The housewares market is experiencing a made-in-the-USA trend, thanks to consumer and retailer demand, a favorable currency exchange, and rising shipping and energy costs.
One of the newest companies to decide to manufacture in America is a British maker of storage containers, Really Useful Products Ltd. in Normanton, England. The company is gearing up to start production at a U.S. unit, Really Useful Boxes Inc., in Elk Grove Village, Ill., a Chicago suburb.
The company already has invested $4 million to develop new products for American consumers and set up a warehouse, according to Mike Pickles, president of the parent company. He was interviewed at the International Home & Housewares Show, held March 16-18 in Chicago.
He plans to place 20 injection molding presses in the 60,000-square-foot Elk Grove Village warehouse, and start molding in the next 12 months.
Pickles said the U.S. factory will be modeled after the headquarters plant in Normanton, which has 75,000 square feet of manufacturing and 25 presses.
Why start manufacturing in the United States? Pickles said Office Depot and Staples, its largest customers in Europe, suggested that he sell and produce in the States.
``We will grow for sure,'' he said. The company plans to invest ``about $5 million a year'' to bring a complete line to the U.S. market, Pickles said.
He's not overly concerned with the resin prices, a universal problem for plastic processors across the globe. He said the company expects to pay about 5 cents more per pound for polypropylene in the United States than in the United Kingdom. But his winning strategy isn't focused on low-cost manufacturing, it's on innovative design.
``As our trademark suggests, we don't just make boxes, we make really useful boxes,'' Pickles said. The company's storage containers for office and household uses are tough, clear, stackable and neatly designed with innovative lids.
And as shipping costs become more expensive, being close to customers is more important than ever, Pickles said.
Other exhibitors at the housewares show agreed.
``It is a good time for American manufacturers,'' said Amy Dean, vice president of sales for the Galaware line at Proto-Cast LLC. She noticed a hike of buyers' interest in products labeled made-in-USA at this year's show.
Galaware, owned by Douglassville, Pa.-based Proto-Cast since September, was acquired from Wiltec Inc., a company founded 36 years ago by Dean's father, William Holloway.
The acquisition was a good fit, Dean said. For custom molder Proto-Cast, the addition of Galaware, a registered trade name for plastic storage containers, mugs, tumblers, dishes, trays and assorted crystal polystyrene serving pieces, brought established market share and expertise.
Dean, former president of Wiltec, and three other employees joined Proto-Cast.
Proto-Cast currently runs 13 injection presses from 50-350 tons, President Joe Gizara said in a telephone interview.
Dean said promoting ``made in America'' housewares products can be a plus with consumers. But there are other reasons, according to President Robert Kleckauskas of Arrow Plastic Manufacturing Co. of Elk Grove Village.
``We understand [U.S.] customers' needs better,'' Kleckauskas said. U.S. companies also can provide value such as credit terms, fast turnaround and on-site service, he added.
``We hold inventory for customers, since we know their businesses. It is impossible for importers,'' Kleckauskas said. Customers appreciate these perks, ``even if it costs a little more,'' he noted.
That's one of the reasons Philip Seldon chose to commercialize his design of plastic wine racks in the United States. Seldon is president of the Vintage Society Foundation Inc. of New York, which owns Wine Racks International Inc. of Norman, Okla.
A wine enthusiast, Seldon came up last year with the idea of lightweight, decorative and stackable wine racks made of plastic. He compared quotes from China and the United States.
``The difference in price doesn't justify the difficulties [of outsourcing],'' he said, ``In the U.S., I don't have to maintain inventory with just-in-time production.''
So many things can go wrong when you are 10,000 miles away, he said, sharing his frustrating experience with a Chinese toolmaker.
``A dishonest vendor promised to deliver in five weeks, but it eventually took five months and when the molds finally arrived, they were defective,'' Seldon said. He had to delay the planned launch for the Christmas season. The lesson he learned was, ``either have the molds made in the states or someone in the U.S. has to be responsible and can repair and maintain,'' he said.
The high-impact ABS wine racks with shiny polish are now made by factories in the Midwest, he said.
China, a major outsourcing destination and exporter to the U.S., has its own set of problems, said Bruce Ronner, vice president of finance of Arrow Plastic.
China has been tightening its regulations on manufacturing, he said, and lead times for Chinese production can be long. Some suppliers use outdated equipment and processes, resulting in long cycle times. Plus, the cost of manufacturing in China is rising.
``You also need to factor in the labor cost increase and shortage of labor [in China],'' Ronner said.
For Ningbo Lisi Plastic & Rubber Co. Ltd., one of China's largest exporters of housewares products, pressure is coming from all directions. Located in eastern China's Zhejiang province, the 15-year-old company is not as concerned with a labor shortage as with the shrinking dollar and a possible shrinking U.S. market.
The company relies on North America for 65 percent of its sales, General Manager Sally Jin said at the show.
``We've seen some impact [of the U.S. slowdown] already, not much,'' she said. China's tighter regulations do affect manufacturers like Lisi. Following the string of product recalls last summer, China Commodity Inspection started checking every container of products, Jin said.
``I believe we still are competitive, but we need to work harder,'' she said, adding that the golden days for Chinese exports are gone.
It's not just the Chinese firms that are affected by the U.S. economic condition and currency policies.
Home Concept Products Inc., a Los Angeles-based company that makes products under Reynolds Cleverware and Reynolds Casuals at its Thai joint venture factory for American consumers, is also hurting.
Higher resin prices in Asia and strengthening Asian currencies make the business environment tougher, said Jim Cucinotta, vice president of sales and marketing.
``Freight cost is also a crazy factor,'' Cucinotta said. He said freight used to be about 6 percent of sales, but ``now it's more than 20 percent.''
Maybe the only solution to dilute the risk of relying too much on the U.S. market is to diversify the business geographically. ``We'll have to become a more global company,'' Cucinotta said.
Arrow Plastic echoed that point. Although the company makes 95 percent of its products in the United States, it does leverage Chinese manufacturing by sourcing components from a numbers of vendors.
``What we [U.S. businesses] should do is to use China to accent what we do,'' Ronner said. The 300-person company is optimistic with that outlook. ``Recession hasn't hurt the company in the past,'' Ronner said. ``We hope our suppliers do well and grow with them.''
Arrow runs about 50 machines, including injection presses and blow molding equipment. It uses U.S. tooling and expands capacity by replacing older machinery with larger, faster machines.