A few years ago, I visited two similar processors in Iowa. One was a leader in its market, and had established its reputation by jumping through all of its customers´ quality-control hoops.
The plant was the picture of modern efficiency, with an army of robotic trimmers and the best processing equipment money could buy. Let´s call this Company No. 1.
The other firm — Company No. 2 — was an upstart, launched just a few years earlier in a barn with dirt floors and machinery built in-house. By the time I visited, the company was light years beyond those early days. It was growing like crazy but still had an unpolished temperament, especially compared with the larger competitor.
Both companies seemed to be doing well. Still, the big company had some vigorous beefs with the upstart.
The president of Company No. 1 complained about parts buyers who demanded statistical quality control and all the accompanying paperwork, but only from his firm. At Company No. 1, everthing had to be done by the book. At Company No. 2, the book conveniently got thrown out the window.
Why? Because Company No. 2 wasn´t prepared to jump through all those same hoops, but it still was able to deliver quality parts, plus save the buyer a chunk of his budget.
No matter how much time original equipment manufacturers spend talking about quality, you´re always going to be able to catch their attention if you can beat their suppliers´ prices.
Sometimes OEMs make shortsighted decisions to go with a cheaper supplier that doesn´t have the experience or capability of their current "partner." They don´t realize the reason the new supplier is cheaper is because it hasn´t invested in the training or technology to do all the extra work that the OEM requires.
North American toolmakers, for example, frequently cite customers that send work to the Far East and end up behind schedule or with lower-quality work that needs to be fixed.
OK, that happens. But OEMs have to be willing to put up with that in those cases, or they shouldn´t send the work overseas. Once they establish a comfort level with the new suppliers, then they can send high-tolerance, deadline work there too. If they send critical work overseas before they reach that point, then they get what they deserve.
The same applies to processors. These days it´s getting more acceptable to complain about losing business to Mexico, China or elsewhere. Yes, there´s some of that happening, although the reality is that free trade creates more jobs in North America than it destroys. (One real gripe critics have relates to subsidies from government or supplier sources. But that´s another topic entirely).
In the short run, a few OEMs will send work to the cheapest available supplier, regardless of quality or ability. Some will get burned.
But successful processors will concentrate on the work for which they´re best suited, and be fanatics about making sure customers get what they´re paying for, and understand why they´re paying for it.
Loepp is managing editor of Plastics News.