Joseph Rocco sees a future marrying Chinese manufacturing with U.S.-based product development.
Rocco and investment house Draupnir LLC in Chicago bought plastic molder and contract manufacturer Eastek International in 2004, and want to use its South China manufacturing base to carve out a niche as a smaller-scale product-development company.
The U.S.-based firm has been making substantial capital investments at its factory in Dongguan, such as upgrading injection mold-making capacity by 50 percent in 2006 to about 350 tools a year.
The company, which has corporate headquarters outside Chicago in Buffalo Grove, Ill., but has all of its manufacturing in Dongguan, sees itself moving more into design and product development.
It set up a product design department last year, for example, with staff in both China and the United States, and estimates that 60 percent of its new clients, mainly U.S.-based manufacturers, are coming to it with product design needs, from tweaking an existing design to taking an idea and turning it into a product.
``Certainly it's the continuing trend to move manufacturing to a low-cost country,'' said Rocco, who is president of Eastek. He spoke during a Feb. 10 interview in Dongguan.
``The design function is another source of outsourcing, as well,'' he said. ``If we design the product, we're likely to be the low-cost place to manufacture. We're going to build-in design for manufacturability.''
Rocco, a former executive at GE Plastics, lawn-care firm Scotts Co. LLC and diversified manufacturer SPX Corp., said Eastek's sales have doubled since 2004 to about US$34 million. Eastek employs 1,200.
The company last year expanded its manufacturing space in Dongguan by 55 percent, to 465,000 square feet, and added three injection presses. Eastek now has 29 presses and plans to add several more this year. About half of its business is plastics-related, with the rest coming from things like assembly and printed-circuit-board manufacturing.
The firm said it is increasing its investment in its workforce, as well.
Last year, the company started a school at its factory, with two teachers and an administrator, offering an 18-week English course. Rocco said once his firm becomes more familiar with administering a school, it plans to add more English courses, along with business topics like project management and public speaking.
Its has added sales staff also focused on building business in Europe and Asia, he said.
Longer-term, the firm is looking at building a similar-size facility near Shanghai or Beijing, within three to five years, and is studying whether to build a small circuit-board assembly plant in the United States, Rocco said.
``The U.S. is a very competitive place to be, with a very productive workforce,'' Rocco said. ``For the right product and the right category, that makes more sense.''
Right now, Eastek's design team is small, with nine people, and is run from the U.S., with several design engineers in Dongguan, said Cherie Wilkinson, Eastek vice president of engineering. She said she expects the role of the China design staff to grow.
``Industrial design happens in the United States at the [Buffalo Grove] office,'' she said. ``Engineers [in Dongguan] are more focused on doing what you tell them. I am focused on developing their creativity.''
The company uses its U.S. offices for sales and engineering, and maintains that its headquarters and assets in the United States provide a comfort for customers concerned about intellectual property, said Bob Wiegand, vice president of sales and marketing.
``We're a phone call away. Your lawyers can haul us into court in the U.S.,'' Wiegand said.