Issue Date: October 22, 2012
Getting A Grip On Grip Supplies
When the Pennsylvania-based hand tool manufacturer Channellock started considering American companies to supply the molded polymer grips for one of its product lines, its motives were not particularly patriotic. Channellock’s Taiwanese grip provider had gone bankrupt, and it needed a new source quickly.
But when Channellock managers surveyed the global supply landscape, they found that U.S. molding companies were more competitive than they once were. Channellock decided to stop importing the grips, and its decision is now having positive repercussions for several U.S. companies up and down the plastics supply chain.
The toolmaker’s switch from imported to U.S.-made grips this summer is an example, albeit a modest one, of reshoring, a phenomenon in which the manufacturing of products that were once made in America is shifted from offshore locations back to the U.S.
Other examples of reshoring among consumers of chemicals and polymers are emerging. Earlier this year the outdoor- goods supplier Coleman moved production of its 16-qt wheeled polyethylene cooler from China to a plant in Wichita, Kan. Coleman says it made the move in response to rising manufacturing costs in China. U.S. production, the company adds, allows it to “tap into a high-quality labor market while improving our supply-chain logistics at lower manufacturing costs.”
Elmer’s Products, maker of the well-known school and household glues, is also reshoring. Several years ago, Elmer’s shifted some manufacturing of its polyvinyl acetate glue from the U.S. to China. But many of the Elmer’s products stacked in drugstore back-to-school displays this fall were again bearing the “Made in U.S.A.” label.
Consultants differ on whether reshoring is just a feel-good story with little economic impact or whether it can have a real effect on the U.S. economy and on manufacturing employment.
In May, the Hackett Group, an operations improvement consulting firm, released a study analyzing the trend. It concluded that reshoring is largely a myth and that the amount of manufacturing returning to the West does not offset the amount that continues to be sent offshore.
China’s relative competitive position as a manufacturer is indeed eroding rapidly, to the detriment of its overall economy, the Hackett study confirmed. However, few of the U.S. manufacturing jobs lost to China will return; most will simply move to other low-cost countries, the firm concluded.
Last month, the consulting firm PricewaterhouseCoopers came to a different conclusion in its own study of U.S. manufacturing. PwC found that manufacturing is resurging in the U.S. because of improved labor competitiveness but also because of drivers such as energy costs, U.S. market demand, supply-chain simplification, and availability of capital. PwC identified the chemicals and metals industries as two that are particularly likely to benefit from reshoring.
Several factors played into Channellock’s decision to seek a U.S. grip supplier, according to Ryan W. DeArment, vice president of sales and marketing. DeArment is a fifth-generation member of the family that founded the company in Meadville, Pa., in 1886.
With two facilities employing nearly 400 people in Meadville, Channellock has long been committed to U.S. manufacturing. The steel cores of all its pliers are forged in Meadville, and the polymer grips on its basic pliers are applied on-site through a dipping process. But when Channellock launched its Code Blue line of premium tools 10 years ago, it found itself going to Taiwan for the specially molded grip.
The Taiwanese supplier’s bankruptcy forced Channellock to rethink grip manufacturing. At first, DeArment says, the company considered bringing production in-house, but it realized it couldn’t achieve economies of scale. When it approached large molding companies it was told that its production runs of 300,000 grips or so wouldn’t be worth their while.
Channellock looked at smaller molders in Eastern Europe and in the U.S. Midwest, but in the end it settled on a local company, Evolution Molding Solutions, based just a mile away in Meadville.
Evolution was formed in early 2011 by Jamie Holler and Joshua Sindlinger, who between them had 30 years of experience in the plastics molding industry. It’s still a two-man shop. “We’ve worked at several companies over the years and have seen some of the shortfalls with these companies,” Holler says. “We run lean and mean here.”
After learning about Channellock’s search for a new molder through the local Meadville grapevine, Holler and Sindlinger sought out a meeting. They offered competitive pricing plus the ability to store the molded grips in their own warehouse for just-in-time delivery. The partners also proposed a change in grip technology via an improved elastomer and the use of a “salt and pepper” blend of elastomer and color concentrate pellets to avoid having to precompound the polymer.
DeArment says his team ran the numbers and concluded that Evolution’s pricing was about the same as what the Taiwanese firm offered. Added benefits were lower freight costs, no tariffs, and much shorter lead times. “We saw the opportunity that we could put a comparable product out there that was made in America, and it was kind of a no-brainer,” he says.
Evolution got assistance from other companies that are now also benefiting from Channellock’s reshoring decision. One is Evolution’s regular color house: RheTech Colors, a Sandusky, Ohio-based producer of color and additive concentrates—-also known as masterbatches—for the plastics industry.
Craig Dunaway, RheTech Colors’ general manager, says his firm’s color technicians started by creating pigment blends that matched the signature red and blue of Channellock tools. The company then incorporated the pigment into a masterbatch that Evolution could use to create sample molded parts for approval by Channellock.
Although Channellock’s masterbatch needs aren’t huge, winning the contract introduced the tool market as a new business sector for RheTech Colors, according to Dunaway. “It opens up a lot of opportunities,” he says.
And for RheTech Colors, the new business continues a trend of benefiting from reshoring. “We’ve definitely seen in the last one-and-a-half to two years a pretty steady stream of customers coming back and looking domestically for colorants and additives for products that were made overseas previously,” Dunaway says. The company moved into a new facility in 2008, and reshoring has contributed nicely to the firm’s growth since then, he adds.
United Soft Plastics is another beneficiary of Channellock’s move. Based in Lawrenceville, Ga., USP blends elastomers, polyolefins, mineral oil, and other ingredients to create soft, pliable plastics. Earlier in his career, founder Rudi Herbst helped develop special adhesion grades of elastomer that stick firmly to an underlying polymer without the need for added adhesive materials.
Herbst says Gillette used the technology two decades ago to meld dissimilar plastics and create advanced multiblade razors. With the help of USP’s adhesion-grade elastomers, Channellock and its partners were able to redesign the grip-manufacturing process and create a durable yet economical two-piece molded grip.
USP started to see new business from reshoring in 2008, soon after the financial crisis, Herbst says. The pace has accelerated every year since then to the point that reshoring is the source of 40–50 contracts, he estimates.
The universe of U.S. companies that benefit from a reshoring move such as Channellock’s is broad, Herbst points out. For example, to formulate the grip elastomer, he buys styrenic block copolymers made in the U.S. by Kuraray and Kraton Performance Polymers. U.S. manufacturers supply the boxes in which USP packages the elastomer, and U.S. shipping firms transport it to Pennsylvania. “It all adds up through the entire supply chain,” he says.
At Evolution Molding, Holler sees the Channellock contract as the start of something big for his company that could mean hiring more people in the future. Evolution’s highly automated molding machines do most of the manual labor, but he will be looking for people who can help the company grow. “We want thinkers,” he says.
Holler also sees Channellock’s reshoring decision as part of a larger trend that will benefit the country. “If we get more and more of this happening,” he says, “it will definitely have an impact on the U.S. economy. That’s what we need.”
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