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ReSelectUSA Reshore, Retain, and Reinvest Case Studies

>>Okay, hello all. Welcome. I know this is the
last session on the first day after some folks have
had international travel so we’re going to try to keep
it lively, keep it a little fun. But this is the panel on
ReSelect USA: Reshoring, Retaining and Reinvesting
Case Studies. So we are thrilled
to have you here. We’re going to keep it keep
it light, keep it interactive. So, overall we’re going to do a
really quick executive summary of the case study that was
just released this afternoon. It will be my pleasure to introduce our distinguished
panelists in a mere moment, then we’ll have a quick
discussion amongst our panelists and open it up to
Q&A at the end. So, very quickly let me
introduce our members to my left, to your right. So, it’s my pleasure to
introduce Dr. Fujita. He is the founder, president,
CEO and chairman of the board for Quality Electrodynamics. He’s also the honorary counsel
of Japan in Cleveland, Ohio. It’s a pleasure to
have you here.>>Thank you.>>To his left, your right,
We have Mr. Carl Richell. He is founder and
CEO of System 76. And to his left, your
right, we have Matt Roberts. He is co-founder and president
of Sherrill Manufacturing. And just one more over,
last but not least, we have Mr. Paul Lavoie, general
manager of Carey Manufacturing. These gentlemen will have
an opportunity to share more about their firm and what
they do in their firm, as well as the opportunity
that they highlighted in the case study
in mere moments. And just to give you a
larger idea of the context of this conversation,
so our Undersecretary of the International
Trade Administration, Undersecretary Gil Kaplan,
charged us to look at the story and the narrative
around reshoring and expanding in
the United States. These gentlemen to
my left as well as two other firms
kindly answered the charge in sharing their stories
about how they chose to either reinvest in the
United States via an expansion, choosing the United States over
another potential location, or bringing some part
of their operations back to the United States. So it’s actually, I have
to, I would be remiss if I did not highlight
the authors of the study who are up here to the front. So Miss Kim Agard, Veronica
Faust and Nick Hecker. We are very grateful for your
hard work in authoring the study which is now publicly available
on the Select USA website under the research
and reports section. Just to get a better feel
for what’s in the study and the executive summary is
in the back left-hand side, we looked at drivers,
challenges, and overall motivation
for why firms would choose to invest in the United States. We did this keeping in mind
sort of three key audiences. The first audience is
for other investors that might be interested in
engaging in this activity. We wanted to give
them some narratives that they might identify with. The second audience is for US economic development
organizations to better understand
what the story is by which they could attract
additional investment. And then we also
wanted to highlight for policymakers what
the challenges are so that we can actually incur
real change more systemically that would help incentivize
this type of behavior. So before I recap
lessons learned, I think it’d be much
more interesting to hear from the folks to my left. So, before we kind of
dive into the discussion, I’d love to tee up, if it’s okay
if I start with you Dr. Fujita, just an opportunity to
better understand your firm.>>Yeah.>>As well as the project that was highlighted
in the case study.>>Okay, thank you. First of all, I’m a very honored
to be here and I’m very happy to share our story with you. And our company, QED,
Quality Electrodynamics, is a medical device engineering
and manufacturing company, specialized in the development
of radiofrequency antennas for the global MRI providers
such as Siemens, GE, Philips, , you know,, Canon, and
Hitachi to just name a few. Now, you may not be
familiar with what we make. What it is is that when you
talk about the MRI scanner, at the end of the day you do
take images of a patient and try to understand, , you know,, for example if we can identify
a cancer in a brain, I mean, , you know, at the earliest
stage, that maybe, , you know,, that may provide the opportunity
for physicians to come up with a better solution to
address, , you know,, cancer. So, our business is, , you
know,, radio frequency antennas. They act like a camera in
the context of a MRI scanner. That’s what we make. And, , you know,, the better
the image quality is the, the, , you know,, basically
the better the device. So our device, we are trying to
optimize the device with respect to signal-to-noise
ratio which means that the higher the
signal-to-noise ratio is, the better image
quality you can get. So, that’s our business. This special project was in
collaboration with the state of Ohio, Jobs Ohio, and
also the local industries such as Cleveland Clinic and
others, , you know,, to– , so, we are trying to create a
advanced imaging center at QED. And what it does is to
bring all the researchers and physicians together to
keep innovating our field. Because at the end of the day,
why do we care about America? Because America is a is
the country of most number of innovations and it’s
because all the, , you know,, great people come to this
country to keep innovating. , you know,, each field, in your
case healthcare, in our industry but you see, what to me
what is interesting is, you see, we have great ideas. And then when we talk about
manufacturing, that is another, , you know,, very important
aspect of innovation. Because even if you
have an idea, if you cannot produce
that, what that idea is, to me it is not complete. So when I started this
company, QED, back in 2006, my idea was that we
are going to walk with, collaborate with all the
partners, , you know,, local government and state
government and then, , you know, federal government and NIH,
and also the OEM partners to bring the innovations
so that people in the whole world can benefit. But I wanted to do this in
in America because as I said, to me, the ability to
be able to make things in your own country is
a very important step. So that’s what we
have been doing.>>Thank you.>>Thank you.>>Thanks. Carl?>>Yeah. I’m Carl
Richell and I’m the CEO and founder of System 76. We are a Linux laptop, desktop
and server manufacturer. We also produce an operating
system called Pop OS. Our products are designed
for software engineers, people working in
artificial intelligence and machine learning, as well as advanced computer
science fields. Our work is to optimize
the operating system and the hardware to provide
the best possible performance and the best experience,
the easiest experience, to get to work quickly
and easily, probe through the operating
system with as few layers as possible for those people that are working
in advanced fields. In the last year, we opened
a manufacturing facility in Denver, Colorado. Originally we were manufacturing
our products in China but we had, we lost a lot
of control over the design, the kind of control that enabled
us to differentiate our product from those of other
manufacturers. And in bringing the
manufacturing in-house, we’re able to control the
full design to better respond to our customers’ needs,
to respond to improvements and enhancements we could
produce with the product, and turn around the time from
design to production from months to weeks, and, we
hope soon, days.>>Thank you. Matt?>>MRIs, computers and now
forks and spoons [laughter]. I’m the cofounder and president
of Sherrill Manufacturing. We are the only flatware
factory left in the United States or Canada. So if it says USA on
the back of your spoon, it was made in Sherrill,
New York, which is pretty basically
the geographic center of New York State. I was running the factory for a very large company
called Oneida Limited. We employed 2,500 people
in this little town, the smallest city
in New York State. We were making three and a
half million pieces a week and then they closed it down. So my business partner,
Greg Owens, and I ironically
were the only people that made an offer
for the factory. We bought it with the idea that
we could create our own brand and while we’re making a product that is very infrequently
purchased, the average person buys flatware
three times in their lifetime. That’s why you don’t see
Super Bowl commercials about forks and spoons. We became a dot-com company
so we manufacture, the, and we’re a made in USA company,
so we are focused on making sure that every part of the
product, from the steel, to the packaging, to
all of the manufacturer, to most of our supplies
is of US content so that we can differentiate
ourselves from the competition. Our sales on the internet are
growing about 30% year over year for the past six, seven years,
and we hope to continue that. We also have innovated a
little bit and, , you know,, how can you be innovative
in flatware? We, if you go on our website, we
are actually through Facebook, Instagram, Pinterest,
we are going out and creating what we
call Affinity Patterns, so that we can market
to a specific group that that has a specific design
that they love or something that they like in their life,
sort of a lifestyle type design. So it’s working well for
us and we’ve gone from 6 to 56 employees in
the last five years.>>Great, thank you. Paul?>>Good afternoon. My name is Paul Lavoie. I’m the general manager
of Carey Manufacturing. We make catches, latches and
handles and other hardware. So if you’ve ever
opened up a first-aid kit or a Stanley Black
& Decker toolbox, then you’ve used our product. So, we’re the ones that
keep that product closed. We’ve been around since 1981. We were manufacturing in the
United States from 1981 to 2001. And in 2001, with a flood of
cheap Chinese imports coming into our market, we had
really no other choice but to move our manufacturing
to China in 2001. It was a, it was just for purely
survival for us to be able to just be able to function. So we moved from
being a manufacturer to being a distributor
of our own products. Through advances in technology
and a very good salesperson from Trumpf, that’s with
an F, Trumpf with an F, who has a very large plant
in Farmington, Connecticut, our founder and president
Jack Carey was able to look at the equipment that
they’ve offered and figure out that we could in a cost-effective manner now
move the manufacturing back to Connecticut. So, , you know,, 18
years, well 16 years later, we now are becoming
a manufacturer again of our own products,
for the same products that we had sent over to China. So, have a 16 year gap. We were lucky we have
a sister company, so some of our engineers were
able when we out moved it all over to China, were
able to work over there. So we kept some of
that expertise and of course we always
have Jack to manage that manufacturing
process for us as well. But now we’re about,
probably about 70, 80 percent of the volume
that was being manufactured in China is now being
manufactured in Cromwell, Connecticut. The more complex parts that we
do which are winged turn latches on large music cases, there’s
probably some back there, we, , you know,, some handles back
there and latches and things on the equipment back
there that we make will be, those are the kind of the tail
end of what we’re moving back. So still about 20% manufactured
in China but with plans to make sure there we’re
100% percent USA made.>>I will never look at a
latch the same way again, so thank you. I will keep that in mind. So you already, some folks
already started to touch on this but just to dig a little
deeper and peel back the onion. So, what were really
the key factors? This is just a general
question of the panel, that drove the decision to either bring those
operations back or to expand within the United States?>>I think Paul mentioned
something that that kind of struck me. When we’re a 14-year-old company and for those 14 years
we’ve been writing lots of software and, but we
produce laptops and desktops. But we’re not actually
manufacturing the product that we put into
our customers hands. So we build everything around
it except the actual thing that they hold onto and
that we deliver to them. I think being a distributor
of your own products is kind of that feeling that
you get from it. , you know,, you feel powerless
sometimes to improve it, to make it a better product,
to respond your customers when they need things from you. And that was, I think that
was the key determiner to us about manufacturing. The key reason why we did it
is because it gave us the power to kind of express who
we are, who we were, our culture as a customer or
as a company, and to respond to our customers’ needs in a much more capable
way than we could before.>>Great, thank you.>>I’ll talk a little bit
about the, about that. I mentioned earlier that
we’re a dot-com company but we have two other
very large customers. One of them is the
government, GSA, and another one is a very large
cutlery manufacturer in Olean, New York called Cutco. We manufacture their
forks and spoons. They make the giant chef knives. That, all of that
product we were forced, when the factory had to shut
down to move it to Mexico. We had a very close friend,
actually Greg and I met in Mexico when I was running
that particular factory, and they made the product. And the idea was if we move
back, okay, a base of product, give us economies of scale
and then layer on on top of that the internet business. So we’ve got a we call
keep the lights on business and then layer on the
higher margin business. Because if something, one of the
things that’s a little different about us is that when you
go into a retail store and you buy a $100
jacket, it probably cost about $10 to make that. So 90% of that cost is
in the supply chain. Most of it is at
the retail store. So we couldn’t compete
head-to-head with imported product. From, most of the
flatware is made in China, Indonesia or Vietnam right now. So we decided we’re not
going to compete with China, Indonesia and Vietnam. We’re going to compete
with Macy’s, Bed Bath and Beyond, Williams-Sonoma. So that’s who we are
competing against. We’re competing against
brands and retail. But the idea of bringing
back the product from Mexico, like I said earlier, was to create economies
of scale for us.>>Great. Thank you. And keeping in mind too, so in
this lecture you say summit. So, I mentioned we have
multiple audiences here probably audiences from different
places in the room. So both economic
developers as well as folks might be
interested in reinvesting or reshoring themselves. Looking at the company
sort of narrative first, is there something that
companies should keep in mind when they start on this journey that you all have successfully
closed out and continue to do? What’s the top of mind that
would be helpful for a company to know from inception
of this type of activity?>>Yeah so as I said, the we
came from Cleveland, Ohio. And as I said, we are
doing medical devices. So Cleveland has
a special meaning for at least our business because it has a
infrastructure needed. So as you may know, we
have Cleveland Clinic, Case Western Reserve University,
University Hospitals, Philips from the Netherlands,
and Hitachi, GE, I mean, , you know,, and then
Canon to just name a few. I mean they all, , you
know,, are in Cleveland and they also develop a, this infrastructure
supply chains together. So to me, the reason
why we are being able to do what we do today is
because of the network that the, , you know,, the region is
going to, is bringing to us. Not only that – we
work very closely with local government
and state government. So if we are starting
any business, especially we started our
business from scratch, and the support we were getting
even at that time from the city and also the state, I mean,
it’s just wonderful network. So I have a philosophy
that when we do anything, we have to be able
to win together. I mean when our business
does well, the community has to
also win together. So, , you know,, throughout
my management meetings and then training, what I
share is that, , you know,, we have to win together and
that’s what, , you know,, brings more communication,
I mean, more collaboration. Because when we do well,
Jobs Ohio, the state of Ohio and as the city want
us to do more. So they push our back
really to be more every day. So that’s I think key
because at the end of the day, it comes down to
people and trust. So that’s something
I can share with you.>>That’s a great answer for
both audiences all at once. That worked out wonderfully, just brutally efficient
which is wonderful. Any other sort of thoughts for companies just
starting on the journey?>>Well first, in
the first place, it’s harder than you think it is and you’ll make pretty much
every mistake in the book and you need to be, a term that I’ve coined is
gently relentless. So, and case in point
– for example, when you’re reshoring back and
you’re using new equipment, we had no time studies on how
long something would take. How long does it make the
take to make this part? Well, we would estimate how long
it would take to make the part and then we would actually
time study how long it take to make the part, and realize
that we weren’t even close to where, , you know,,
we needed to be. So, but we needed to be where
we thought it was going to be in order for it to be
cost-effective for us. So we had to continually look
at how are we going to kind of reengineer cost
out of the process and become more efficient
to get it to where we can be at that cost competitive level. And again, just the
mistakes that we made. We were a catalog company, so when we were a
distributor we had a catalog. You could have any part you want
as long it was in our catalog. So then when we started to
reshore, the catalog kind of goes out the window, because
now we can do whatever we want with whatever we want and
how we want to do that. So then, you know, then
you’re kind of opening up your capabilities as well. So while you’re trying
to learn how to bring a, how to build a manufacturing
organization, we had to do it with, we needed
people, we needed machines, we needed people, we needed
process, we needed engineers, we need design, we needed,
you know, you’ve got to go from designing the part to manufacturing
to quality control. Again our thing was it’s harder than we thought it
was going to be. It always took longer than
we thought it would be. We’re, you know, we’re
still kind of working through those processes and, you
know, you’ll make every mistake in the book but, you know,
just gently relentless. This is kind of how we
approach our manufacturing. We just keep pushing it,
pushing it, pushing it to get where we are and we’re in pretty
good place right now with it. But just, you’ve got to,
you know, don’t give up. You’ve got to be in and
you’ve got to, you know, you’ve got to do
it and you’ve got to just make sure
you keep at it.>>Great, thank you.>>I think I can add that
for us, I think a key to our success was a culture of
creation inside of our company. There was time after time
when there wasn’t something on the market available to
fill a gap in our operation or the way that we
operated our company. We didn’t like the accounting
platforms that were available to us because there
wasn’t enough automation. So we, software, we
software engineered a accounting platform. We created a CRM platform. We created a support platform to help our company
be more efficient at providing support
to our customers. With each one of those and with
success with each one, we grew, our confidence grew that we
could probably attack any problem that came
out in front of us. Manufacturing is
a substantial one. It’s a large one. It’s definitely the most
capital intensive as well. And what’s, but once
it was in front of us, once we made the decision to
do it, that culture of creation and that ownership that
employees had over the project that they were tasked with I think helped make
us much more successful than if we had had a history
of outsourcing things like CRM and accounting and
these other platforms.>>So I’m hearing a lot
of different versions of the transition
that was associated with however you internalize
that internal operation. But it seems like the
common theme of persistence, company philosophy,
and overall commitment to bringing things back to the
US was key, is what I’m hearing from the conversation. And I know from, I have a sneak
preview of the report so I know from your stories before that
engaging with community partners and EDOs was key in some
situations to help the success of the overall investment. Could you share sort of what
would be helpful for EDOs to keep in mind or share your
story relating to engaging with community partners? I know we have some specific
stories from Dr Fujita and->>Sure. I’d be happy to. So as I have already mentioned
to you, I mean, you know, we started QED back in 2006. And as we grew the business, there were many milestones
which we hit. I’m sure any enterprise you do
there are some milestones you are going to hit, right? Otherwise business
would be gone. But at each stage
what we made sure was to involve the community,
as I said, EDO, I mean economic development
organization such as Jobs Ohio, [inaudible], Bio Enterprise,
there are many of these EDOs who are trying to promote the
industry to the next level, to make it more infrastructure. So, we always try to involve
them with our milestone so that our milestone
becomes theirs, and then they almost take what
we do as if they are doing that. Which is very important,
because then what happens is that to your point, we have
received the first industry grant from Jobs Ohio which was
a three, almost three point, you know, three million USD. And we used that funding grant to create this advanced imaging
center, to keep innovating, you know, what we can do
to healthcare industry. But the key is is that if we
were not known to this network or Jobs Ohio, we don’t have even
known these opportunities exist. Jobs Ohio’s president and CEO
and his team came to see me and they said that,
you know, here we want to start something very exciting to bring more innovations
to the state. Would you be interested in
being our first recipient of, you know, this industry grant? I said of course. Where is a place for
me to sign [laughter]? See, that’s what I mean. It’s a network and trust, because they have seen
what we have been doing for the last 14 years. So I don’t have to go to them and then tell them
how good we are doing, because they knew exactly
from data what we have done. So I think it’s very important,
you know, I mean I’m not talking about just my business but
anything we do in life, at the end of the day it comes down to mutual trust
and friendship. So that’s what we need. I said that, you know,
win your business together with your community
where you live and the people together, right? Because then they will
become a part of success and also winning a story. They want to do more
because that’s a, you know, a natural instinct
of a human being. They want to do more they
want to do better together so I don’t know if I’m
answering your question in a way I should but I mean->>Deeply. It sounds like this is a life
philosophy, which I’m getting out of the conversation
which I’m grateful for.>>That’s probably our secret. I mean we, working
together with the community.>>Great, thank you. And Matt, I think you had
a story to share with->>About the economic->>Commerce->>Economic development? Yeah, from the standpoint
of the company and then from the standpoint of the
economic development agency, we were just two
guys who had a dream and we didn’t have any
idea of how to do it. We knew, I knew the process
and I knew how to make forks, knives and spoons and
I was pretty convinced that we could do it. The economic development
agency basically held our hands through the whole
process, so from, if you’re a company
looking to reshore, it’s the squeaky wheel
thing, the old adage. Reach out to the local,
other local businesses, reach out to other local
economic development, whether it be the state, federal which the federal
basically gives the money to the states to pass out. From an economic development
agency perspective, I think you have to under,
field, or you have to have, come into the discussion
with the idea that these guys don’t
know anything about getting money and grants. We need to help them
get through the process. So it’s like Dr. Fujita said, it is a it is a community
minded thing. And from my experience I was,
you know, you read things in the news and you hear stories about government this
and government that. I can tell you that every person
that I worked with that was in economic development
was just a fabulous person that did everything in
their power to help us out. It was it was just an
awesome experience.>>Thank you and Matt,
if I could follow up too, so you mentioned about company
philosophy and could you unpack that a little bit in terms of
how that might have been key in your overall investment into the United States,
bringing it back?>>Right. Okay, well,
there’s some sort of a multi-faceted
answer and I’ll try to keep it under 35 minutes. I’m kidding, right. But the, our, the city of
Sherrill, okay was built by the Oneida Limited factory which actually came
from a commune. It was the most successful
commune in the history of
the United States. It lasted from 1848 to
1878 and they’re all, if you read about it, there was
a bunch of reasons why it broke up that I won’t want to, I
don’t want to discuss right now. But one of the things that
came out of that mentality, that one of the mentalities
and ideas that came out of, or philosophies that
came from that was that every job was important. And we each, the company
through the years had that same mentality. So Gregg and I, our philosophy
is that it doesn’t matter if you’re the janitor, the
CEO, everybody is important, everybody is part
of the community. And when we were forced to
move the product to Mexico after Oneida closed
the gigantic factory, it was sort of a
dejecting thing. So our company philosophy has
been family, and we treat all of our employees like family. We know everybody, everything
that’s going on with everyone. Our kids go to the
same school as them. My philosophy always was live
in the community that you, that everyone else works in,
you know, so that you’re, you interact and
you’re part of the team. So I think that philosophy
does a couple things. Obviously from an owner’s
perspective you have empathy and you’re in the game for your
employees that’s my philosophy and Gregg’s also. And then the other thing that
happens is you have employees that know that they’re
part of the team too. They’re just as important
as you. I remember when we were
very small as a company, we’re really in the
darkest times. One of the employees come in
to me and said Matt, you know, what’s the chance I’m going to
have a job six months from now? I said your chance of
having a job six months from now is exactly
the same as mine, because if you don’t have
a job, I don’t have a job. So that’s sort of
our philosophy. I see a lot of companies,
these gentlemen up here also. The small, medium-sized
companies that are successful become
part of the community and treat all the employees
as family, pretty much.>>Great, thank you. The next question is
for Paul and Carl. So we talked about
sort of drivers and what may inspire the
investment coming into the US. I’m wondering if you could speak
to a little bit of the benefits that your companies have
realized as a result of your decision
to either expand or reshore to the United States?>>Yeah, certainly. So the first advantage that
we’ve gained by reshoring or manufacturing is just
our ability to respond to our customers
and their needs. When we launched our
product in December and started shipping it
then, it was a good product and a solid product, but
we weren’t done with it. And just like the
software that we developed, we are continuously improving
the software we build. We do the same thing
with hardware. So, since that initial launch, we’ve already updated the
product 200 times to improve it in just the course
of five months. So and the same way that we
continuously improve software, we’re continually continuously
improving the hardware. I think that allows us to
respond to our customers in a way that other
manufacturers are incapable of doing, if only because
the time from designing and improvement to getting
it into the production chain and getting it shipped back to the United States limits your
ability to respond in this way. When I think about
manufacturing, I kind of like small regional
manufacturing for this reason. Even if we would ship our
products at 65 countries but as our as our external sales
grow I imagine another factory in in Europe that would
be able to respond in the same way there rather than Goliath manufacturing
facility in the middle of in the United States and
Denver shipping everywhere. So I’d say that’s
probably the key. The second thing is
that we were able to express our company’s culture
and our community’s culture through the product’s
design itself. Whereas we were taking pretty
much white box type of machines and then putting components
in them, we understood that we could do much better. We could design the thermal
control would be much more superior than, you know,
what was coming from ODMs. We could, we wanted a
rich and open feeling to way the way the
product looks. So we put veneer on a computer
which is something that’s kind of unique, you know,
in the industry. Our, we build computers for
scientists and to scientists and to those in UNIX and Linux,
the UNIX epoch is like a, it’s a symbol of the beginning
of time for computers. So the air vent on the back of
our computer is the solar system at the time of the UNIX epoch. To us, these little touches
are things that we can do that we can express who we
are and who our customers are through the product
that’s only available to us if we’re building the
product ourselves.>>Well, I have two
stories to share with you. We manufacture a
latch for a customer and in the manufacturing
process, as we shipped the product
to them, they called us up and said one of the holes
isn’t lining up exactly right. So we told them, this is
on Monday and we said, listen ship us the
parts, the bad parts, ship them back to us overnight. So we got them Tuesday morning. The engineer took a
look at it and saw that we had had not lined
the hole up properly. Went on our machines did a
couple of samples of the part with the holes lined
up properly. Tuesday night we overnighted
it to the customer. He put it back in their
production line on Wednesday. Said it’s perfect,
make me those parts. We shipped him 2,000
parts for Friday.>>Wow.>>So if I’m manufacturing
in China, you add 18 weeks
to that scenario. So now I’ve cut down a, you
know, what would’ve been a 18 to 20 week solution to a
problem to 5 working days. So that customer very happy. We have another local
customer that came to us and they said we, you know, we’ve been buying
this this catch and again we’re a
catalog company so you could have anything
you want as long as it was in the catalog until we
started manufacturing. He says but I need the loop
to be bent a little bit and I’ve been doing a secondary
operation for the last ten years that takes about
five minutes a catch. So if you think of, you
know, now you’re, you know, you’re talking in
a production thing. He goes, to bend this loop. And our engineer
looked right at him and said well we can make the
part for you just like that. You know, he said we’ll
just change the part number, here’s your new part number. We’ll do this. He stood up and said this
meetings over I don’t, you know, like, and he said, he goes I
can’t believe I’ve been doing a secondary operation for so long that you’ve just fixed
this huge problem for me. And we couldn’t have done it if
we were manufacturing in China, because then it would have
been a different part. We’d have gotten
through that process. It wouldn’t be enough volume
to support what he was, for us to be able to
bring it in from China. But those are just two
examples of, you know, we did this for financial
reasons but for customer service and quality reasons we now
have a significant advantage over our competitors. So, you know, allowed to
be much more responsive.>>Yeah. Actually we were having
dinner last night and talking to these guys, we have, our computer is a internal
chassis and an external. The external comes off so
you can add components, remove components, the
normal things that you want to do with a computer. And we use thumb screws in
the back of our computer and I always wanted
to use a latch, because that would be better
if you didn’t have something that was loose off the computer
that you had to keep store of. A latch is going to
stay on there forever.>>Carl, we can handle
it [laughter].>>So yeah, that’s these guys. So I can design a latch and with
your software I can just come over there and you can make it?>>There you go.>>He said yeah,
yeah we can do it. That’s a that’s value to me that I didn’t know I
even had available to me and that’s something that
that it’s good for us and it’s worked well for you.>>Yeah, absolutely.>>Great. Well, happy to hear
that things are happening on the margins of this
lecture series summit. And then also it seems
like the shortened sort of production time ability
to customize is much greater. The opening of potential
associated with customizing product for
clients and customers is huge in terms of the innovation
that the nearshoring of operations brought.>>And don’t underestimate
the market demand for products that are made in the USA. We went to visit, you
know, we provide products for McMaster-Carr
for their catalog. So I went out to visit
with them and, you know, they kind of opened
their catalog and said can you make this,
this, this, this, this, this, this and we had never made them
before these parts but we’re like sure we can make all those. So they’re like great because
we’re buying them overseas now and we would much
rather, you know, have them sourced
here in the USA. So, you know, for us we
picked up a significant amount of business from an
existing customer just because we’re now
manufacturing here.>>Great, thank you. And I don’t know if the, if
everybody has seen the latest out of the McKinsey
Global Institute, but they did a large-scale
survey of global CEOs and found that there’s this
overall trend of, the next trend this nearshoring
as they are terming it in terms of adjusting supply chains that
they can be hyper localized if needed for the purposes
of what you just described. So, that’s a global trend
overall so something to stay tuned and
connected into. So if we can turn to
Dr. Fujita and Matt. So I hear a lot of themes
around local engagement, how that was key to you and that that really helps your
overall investment. Thank you so much for sharing
the story about how you engage with your local EDO and as
part of the overall persona of just what Sherill
looks like in New York. So overall functionally, how
does that engagement look like? Is that something
that, who do you go to? How did you start creating
those sort of connections? Is that something that you
initiated the conversation or what does that look like
for somebody that wants to engage deeper
with their economic development organization?>>Yeah, so I think, you know,
when I started QED back in 2006, that was different from
the way we do things today. Because in 2006, we were not
known to anybody yet and but, you know, we just needed
to one person at that point who can make introductions to many different
organizations and network. And today, I mean, thanks
to, you know, all the things that my colleagues do, we have
been able to make some impact in our community and beyond
including our, you know, OEM customers globally. Because for example, last
year Siemens awarded, Siemens in Germany awarded
us the Overall Best Provider of Technologies in
the whole world. We received that award. And then once again, you know, once we have these moments
it’s very important for us to also credit partnership with
EDOs and, you know, the state, state government and
local governments. So I mean, you know, now what’s
happening is that we know who is responsible for
what programs, you know, at the state level
and also local level. So the conversations can take
place anytime without any, you know, tedious processes. So that’s what I meant by establishing a partnership
based upon the trust and friendship. So I think there is no secret
to it at the end of the day. We just have to keep
working on it and keep expanding your
network, because at the end of the day you cannot
do anything by yourself. Everything we do is a, you know, outcome of the successful
collaboration. And that’s what I value at my
company with my colleagues. So I mean once again, I’m
not answering directly to your question, but I
mean, to me it’s people. It comes down to people. So keep, you know, celebrating
the relationship that we have with people and partners.>>Great, thank you.>>Our relationship with the
economic development agencies is one where we keep in
constant contact with them. We’re always asking, you know,
not only what programs are out there to help us – what
other companies are there coming in that maybe want to
ask us some questions about what we did, what
we did that was a mistake which was a lot, and
what we did that worked. So if you have a company, you
want to you want to bring, reshore a business to a
specific area, not only reach out to the economic
development agency, but ask them about other companies
that are there that have maybe learned,
lessons learned. Because now what’s
happened with us is, and we’ve discuss this this
morning and we’ve discussed it over dinner last night, is
we’re, you can get a grant, you can get a low-interest
loans, you can get all of those things and you
can have a business model on a PowerPoint present, well, they don’t use PowerPoint
anymore. I’m dating myself probably. But you’ve got to have people. One of the issues
now and we’re working with economic development
agencies regarding this is, apprenticeship programs. So make sure that you have
that full, that solution. I was trying to think of the
term, had a senior moment. But you have the solution of
the people, the equipment, the location and
obviously the financing. But like I said earlier, we now work with our economic
development agencies to lobby in our state government,
to come to Washington DC and tell them what we need
as a group of manufacturers to go to the next level. So that’s how we’ve
sort of evolved with our economic
development people.>>In a shameless alliteration, I keep on thinking the
people pipeline, right? So you just, really it’s
the core of any business. And thinking through it, you
can establish partnerships. Oh, another P. People,
pipeline, partnerships. The different type of p3.>>Cubed, yes, P
cubed, look into that. So I know we’re starting to get
into our potential Q&A time, so just one last question
for Paul and Carl, and then we’ll open
it up to the audience. So again, we’re getting
really into the nitty-gritty. We’re going to go
into tactics, right? Tactical strategy. Do you have any sort of tactical
or strategic lessons learned from your overall experience
investing in the United States and doing this activity?>>I, you know, again,
with us it really is kind of getting the process
down, right. I mean how do you,
you know, you’re, we had to build a
new workforce for us to be able to manufacture here. And then while we were
building the workforce we needed to build those processes
as well. So we needed to make sure
that we had, you know, quality programs in place, that
we had manufacturing protocols in place, that we had design
protocols in place, you know, we had to have, you know, make sure that we were working
off of, you know, our, you know, our drawings change frequently. So making sure that
we’re working off of the most current version
of a drawing which goes to the production floor. And we make hundreds
of thousands of parts for thousands of customers. I can’t imagine anything
goes wrong. You know? So it was, so when
we looked at bringing all of that back and bringing
thousands and thousands of parts, back, sometimes
our, you know, our heads get a little,
you know, get spun around a little bit
with just trying to keep ahead of everything that we’re doing. So, you know, tactically with
us it really came down to, you know, how do we build
the process and, you know, quite frankly you’re
building it a brick at a time and a day at a time, right? So, you know, I’m always, I always overestimate how
much I can get done in a day. And I always underestimate
how much we get done in a month or a year, right? When you look back you go wow,
look at where we used to be and look at where we are
today in our processes. Now, we’re not where we need
to be but thank God we ain’t where we used to be, right? so we’re, you know, as long
as we keep moving along. I think from a tactical
perspective it was really kind of paying attention to
that process and, you know, building that infrastructure,
building that mindset and building the processes to
make sure that we’re managing that whole new, for us, that whole new manufacturing
part of our business.>>Great, thank you.>>I think I can add two things. If you’re cutting metal, don’t
go cheap on your laser cutter. Going cheap can be, it will come
back to bite you [laughter]. So the second thing is just get
to the point where you ship. Shipping products is
harder than you think, especially when you’re
a perfectionist. There are so many little things. You don’t feel like
it’s ever ready. Just ship. Just get that product out
and once it starts shipping, you’ll find that the people that
receive it, they love it more than you thought, more than
what you thought you put into it even. So yeah, get your product
out there and ship.>>Great, thank you. So at this point we would love
to open it up to the audience if there’s any questions. There’s a microphone and I
see we have a question already in the front. I’m sorry I think
there’s a microphone, yes.>>I don’t think I
need a microphone.>>Okay.>>I’m just curious. How were you able to
compensate for difference in labor costs in, you know,
[inaudible] manufacturing and Mexico manufacturing? Automation, or [inaudible]?>>So in our case,
it was automation. So our case, it’s, you
know, we take going from having a very
labor-intensive process to now having these
sophisticated Trumpf machines then I have one operator
that operates, we have a laser punch press
and then just a laser. That operator operates
both of those machines. And during the downtime when those machines
are actually running, he’s doing other tasks as well. So now I have, you know, I
can do this with one person, where it was taking me, you
know, multiples of people, you know, 5, 10, 15 people
to do those same processes. So for us it’s really
through that, all of that automation process
and an efficiency process.>>We’re totally
different than that. Well, not totally. We’re the most automated
flatware factory in the world. If you go, but we’re
not automated like these guys are
or this guy is. The way we skin the cat is we
have a different business model. We’re really, we call it
factory to table, okay? So when we make a fork
and a spoon and a knife, it goes from the factory
directly to the customer. So we cut out that retail chain
and I would recommend a lot of people, when you’re looking
at getting into something that is a type of product
that is in the retail realm, that you look at the internet. Because brick-and-mortar
stores are going the way of the buggy whip. I’m sure they’re going
to re-engineer themselves and there’s going to
be something there, but when a company like
Macy’s decides they’re going to close a hundred stores
and their stock goes up, that’s an interesting little
financial conundrum that sort of flies in the face
of traditional retail. But that’s how we did it, okay.>>Great, yes.>>If I may, to answer
your question, I mean what we make
is not a commodity, I mean it’s not mass consumer
product yet, you know, as you just said labor
is of course, you know, something we have to address. So we do, we do deploy
like automation, many automated testing, and then
we are even bringing some robot to do something, you
know, repetitive processes that may result in
expensive cost if you were to use
a human labor. So I think we have to work smart
and effective because we are, you know, facing
competition from China. So I mean, anything we
can do, we can, you know, do in a smarter way,
we have to do it.>>Thank you. Thank you. Are there any other
questions from the group if you don’t mind also
just identifying yourself and letting us know,
that’d be great.>>I’m Jack [inaudible]. I’m the commercial [inaudible].>>Thank you. Thanks so much.>>So I’m hearing a lot
of technology advantages, not just in terms of the
machines but also in terms of the processes being
refined that are associated with either the sales
version, the retail side, or the production side
that are efficiencies that are being gained
that makes sense to bring these operations back.>>Something that came up in the
report as a potential challenge to keep in mind, and as Dr.
Fujita has very kindly pointed out, the intensity and the
perspective of people seems to be central to the success
of no matter what type of production we have a
variety of products here. But it seems like a common theme
running throughout is just how important people can be in
making sure that the operations in the US work just
like any business. Other themes, are there
other sort of key components that you kept in mind that are
associated with your investment that you thought might cut across these different
sort of industries? So for example we
talked about technology. We talked about labor. Is, we talked about
community partnerships. Is there anything that was
part of the secret sauce that you just wanted to touch on or is it a three trio secret
sauce which would be okay, too.>>Well I’ll jump into or
we talked about this morning with Gil Kaplan,
or I mentioned it. If you go through the, I think about 18 million manufacturing
jobs went overseas between 2000 and probably 2015 or 2016. When we say those jobs went
away, the people didn’t go away. And many of those individuals,
some of them got retrained, some of them went into some
other type of business or job that they didn’t like. In our situation, we had
this huge factory with people with many, many years
of experience. So we knew, well we
thought we knew and we ended up I guess maybe getting lucky. We knew that there was
a pool of employees because if you have a
group of employees in any of the these companies
and they’ve been around for years,
it’s a specialty. So you have a skill set
that sort of allows you to be good at what you’re doing. If you’re making
Cabbage Patch dolls or you’re making automotive
parts or you’re making flatware. So when we made the decision
to come back to Sherrill, New York to manufacture
knives, forks and spoons, we wouldn’t have done that if
we didn’t have a core group of highly skilled
people that could, that knew the whole process. So, that was really part
of the secret sauce for us, is knowing we had a we
had a pool of employees. And that’s why I always
talk about training, training, apprenticeships. Make sure you’ve got the human
capital available to you.>>Great, thank you. And as a friendly reminder too,
so Select USA is always here to be a partner as you
have questions looking about expanding your investments
or considering reshoring, we have some tools at our
disposal such as information from Census Bureau
that actually can get down to the county level. Looking at what the certain
demographics are as far as education, workforce
information that might be relevant to
find those sorts of clusters of highly qualified people that might have very
specialized skills. And we also are also very
happy always to introduce if folks want to connect with their local economic
development organization, we’re very happy to facilitate
that conversation, particularly in the context of
keeping your investment or expanding your investment
in the United States. So, please feel free if it’s a
little awkward, hey I’ve been in my community for
many, many years and I’m not quite
sure where to start. We’re happy to be that
first starting point or that first point of contact to facilitate more deep
introduction into resources that you might not be aware of
in your respective geographies. And I think we’re starting
to come up on time. If there’s any last questions, but we are just extraordinarily
grateful for the expertise, the experiences and really
the meaningful stories that you all have shared. So for folks that
might want to check out in more detail the
information online, the reinvestment case study
is available online now. It’s live on the
Select USA website. All you have to do is
go to Select Click on the Research
Reports section and you will find a glossy
report where you can learn more about these fantastic stories. And gentlemen, I just want
to thank you very much for reinvesting in the
United States and thank you for sharing your expertise. Please join me in in thanking
the gentleman for coming.>>Thank you. [ Applause ]

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