – their name comes from what they’re made out of, which is magnesium.
One of the current major uses of the element is in die casting. Because of its light weight, magnesium is one of the most commonly used metals for this purpose, as compared to zinc and aluminum.
A lot of compounds can be made with magnesium, and these compounds, along with magnesium in its purest form, are used over a wide variety of industries. What is magnesium? It is a very important and useful element – it’s not just a third place metal behind steel and aluminum.
Kinetic Die Casting manufactures die cast parts for their customers. If you would like to know more about what is die casting or if you would like a quote, please visit our website:Kinetic Die Casting Company
Aluminum Manufacturing in Die Casting
Aluminum is widely used in die casting because of the properties that it possesses. Aluminum is useful even in everyday life because that is why die casting companies produce die cast parts made from this alloy. Aluminum alloy is lightweight and has good corrosion resistance. It can also take high temperatures so the things that need to be heat resistant are usually made of aluminum alloy. The things that also need high corrosion resistance and electrical conductivity are made of aluminum. Due to its high dimensional stability, aluminum alloy is used to make thin walls and complex shapes.
Aluminum part types can depend on the combination of alloying elements such as silicon and copper. Zinc can also be used as alloying element to aluminum. The combination of the properties of the different alloys allows the production of high quality products. Silicon increases melt fluidity that is why complex parts such as connector housings and thin walls are made of aluminum with silicon. When copper is used as the alloying element, the part has increased hardness and decreased ductility.
Aluminum part types can be differentiated on the amount of alloying element present. Aluminum types are Alloy A380, A360, A369, A390, A413, and A518. They are series of aluminum alloys so expect to see alloy types with decimals. The Alloy A380 is the most common aluminum alloy used in die casting. Lawnmower housings and gears are usually made of AA 380. Escalator parts and conveyor parts are usually made of Alloy 518. Parts that need high corrosion resistance are made of Alloy A360.
Parts differ in the content of alloying element that makes the aluminum part types. They also cater to the different needs of the consumers and the producers as well. These are the most common Aluminum Alloy Types.
Kinetic Die Casting manufactures die cast parts for their customers. If you would like to know more about what is die casting or if you would like a quote, please visit our website:Kinetic Die Casting Company
New Supplier Cerion Buys Bankrupt Metal Auto Parts Makers
DETROIT — Rising from the ashes of three bankrupt auto parts manufacturers in the stamped- and cast-metal component sector is Cerion LLC, a new manufacturer coming to life through acquisitions that could be capable of generating nearly $1 billion in revenue.
Suburban Detroit-based Cerion and parent company Revstone Industries LLC of Paris, Ky., have since December acquired the die-cast metal component business of Contech LLC, almost all the assets and operations of fine blanking and metal stamping firm Precision Parts International Inc. and, on July 14, the assets of castings producer Intermet Corp.
Revstone is headed by George Hofmeister, a Kentucky industrialist with a track record of executing automotive deals in Detroit and the Midwest.
Contech’s castings business generated revenue of $156.7 million in 2008. PPI posted revenue of $141 million from January to October last year, and Intermet posted revenue of about $310 million in the 12 months ending July 31, 2008, according to records from the companies’ bankruptcy cases.
Each of the metal stampings and castings suppliers filed for Chapter 11 bankruptcy between August 2008 and January 2009 and failed to reorganize and emerge intact.
For about $43 million, Revstone and Cerion were able to pick up at least 20 manufacturing operations throughout the U.S. and Mexico and assume supply contracts with General Motors, Ford Motor Co., Chrysler Group LLC, Toyota, Honda and BMW.
The companies also landed work with large tier-one suppliers such as American Axle & Manufacturing Holdings Inc., Delphi Corp., Continental Automotive Systems Inc., Dana Corp., TRW Automotive Holdings Inc., BorgWarner Inc. and many others, according to bankruptcy court documents.
Cerion also gained four plants in Michigan and one in Mexico when it acquired Hillsdale Automotive from EaglePicher Corp. in December, renaming the company Metavation. Hillsdale posted revenue of about $100 million in 2007, according to a press release about the deal.
According to a June press release announcing Cerion’s selection of P2R Associates as the company’s public relations firm, Cerion was officially formed following the Hillsdale acquisition.
In the release, Cerion was described as a “privately held American manufacturing company focused on acquiring and operating small and medium-sized precision component manufacturing operations to serve automotive and other manufacturing industries in the U.S.”
Cerion CEO Dave Doster declined to comment for this story through spokesman Gordon Cole, president of P2R Associates.
While details about the company are sketchy, one thing is clear: the market the company is entering is rough-and-tumble.
“The casting sector has experienced a large number of failures over the last five years,” said Craig Fitzgerald, a partner and automotive supplier consultant at Plante & Moran PLLC in suburban Detroit. “That’s been the rule, rather than the exception.”
High, often volatile prices for raw materials such as steel, excess capacity, low volumes, price pressures and sourcing from low-cost countries such as India and China have squeezed the sector for much of the decade, Fitzgerald said.
Buying the firms out of bankruptcy may give the new owners an edge their predecessors lacked.
“They’re bargains, and that means continuity of the operations. There will be some consolidation, and certainly these guys can afford to close operations and consolidate and keep the good parts running and run them at a higher efficiency,” said Neil De Koker, president of the Original Equipment Suppliers Association.
Cerion and Revstone were able to acquire the desirable assets of Contech, Intermet and PPI without the burden of excessive liabilities and debts. The acquisitions also were a fraction of the likely cost a few years ago.
For instance, Contech was sold by its former parent SPX Corp. in 2007 to Marathon Automotive Group LLC for $147 million. Cerion picked up Contech’s castings division, roughly half the business, for $13.5 million.
The potential fate of a company growing rapidly through acquisition can be seen with such companies as Noble International Ltd. and Lear Corp.
Both used acquisitions to vault themselves up in the auto supplier hierarchies but took on significant debt in the process. When revenue plummeted along with car and truck production volumes, the companies could not service their debt, went into default and eventually filed for bankruptcy.
Source: Crain’s Detroit Business
http://www.mema.org/publications/articledetail.php?articleId=17795
Kinetic Die Casting manufactures die cast parts for their customers. If you would like to know more about what is die casting or if you would like a quote, please visit our website:Kinetic Die Casting Company
Manufacturing Ranked #1 Industry For Economic Prosperity
Manufacturing Ranked #1 Industry For Economic Prosperity NEW YORK, June 9, 2009 – Despite more than a year of bad news as the manufacturing sector continues to contract, a new annual index released today by Deloitte LLP and The Manufacturing Institute shows that Americans view manufacturing as the most important industry for a strong national economy. There is a wide perception gap, however, between the public’s highly positive views of manufacturing’s contributions to America’s economic success and their negative views about pursuing a career in manufacturing.
The survey, Public Viewpoint on Manufacturing, which assessed public perceptions and understanding of a wide range of issues related to manufacturing, shows that the majority of respondents (71 percent) view manufacturing as a national priority with 59 percent agreeing that the United States manufacturing industry effectively competes on a global scale. These results fall in line with public perceptions that manufacturing plays a larger role in overall economic prosperity compared to the technology, energy, healthcare, retail, communications and financial services industries.
Kinetic Die Casting manufactures die cast parts for their customers. If you would like to know more about what is die casting or if you would like a quote, please visit our website:Kinetic Die Casting Company
