What’s more stressful than a nightmare you can’t wake up from? For Ken Rosenblad, it’s watching a ship, a tiny dot on the radar, stuck at sea and unable to deliver the lifeline of a company. That’s how he remembers the early days of the pandemic.
His company, obVus Solutions, makes ergonomic office equipment, and his laptop stand was on board a ship as demand for tools for working from home skyrocketed. He couldn’t get more from Chinese manufacturers, his revenue plummeted, and his main sales channel, his Amazon, no longer ranked his company in searches.
“If you run out of product, you’re not a benefactor for their algorithms,” Rosenblud said. “So our business just got destroyed. We had to completely start over.”
So Rosenblud decided to move obVus’ production and supply chain back to the United States in a process called reshoring. He bought his 18,000-square-foot old furniture store in Victor, New York, and spent $4 million converting it into a factory. The product began rolling off the line last month.
“We have factories here, we have technicians. We can make adjustments and we can control things,” said Rosenblood. “It gives us speed, which is a big advantage over China.”
He’s also betting that it will cost as much, if not less, to manufacture his product in the United States. And as he said, “I hate losing bets.”
The pandemic has forced companies to calculate the costs of producing goods and shipping them abroad. ObVus joins other small businesses following multinationals such as Ford Motor, First Solar, Intel and Lego. These companies recently unveiled new U.S. factories as a solution to the global chaos that left shelves empty with no access to key components. consumer demand It seemed insatiable.
Amy R. Broglin-Peterson, industry consultant and lecturer in Supply Chain Management at Michigan State University, said: “We were spread too thinly to continue to work as well as we do in supply centrally located in Southeast Asia.”
For small business owners, the experience has been difficult. Many of them found themselves relegated to the back of supply lines because they didn’t have the order size, capital, or relationships needed to prioritize them over the larger companies. Even if they could, shipping container costs, which have tripled from pre-pandemic levels, have often been prohibitive.
“They bear the brunt of cost and poor service,” says Broglin-Peterson. “And they don’t have a lot of means to deal with it.”
Pressure on the supply chain eased over the summer, but the New York Federal Reserve’s Global Supply Chain Pressure Index are still at record highs, and a recent Goldman Sachs survey found that delays and backlogs continue to biggest financial concern For small business owners.
As delays and order backlogs continue, building a domestic supply chain from scratch has become more attractive and feasible. Small businesses are prioritizing proximity to their customers so they can respond to market demand in real time, and are regaining pride in their “Made in America” products.
“A decade ago there was similar interest, but I said it was more of a trickle than a trend,” said the president of the Alliance for American Manufacturing, a nonprofit advocacy group. Scott N. Paul said. “I think it’s different now. It’s not a rapid, but it’s more than a trickle.”
However, for SMEs, challenges such as labor and cost remain. An imperfect and opaque system of suppliers and manufacturers that relies on word of mouth. And capital innovation, automation, and sometimes just a lack of knowledge.
“I can’t stress enough that very few companies, even the big ones, really know where their materials come from and all the way back to the earth.” Is it available locally?”
Rosenblood spent five months researching whether obVus could manufacture its products in the United States using domestic supplies such as aluminum, nuts and bolts, as well as skilled labor.
The answer he determined was yes — with some innovations. 1 chose to produce nuts and bolts in-house. The computer-controlled routers, lathes, cutters and milling machines that are critical to keeping labor costs down are imported from China, and the company hires and trains about 25 machinists to run them, and pays them at least $52,000 a year. It’s a schedule.
Rosenblood plans to make a foldable keyboard and smartwatch, and is still weighing whether he needs to go back to China to find affordable parts.
But there are early changes, he said, as a result of recent federal relocations and policies to encourage the growth of U.S. production. For example, the Inflation Control Act encourages investment in domestic battery production for electric vehicles. Days after President Biden signed the bill into law in August, Honda and his LG Energy announced his $4.4 billion battery factory, which is expected to be completed by the end of 2025.
“There is a much greater willingness to implement economic policies that encourage growth in onshoring, reshoring and production within the United States,” Paul said.
For Scott Colosimo, it won’t happen anytime soon. He wants to use these domestically produced batteries in electric motorcycle startup Land Energy.
When he launched the company in 2020, his goal was a domestic supply chain that builds, assembles, and ships everything from a 65,000-square-foot warehouse in Cleveland. Gasoline He had the same dream when he started his motorcycle company in 2009, but it wasn’t feasible. Mr. Colosimo’s 15 employees manufacture and assemble almost everything on site, with the exception of the batteries and a ton of low-cost parts he can’t find here.
“We are looking at items with high intellectual property rights,” he said. “If we can invent the process ourselves, reduce development time, reduce costs, we can bring it in.”
However, these new processes require capital, and funding is Colosimo’s main challenge. It’s common for small business owners, especially those trying to build production capacity no longer in the United States, to forego the word. But they have an unexpected advantage.
“Most small businesses are family-owned or privately held, so they are not responding to shareholders and private equity who are concerned about the next quarter, rather than investing in the future,” Paul said.
A long-term commitment is what first struck Robert Yturri in 2019 when he met Andy Techmanski, who was interested in starting a company to manufacture technical hunting gear in the United States. A lifelong hunter, Mr. Techmanski knew exactly what was missing from store shelves, but he needed a supply expert in his chain to navigate manufacturing.
Mr. Ituri warned him: It costs money and takes time. ”
With Techmanski’s capital guarantee, Yturri has agreed to become Chief Product Officer of the new company, Forloh. He has called every manufacturer he has worked with during his outdoor coaching career for his brand, such as his North Face, to find the softest, quietest, most durable and most breathable shoes on the market. One hunter looked for a supplier who could manufacture his gear.
But most of the time I couldn’t do what I needed. He found printable synthetic leather used by automakers. This is great for knee pads and elbow wear. He turned to his HVAC commercial company to manufacture waterproof membranes. And when he could not find a supplier for the three-layer fabric, he ordered the greige fabric directly from the factory, ordered the lining and other materials, and found a factory that manufactured the three-layer fabric exclusively for Forlault.
“It takes a ‘never say no’ attitude to overcome this US manufacturing hurdle,” Yuturi said.
Building a domestic supply chain was expensive, but the flexibility was worth it, Yuturi said. Our proximity to our suppliers and customers allows us to prototype, test, and bring to market an idea in as little as six weeks. If Mr. Yuturi has to go abroad, it could take him a couple of years.
Additionally, while companies making clothing overseas tend to stick with what they ordered a year ago, Forloh makes small batches and can quickly deliver if something unexpectedly becomes popular. He said we can order.
“We need to be able to respond quickly to market needs,” Yuturi said.