(March 10, 2003) — The recent reader dialogue on this opinion page about U.S. plastics processors investing in China serves as a clear reminder that the topic touches some very raw nerves. As such, it deserves further scrutiny.
We know that the pain many North American companies are feeling is very real, and that current conditions are particularly tough on family-owned businesses that are long on history, reputation and sweat equity, but perhaps short on the critical mass and resources necessary to keep pace in today's global economy.
When Nypro Inc. President Brian Jones addressed the Plastics News Executive Forum 2003 in Phoenix recently, he fired a shot across the bow of all who cared to listen. Few would dispute that Nypro is one of the world's most progressive molders, yet Jones warned that no firm, even one like Nypro, will be healthy for long if it fails to adapt to changing customer needs.
Jones came to our forum to share advice on how to get lean, nimble and more competitive. But, at the same time, he revealed Nypro is busy opening more plants in China, and expects to reap about a quarter of its $800 million in projected 2003 sales from that country. He might as well have stood atop the Great Wall and painted a huge bull's-eye on his chest. The resulting firestorm of criticism from some readers all but accused Nypro of running slave-labor camps while simultaneously eroding the U.S. manufacturing base.
Jones — who points out that Nypro pays its Chinese workers above-average local wages to work in safe, modern plants — doesn't need Plastics News to defend him or his employee-owned company's actions. But some of the figures he cited in his recent letter bear repeating: Since 1996, Nypro has started four new molding facilities in the United States (while closing one), and has bought a Chicago design shop, a U.S. mold maker and partial interest in two other U.S. molding firms. The firm has increased its U.S. sales 88 percent and added 1,626 employees to its U.S. payroll, giving it more than 4,200 nationwide.
Others should do such a job eroding U.S. manufacturing!
Meanwhile, one could argue that other firms have risked all of their U.S. manufacturing jobs by not looking abroad aggressively enough. West Coast electronic enclosures molder Trend Technologies Inc., for instance, tilted into Chapter 11 bankruptcy last year not only because of the miserable economy, but also because it was too slow to establish a foothold in China. One of the first announcements from the restructured Trend was that it plans to establish a plant in China by July and may add tooling capacity in Singapore.
Trend aims to make a billion-dollar company within five years. While much of that growth is likely to occur offshore, one still must ask if the U.S. manufacturing economy would be better off if Trend had been dissolved. We think not.
Darwinism is cruel and unforgiving. The theory of “only the strong survive” pulls no punches and leaves no room for sentimentality or wistful thinking about days gone by.
We don't mean to oversimplify, or in any way demean the legitimate concerns about keeping America strong through manufacturing. That's vital. We just believe that sometimes investing abroad is part of building and maintaining a strong domestic industry.
