Courageous entrepreneurs continue to revive an American manufacturing sector during an uphill battle that favors lower production costs overseas. With American consumers having been conditioned for many years to come to expect to buy products fairly cheaply, there are certain US entrepreneurs determined to keep their products “Made in America” despite the odds.
Still a long way to go in gaining any ground
American manufacturing, however, seems to be gaining ground in a recent study performed by The Boston Consulting Group. The study found that American manufacturers continue to fight the good fight and that economic conditions in China have evolved to where Chinese manufacturers are now facing some challenges similar to other parts of the industrialized world.
Many American manufacturers were outsourcing production to China because they were finding labor costs to be as little as one dollar per hour. That was the key for the outsourcers; the cheap, almost slave-like labor costs. Recently, however, the “Land of the Big Exports” has seen production costs rise as new factories are being built and companies have begun to actually compete for labor. In addition, shipping costs remain astronomical and fuel prices have risen, causing the Chinese profit margins to shrink. Another interesting fact uncovered in the study was that it found Chinese workers to be far less efficient, about 25% less than a typical American worker.
While the playing field continues to be slowly leveled, production costs in China and elsewhere overseas do continue to be far cheaper than in the United States. Despite those daunting figures, many small American manufacturers are trying to keep jobs in the country and continue to fight the good fight to do so.
Mom-Entrepreneur keeps her manufacturing base here despite the odds
Cathy Berse-Hurley founded her manufacturing company, called CBH Studio and based in Massachusetts, quite by accident. Several years ago she began to design and hand stich school lunch bags for her then four year old twin boys, Zach and Ben, with bright and colorful animal designs on them. The lunch bags were a hit with other mothers in town and they started asking her to make lunch bags for their children also. The idea blossomed and Cathy soon found herself selling her lunch bags at local fairs and regional craft shows until she found herself looking to become a full-fledged manufacturing company with orders being taken at such events as the New York Toy Fair.
Setting up a manufacturing process seemed a daunting task as she tried to fill orders from such illustrious retailers as Niemen-Marcus, Saks, and Macy’s. In addition, she was soon getting orders from shows she was doing in Japan and all over Europe. The challenge, Cathy recalled was not making sales but finding a way to manufacture them as inexpensively as possible in America without completely destroying her profit margins or her ability to compete. She began to feel the proverbial pinch as knock-off competitors turned to cheap overseas labor to battle her on price. She struggled to keep her manufacturing operations in the US but overseas shipping and customs costs were eliminating her margins to the point where she suddenly realized that the more her company grew, the less actual money she was taking in.
Cathy knew that she might not be able to compete for long and found a manufacturing facility in Pennsylvania that could produce her bags, from beginning to end, for about a third of the cost of what she was doing. Even so, Cathy lamented, her costs were still three times higher than if she had the bags manufactured in China or elsewhere overseas.
Changing tactics to keep the jobs here
She wanted to keep her jobs in America and, in 2012, she decided to move her operations online and sell directly to customers. Despite continuing pleas from wholesalers and major retailers, she found that she just could not profitably keep up with that end of things. She retains her American operations and has found that her profit margins have increased since she moved online.
Cathy says that she did not want to go to China and still maintains that stance. She has always believed that someone, especially the politicians, should be doing something with regard to making things a bit more fair for American manufacturers but she despairs ever seeing it happen.
So Cathy continues to fight the good fight as she declares at her website: “We are a family run, woman owned, American company battling the big boys… We stayed focused…and are fully committed to helping restore pride in American creativity, innovation and quality. Every accessory from CBHstudio has been designed, cut, printed, stitched, and inspected by American workers making a fair wage.”