Last Friday, several of us from the combined MetalMiner/SpendMatters team spent the afternoon with a local manufacturer (we’ll share details of our visit later this week). My other half and I decided to mix work with pleasure and take this specific tour as we are in the final stages of a home renovation and hope to complete our new kitchen for the fall. The impetus for the tour involved looking at a production innovation we had not previously heard of specifically a new scratch resistant stainless steel countertop (you didn’t think we’d opt for a non-metallic surface did you?) The tour proved interesting on a number of fronts and the collective MetalMiner team had several interesting post-tour conversations. The first one came from a colleague/friend who joined us on the tour and posed this question: don’t you think the marketing of Ëœpoor China quality’ has been overdone? In other words, isn’t the quality message simply over-played and tired? After all, our friend argued, Chinese imports are up and clearly there is an enormous appetite on the part of the American consumer for Chinese produced goods. It’s hard to disagree with that statement. In fact, our trade deficit with China continued to increase according to the latest economic numbers. So, what’s the real beef with Chinese produced products? We’ll return to that in a minute.
My friend’s questioning got me thinking because we saw several things on our plant tour that suggested to me where/how US manufacturers have created successful “niches (we say niches because many of the mass produced products are no longer made here). We will summarize three areas here now: the first product innovation generated only through the connection or close collaboration if you will between the engineering/manufacturing side of a company and the marketing side. The second, the strategic advantages of high mix low volume operations and finally the third, the ability to produce in a “mass customized manner.
Let’s start with the first clearly American manufacturers (or any country’s manufacturers) can gain competitive advantage (and insight) by rapidly solving a customer’s problem. In this case, the manufacturer we visited produces stainless steel sinks, counters etc. When a sales person from the manufacturer went to visit a client (a showroom featuring the counter tops) the sales rep saw a bunch of towels covering the stainless counter, in effect hiding the counter top. When queried by the sales person as to why the towels were there, someone from the showroom said the surface scratches so easily that they needed cover the counters to maintain the look. But according to the manufacturer, that is the exact opposite way to show stainless. Instead, the manufacturer quickly devised a way to create a scratch free surface (which we can attest to, works) that solved the problem and allowed the showroom to remove the towels. Can the process be copied? Sure, but in the meantime, the manufacturer had created a product innovation distinguishing its products from all competitors (domestic and foreign).
On the basis of our consulting business, we believe that high mix/low volume industries remain the heart of US discrete manufacturing (yes of course there are many successful process industries in the States). That’s not to say that the Chinese or other producers can’t compete but it does create a barrier to entry. The US has innovated in terms of lean production processes and automation to create excellent efficiencies in running profitable custom products businesses.
Finally, we come to the concept of “mass customization (though in reality, it may not actually be “mass but rather product customization for smaller and smaller market segments). In the case of this manufacturer, Jason and I have the option of a standard sink or one with a funky shape and “alternative material such as hammered/distressed copper or hammered brass or some combination that we so choose. And in a mass market/big box world, we believe more and more people have opted for the unique, the differentiated or the one-off. That trend provides opportunities for US manufacturers because people are willing to pay premiums to have something that nobody else has, or at least that’s our own personal preference.
So let’s return to the original question on whether or not we have a “beef with China. Personally, I do think China quality is lacking, yet perhaps I have not properly clarified my point. A standard stainless steel sink in China may not have a sound proof coating around it (as compared to the American made ones we saw). Some people might not value that Ëœbenefit’ so perhaps we label the Chinese produced sink as “lesser quality when what we really mean to say is “stripped down version cheap, or some other negative connotation. In our throw away world, we as Americans have come to value goods that can be acquired [relatively] cheaply and we don’t tend to pay attention to the total cost of ownership (e.g. the frequency in which we need to replace/repair said throw away item). It is perhaps this last point that we need to focus on as opposed to slapping poor quality labels to Chinese produced products. Thank you Kevin Brooks for giving us the opportunity to re-articulate some thoughtsÂ¦.