American businessman James Fiocchi sits in the office of his mold-making factory in China and admits his professional life the last few years has been crazy.
In 2005, he and his brother John were running their Chicago-based plastics business when they began having major problems that started them on an unplanned midlife journey that today finds the Fiocchis owning and living part-time in a factory in Dongguan.
Whether by plan or by luck, though, the two believe they've found a business niche, tapping into U.S. injection molding companies that want to cut their tooling costs and source overseas.
As a result, their factory, Feng Ping Tooling & Plastic Mfg. Co. Ltd., has grown from 20 employees in 2007 to 200 now, and they said sales have grown from $1 million in 2009 to $5 million last year, with projections for substantial growth this year.
We have a good business model, said James, who is 49. We export U.S.-quality molds at a very good price.
The company plans to expand in the next six months and is looking at renting an additional 85,000 square feet of space next door to the 85,000-square-foot factory it occupied in late 2009.
Feng Ping's business of building molds in China for export is not a new idea, of course. Foreign companies and traders have been doing it for years, with debates about China pricing and quality a constant in U.S. manufacturing.
But the deep and swift dive the brothers have taken into becoming China factory owners is not a move they expected to be making in their 40s.
If you would have said to me, 'Jim, where will you be in three years?' when I was back in the enclosures business, if you told me I would be sitting in this room talking to you, I would have told you, 'You're crazy; you've lost your mind,' he told a visiting reporter.
Road to China
The brothers were not neophytes to China when they opened Feng Ping, which is a wholly foreign-owned enterprise.
They had been going to China for more than a decade to source molds and plastic parts for their Lake Bluff, Ill.-based enclosures business, which their father started more than 30 years ago.
But that business hit a near-fatal snag when it started having more and more serious problems with its China supply chain, beginning in about 2005.
First, their largest supplier, a Chinese firm, was bought by a German company. The new German owners were not interested in the brothers' low-volume, specialized business of making plastic enclosures for a huge variety of niche markets.
At the same time, they said they were having increasingly severe problems with late delivery and rising prices at many of their suppliers in China.
The brothers had a lot of different enclosures, but they might have needed only a few hundred parts at one time, for products ranging from a fast-food restaurant drive-through ordering system to safety equipment worn by miners. It was all in batches far too small to interest most Chinese factories.
At first they tried hiring their own manager in China to look after the 575 injection molds and 1,200 custom inserts they owned. But many problems finding the right person led them to conclude they had no choice but to do it themselves.
So they spent months gathering their molds from various factories in China and recruiting managers and staff from their years of contacts in China's plastics industry.
After a lengthy, more than two-year-long process to create the WFOE legal structure, they opened their own small shop in late 2007 in South China, about an hour by car from Hong Kong.
The first year was spent keeping afloat, making their own enclosures. But some extra mold-making capacity and conversations with manufacturers in Chicago led them in late 2008 to branch out from enclosures into mold making.
Now, they said, their mold-making business is growing quickly, with more than 90 percent of it being exports to U.S. and European companies.
They've made molds for speaker housings for BMW cars, for components for General Electric transportation equipment, and their largest, a 16,000-pound, 32-cavity mold for a medical application.
Fiocchi said the firm wants to expand its technology, and is looking at making end-of-arm tooling for industrial robots.
A change of life
For the brothers, the factory has meant major life changes. They try to rotate their time in China, with one of them back in the United States acting as dad to all of their children. They've also taken a stab at learning Mandarin.
The two of them have living quarters for themselves and guests in the Dongguan factory, next to worker dormitories, and they sometimes take groups of staff on short road trips around South China, a new concept in China's still-developing car culture.
They've brought over three Weber grills from the United States and have weekly cookouts with staff.
We love what we do. We've been able to make a transition into Asia that's a life-changing experience, James Fiocchi said. This is not the easiest place in the world to live. My brother and I have a saying between us the country will chew you up and spit you out and you have to get up, and it will chew you up and spit you out again. You just have to get back up and keep going.
If you're willing to go through that, you can have a great thing, he said.
Part of their business strategy, he said, is to pay 20-30 percent above market rates, and that's insulated them somewhat from the labor shortages hurting factories throughout South China. (The company added 10 workers after Chinese New Year with referrals from existing workers, he said.)
Our scheme is not to hire the lowest-priced worker we can find, he said. We're not a factory of 50,000 where if we have to pay an extra 2 cents an hour, we don't make any money next year.
In the interview, James Fiocchi admitted the company is not sure what its plan is for the next five years, with all the changes they've seen in the last few.
But Feng Ping is debt-free, he said, and sees solid opportunities from overseas injection molders looking to reduce tooling costs.
He acknowledges that the China price for molds the growth of lower-cost Chinese mold exports to the United States is a sore point in the U.S. mold-making community.
But he said he sees Feng Ping as providing good wages and opportunities for its workers in China, and at the same time bringing profits back to the United States, rather than staying in Asia, and helping U.S. manufacturers be competitive.
Do I feel like I'm hurting America? No, here's what I feel like: I feel like I've designed a new business model that other American companies should follow, he said.
You can come over to China, you can change your lifestyle, you can live here like I do, it can be done. You can make money and you can grow it rapidly.