Dramatic Bottom Line Reduction
There is one reason and one reason only that decision makers elect to have products manufactured in China and that is cost savings. Assuming that manufactured costs are lower in China due to labor savings, there are many other cost levers to consider when manufacturing offshore in China. Here are the top five:
1. Freight costs—Freight and logistics should not exceed 10-12% of your total cost of goods. In other words, if you ship a 40 foot container to the U.S. this will cost on average $5,000 including import fees, duties, tax and drayage (overland transportation to/from a shipping port). So if you can’t move approximately $50,000 of product, that should already be 20-30% below existing manufactured cost, you need to re-evaluate whether it makes sense.
2. Carrying cost of capital—Cash is king in any business. It is critical to produce inventory that will move once it gets to the U.S. otherwise each month that inventory is tying up capital and not producing top line sales revenue, you are eating into your cashflow.
3. Warehouse space—every square foot of a warehouse used to store products has a fixed cost. Unless you have excess space available, you need to be certain you are allotting this valuable real-estate to products that are generating revenue. Otherwise the savings will be offset by the additional cost of warehouse space.
4. For items #2 and #3 it is imperative that analysis be given to not only finished goods but also raw material and components. Often overlooked is the advantage of using China to absorb the financial burden of not only managing but paying for commodity purchases, raw material, components and works in progress. Every month of financial responsibility taken on by your China producer is a month of cashflow freed up for your business.
5. Start-up costs—your China factory will absorb many intangibles associated with start-up costs including learning curve, purchasing coordination, and in many cases tooling not to mention infrastructure such as plant, property and equipment.
Quality, consistency and timing should only be the “cost of admission” and no sacrifices should be made in these areas.
Interested in learning more? You can right here.
There is No Next China
What is something you can think of that can’t successfully be outsourced in China? Think long and hard about this. Resist the temptation to veer toward intangibles or time sensitive services with obvious geographical barriers such as a haircut or plumbing repair. What product theoretically cannot be manufactured in China? How about a portrait? I have an acquaintance that has connected with amazingly talented artists who will take a family photo and reproduce a framed, hand painted, oil on canvas likeness taken from a photograph. It will have the same level of detail and quality as those done by artists in the U.S. costing a minimum of $1200-$2500 just for the painting itself. This does not include the frame which can be another $350-$500. The exact quality portrait from China can be delivered to your doorsteps for $450 or about a quarter or less that which someone would expect to pay here. Why is this?
If you said labor cost you are only partly correct. There are many more factors that play into “the China price” for which Westerners have had an insatiable appetite since the Wal Mart effect took hold in the early nineties. Yet now writers, politicians and economists say the tide is turning. Many assert that currency fluctuation, labor shortages near China’s coastlines, and a rising middle class, are quickly narrowing the cost gap between China and the West. They might be forgetting one thing though according to Mike Bellamy, author of The Essential Guide to China Sourcing , “there is no Next China.”
Rising labor costs in China
In a Roya Wolverson interview published in Time, May 16, 2011, Pin Li, President of the Wanxiang America Corporation stated that “rising labor costs in China will only cause inflation and not necessarily jobs returning to the U.S.” He further explained that what this means is “instead of paying $1 for latex gloves the price may rise to $2 and will still represent the lowest cost available in the world.”
In other words, assuming material costs are consistent globally, even doubling or tripling the average monthly wage of Chinese factory employees still does not bring total cost of goods in line with U.S. workers.
In a recent conversation, Bellamy, Chairman of the Advisory Board for China Sourcing Information Center begins to make the “No Next China” case with the notion that China’s economy is still vastly lopsided in its dependence on exporting. The Chinese and its neveaux riche’ have created the world’s second largest economy that many predict will be bigger than the U.S. within the next decade. The only fuel to keep this burning is the demand for cheap(er) exports. A growing middle class also means bolstered domestic consumption, particularly as brands become more prevalent with Chinese consumers. But to sustain economic growth, exports have to remain a big chunk of the equation.
A shift by coastal manufacturing regions
The question may not be so much about “Made in China” as it is “What will be Made in China?” Sure there is great capacity and infrastructure in coastal regions but there may be a shift developing with the evolution of improved skill sets and wage increases. Dr. Eric Thun , lecturer in Chinese Business Studies at the University of Oxford China Center, says "pushing manufacturing into high value-added activity is very much what the government wants. This kind of cost pressure stimulates upgrading."
Bellamy adds, “because China’s economy is still heavily export dependent at present, over the past years there have been concerns about the China government promoting the interior too fast at the expense of the coast. This could have major side effects on the much needed revenue stream gained by supplying product to overseas buyers. But, as April data demonstrates to policy makers, the development of the interior is not having a major impact on exports. “
The role of appreciation in Chinese currency to U.S. job creation
Since June, 2010 when currency truly began floating, the RMB has appreciated 6% against the US dollar. Depending on whom you talk to however, the RMB is still undervalued by as much as 25%. Add to this CPI inflation and productivity growth rates (Chinese worker productivity is growing faster than U.S.) and the RMB will continue to be undervalued for five years or more.
Pin Li argues that “currency can help but it also can hurt. Structural issues are more fundamental for the U.S. and China. This is more of a political question than any economist can even measure. Politically we have to pretend it's an issue. But the reality is that jobs from China won't come to the U.S. They'll go to Mexico, Korea, and Indonesia. And that means the imports that came from China will now cost more which also doesn’t solve the deficit issue.”
Bellamy claims “we can expect that the US government will probably use the April export record to put pressure on China to allow their currency to appreciate. The China government has a plan in place for a slow but steady increase as opposed to a dramatic adjustment as desired by the US. Don’t expect China to change their plan just because of this April data and any related pressure from the USA.”
China as a market
Li’s passive reference to the deficit is interesting and should not go unnoticed. While many grip about jobs, only a small percentage of Western companies have invested in growing market share in China.
In an October 6, 2010 Bloomberg Press report it was estimated that China market was valued at $150 billion in potential goods and services or a top ten global opportunity for U.S. companies. “U.S. companies have experienced tremendous commercial success in China’s market and the prospects for future growth are significant,” said Erin Ennis, vice president of the U.S.-China Business Council.
Beijing has a $145 billion trade surplus with the U.S., more than its deficit with the next seven- largest partners combined. But is this solely due to undervalued currency and cheap labor? Could it be more the apathetic or myopic strategies of only selling into North American and European markets and not breaking from traditional business models?
Pin Li makes a bold statement when he asserts, “Firms’ access to Chinese should be their more of a concern than an unbalanced currency.”
The next five years
China remains a factory to the world. Government subsidized infrastructure has ensured overcapacity of manufacturing availability. One needs to simply travel from town to town; cranes as far as the eye can see. Staggering development continues in all sectors such as transportation, industrial, housing, recreation, hospitals, shopping centers, and resorts. Innovation and branding are now woven into the next generation’s mindset with Beijing’s full support. There is no next China. Whether as adversary, trading partner, or ally the future will depend on setting priorities and building mutual trust.
David Alexander is President of BaySource Global www.baysourceglobal.com
The Great Firewall strikes again!
Not that 60 million users wasn’t proof enough. But when the most noted business social networking site in the world gets blocked from 1 million of its subscribers, you know you count. That’s what apparently has occurred in response to the recent Jasmine Protest gatherings which coincidentally got a guest visit by potential U.S. presidential candidate John Huntsman at a Beijing McDonald's.
Via Tech Crunch
“The idea that China could succumb to the kind of unrest rocking authoritarian governments across the Middle East was absurd,” a senior Chinese official said. According to a Reuters report, “Long-term disruption to the site would exclude the company from the world's biggest Internet market by number of users -- about 450 million and growing. That could hurt its planned initial public offering in New York and anger the United States, which has criticized Chinese Internet censorship.”
According to a report in the February 24 edition of Wall Street Journal Asia many Internet users are becoming increasingly aware of the extent of the censorship system, as well as how it works, and are either seeking new ways to get around it, or becoming increasingly frustrated at their failure to do so.
One of the most damning critiques of China's censorship system came Tuesday from Murong Xuecun, a popular Chinese Internet author.
"Our mother tongue has been cut into two parts: one safe, and the other risky," he told an audience at the Foreign Correspondents' Club in Hong Kong.
"Some words are revolutionary, and others are reactionary; some words we may use, and others belong to our enemies."
via Tech Crunch
How are you going to get to China?
Can you tell me how to get to China? David Alexander
Head West and turn...
Let’s be clear on one thing. This piece is a completely self-promoting call to action. If you were in charge of business development for your organization; and here is the one qualifying caveat—for a product or service you absolutely knew would help other businesses reach their targets while delivering a heady ROI, would you not pound the war drums?
In a January 31 API wire the #1 manufacturing country was reported. Many would assume China leads the way by a commanding margin yet it trails the $1.7 trillion output of the United States by a whopping 40% meaning we produce more with less labor. It also indicates that low value added jobs with less profit margin have gone overseas. So what does that mean for us? It means that China is still the factory to the world and if operations decision makers haven’t developed a competent model to outsource redundant, high labor and low value add processes, they are tempting fate. Is it finally time for your organization to embrace a synergistic offshore-onshore manufacturing & distribution strategy?
Consider Sure Power of Portland who increased their employment by 53% after embarking on a manufacturing outsourcing strategy to free up valuable plant space. They increased sales 188% by re-dedicating valuable assets to R&D and higher margin products. This translated into a 204% increase in tax contributions to the state of Oregon in one year. Getting to China however can be a daunting and expensive undertaking for the inexperienced and timelines are usually doubled when going it alone. Does your company have any KPIs for lost opportunity cost?
Assume for a moment that you are the SVP of Operations for a U.S. firm in Des Moines that manufactures some sort of metal and plastic assembly. Sales have been flat and finally in that Monday morning meeting the inevitable question arises. “What are we doing about China?” your boss asks. You have a solid team of purchasing professionals, none of which can point to Hong Kong on a map. However, through the internet one of your go-getters, Bill, has begun to put a spreadsheet together of die cast and injection molding companies in the Guangdong Province, which he’s researched as being a hotbed for these industries. Since Guangzhou is a FTZ (Free Trade Zone) Bill with his Operations Management degree, has identified this as the logical place to start. He’s shared a couple of months of emails with “agents” posing as direct factory managers and is ready to take his associates to China. Just say the word.
Assuming that Bill and the others now have passports and visas in hand, they begin booking flights, hotels, trains, and ferries to venture out into the Middle Kingdom. In all they’ll be gone for just under three weeks. Since this is the company’s first sojourn to Asia, you’ll undoubtedly accompany them on this exciting new foray into the land of the dragon along with your Ops VP. Now you and your four valuable employees will be out of pocket the majority of a month leaving yours and their day to day responsibilities to others or to simply take a break from existing projects. How much time and capital do you think this will require? You may be surprised.
The following lists conservatively typical expenses by line item for a 2 ½ week trip to China.¹ Remember, you’ll require a full 24 hour day of travel to and from and a day of recovery once you’ve arrived.
Cost for single trip, five personnel, to China
T
The good news is there are competent firms in place to assist in your project management initiatives. In a recent poll on Linked In, 150 Supply Chain professionals weighed in with their response to the question, What is the best way to manufacture outsourcing in China? (See diagram below). 57% of respondents chose “Establish a trusted partner in China.” Perhaps a good portion of the voters had already been through the trial and error process. Or it could be that those who have succeeded in tandem with a firm watching out for their best interests can easily quantify the decision to engage a reputable partner for monitoring manufacturing, quality control, packaging, labeling and logistics.
Linked in Poll-150 respondents
In his article 10 tips to better sourcing William Atkinson of Purchasing Magazine explains that regardless of their China story, those who have enjoyed a successful relationship with China have done so through proper guidance and preparation. In this critical juncture of global commerce, fluctuating currencies, and competitive pressure, it is imperative to select a reliable partner whom you can trust, knows the local governments and regulations, has engineers on staff who understand your products and who can help you gain a foothold in this valuable region of the world.
¹Airfares, four star accommodations and RMB exchange rates as of February, 2011 for travel in March, 2011
Baysource Global President, David Alexander can be reached at david.alexander@baysourceglobal.net
China News
Each day we read and hear more and more about the co-mingling of China and the U.S. as these two interdependent nations refine their geopolitical position with each other and the rest of the world. China is a vast nation teeming with industrious minded entreprenuers who are seeking their fortune much in the same way as U.S. pioneers in the early 1900s. Our countries are indissolubly linked from an economic standpoint and nothing on the horizon seems to contradict this long term description of our relationship. China, while still "factory to the world," will forge ahead in Western style to build consumer brands, capitalize on the meteoric rise of a middle class market, and play a vital role in world financial markets. It is a story that will be amazing to see unfold and in no way does the ending have to be a negative one as both nations continue to innovate and lever their strengths and resources.
If you or your colleagues and associates have the need for a competent and experienced partner to manage your company's China business, we want to be just that. We have a China staff of over 30 who have working knowledge of hundreds of industries and disciplines. Our specialties are complex manufacturing assignments, supply chain management, fulfillment and distribution in China, greenfielding, and highly competent project management. We are integrity driven, quality focused and have an ardent desire to see our clients succeed in every undertaking.
Thank you for allowing us to continue to reach out to you with newsletters and emails. Should your business plans include any aspect of dealing with China, please don't hesitate to contact us for a free, no-obligation consultation.
China to continue RMB exchange rate reform Chinese President Hu Jintao reiterated on May 24th that China will continue to steadily advance the reform of the formation mechanism of the RMB exchange rate under the principle of independent decision-making, controllability and gradual progress. Hu made the remarks at the opening ceremony of the second round of China-US Strategic and Economic Dialogue in Beijing.
Hu said China will continue to pursue a win-win strategy of opening up. The country would expand market access in keeping with established international economic and trading rules, support the improvement of international trading and financial systems, and askance trade and investment liberalization and facilitation.
On China's effort to accelerate the transformation of its economic development pattern, he said, "We will make great effort to expand domestic demand and increase household consumption, vigorously promote sounds and balanced growth of external trade, and reject protectionism in all manifestations."
China's trade back into surplus After a US$7.2bn deficit in March, China's trade retuned to surplus in April but shrank 87% from a year earlier due to faster growth in imports. The trade surplus stood at US$1.68bn in April, according to the General Administration of Customs. Exports rose 30.5% you to US$119.92bn in April, while imports surged 49.7% to US$118.24bn.
Harley Sales Up Harley Davidson Inc has reported that sales in China doubled last year, according to Rodney Copes, VP of international sales. Since it entered China in 2005, Harley has developed four dealers nationwide - one in Shanghai - and plans to open four new dealerships this year in Wenzhou, Xiamen, Dalian and Chengdu.
Foreign Investment Reflecting the determination of China's central government to attract additional foreign investment-and to direct that capital towards industries and regions that serve the government's broader social and economic goals-the State Council issued Several Opinions on Further Utilizing Foreign Capital (Foreign Capital Utilization Opinions) on April 6, 2010. The Foreign Capital Utilization Opinions set priorities that encourage foreign investment in research and development centers, high-end manufacturing, high and new technology, alternative energy, and other environmentally friendly industries while discouraging investment within industries that consume large amounts of energy, pollute the environment, or are already over capacity in China.
Shanghai Pudong - new policy on JVs On 13th April 2010, The Shanghai Pudong People's Government issued the Tentative Measures On Setting Up A Sino-foreign Equity Joint Venture ("EJV") and Cooperative Joint Venture ("CJV") In Pudong ("Tentative Measures"). The Tentative Measures have been introduced to allow domestic natural persons to establish EJVs and CJVs in the Pudong New Area. The Tentative Measures came into effect on 1 May 2010 for a trial period of 2 years.
The Chinese laws on joint ventures, which were initially issued in 1979 and 1988 respectively, do not allow domestic natural persons to set up EJVs or CJVs with foreign companies or individuals. Such restrictions do not conform to the principle of "national treatment" and so have been seen as being an obstacle to domestic individuals hoping to cooperate with foreign entities and/or individuals. As the Chinese people are becoming more prosperous, pressure has increased to abolish the existing restriction.
The usual way to circumvent the restrictions is for a Chinese natural person to set up a limited liability company (normally a one-person company), and to use the new company as a vehicle to partner foreign parties. However this route is very inconvenient and the issue of the "invisible investor" has led to many disputes between contracting parties.
Foreign investors have encountered difficulties when trying to partner with a Chinese citizen they trust. There has been rapid growth int he need for cooperation between individuals from SMEs and foreign individuals in high-tech and creative industries. As the officials from Pudong said, "We have changed because such change is required."
Highest Level of Confidence Chinese consumer confidence rose int he first quarter of the year to the highest level since 2007 as people became more optimistic over their future, a survey by Nielson Co and the National Bureau of Statistics. The Consumer Confidence Index in China climbed to a three-year high, bolstered by better employment prospects. However, people's willingness to spend fell slightly due to soaring asset prices.
World Expo Opens Shanghai kicked off the 2010 World Expo with an extravagant opening ceremony and fireworks show. The two-hour performance at the new US$270m Expo Culture Centre ended with a spectacular outdoor multimedia show punctuated by a parade of hundreds of national flags carried by boats along the city's Huangpu River. The city has spent US$45bn, more than Beijing spent not he 2008 Olympics, to put on what it says will be the biggest Expo ever.
David Alexander is President of BaySource Global, a U.S. based manufacturing and project management firm with offices in Shenzhen and Shanghai. www.baysourceglobal.com
US China Relations
US Ambassador Jon Huntsman’s speech at Tsinghua University (http://beijing.usembassychina.org.cn/031810amb.html) reminds us about the positive aspects of US-China relations. An excerpt;
“So this year could be the most important in the history of our bilateral relationship. As an optimist, I believe the test will be how we take our relationship to a new level of cooperation and make real progress in resolving the pressing global issues that we face today.”
Steel Prices to Gain on Low Inventories, Costs, Baoshan Says Steelmakers will raise prices globally as they run down inventories and raw material costs gain, according to Baoshan Iron & Steel Co., China’s largest publicly traded mill.
“There’s momentum for prices to go up,” Yao Lili, an executive with the Shanghai-based company’s raw materials purchasing department, said in an interview in Hong Kong. “Inventories globally are generally quite low.”
Orders for Baoshan Steel, Posco and rivals are picking up as the global economic recovery accelerates, spurring a 55 percent gain in the costs of coal as steelmakers compete for supplies. Steel prices rose 9.1 percent in February int he U.S., and Chinese mills are charging 10 percent more since the start of this year.
“Demand growth from the home appliance makers may be stronger in 2010 than from automakers,” said Yao. “There’s a lot of potential from home appliance makers.”
Total vehicle sales in China jumped46 percent last year, fueled by the government’s stimulus spending and tax breaks. Sales may rise more than 10 percent this year, the Ministry of Commerce said Jan 29.
EXPO 2010 – Shanghai
Throughout the history of world expositions, the themes have always exemplified global progress, the contemporary spirit of each epoch and the challenges facing the world as it moves toward the future. The World Expo brings the whole world together to look into the future. Although the various world expos have taken their themes from an array of issues, including industry, information, civilization, science, technology, culture, art, education, transport, sports, ecology, environment and resources, what has always remained common is a spotlight on mankind, cities and nature. This is also the origin of the theme of World Expo 2010 Shanghai, China – “Better City, Better Life” – which points to two essential aspects of our future. This theme involves the relationship between people and cities, mankind and nature. World Expo 2010 Shanghai China will showcase the challenges facing human societies in this age of urbanization.
Greek philosopher Aristotle once said: People come to cities for life, and live there for a better one.” His wisdom best interprets the theme of World Expo 2010 Shanghai China. If we want to make our lives better, we first have to make our cities better. Cities represent the essence of human civilization. It is no coincidence that the equivalent of “civilization” in many Western languages has its origin in the Latin word “civitas,” which means “city.” The pursuit of World Expo 2010 Shanghai China for the ideal city of the future is embodied in the concept of the “city of harmony.” The notion of “harmony” is an old one in Chinese culture, advocating peaceful coexistence between mankind and nature, between body and soul, between individual and individual. The United Nations Human Settlements Program stated in its 1996 Istanbul Declaration: “Our cities must be places where human beings lead fulfilling lives in dignity, good health, safety, happiness and hope.” That underscores the ideas behind the theme of World Expo 2010 Shanghai China.
Duration: May 1 to Oct 31, 2010
Expected Visitors: 70 Million
Expected Participants: 200
Down on China? Not so fast
1.3 billion people. Or at least that's the most widely believed figure representing the population of China. There are many who believe the number is actually 1.5 billion and growing. China's GDP is back to 10% and thanks to the 2009 stimulus package there are tens of thousands of infrastructure jobs in progress. So why aren't more decision makers including China in their plans? One Tampa company did just that.
Dais Analytic got its start producing high-tech filter membranes to improve air quality and cut energy costs in homes and businesses. It has expanded to develop products for desalination, wastewater treatment and energy storage, among other things. Although it currently has only 18 employees plans have been inked to add 1,000 jobs over the next five years, thanks to a $200 million trade agreement with China. Born about 10 years ago from an idea for developing fuel cells at Rensselaer Polytechnic Institute in Troy, N.Y., Dais Analytic opened in Pasco County in 1998, lured by tax breaks and assistance. The company specializes in nanotechnology: crafting materials that work with matter on the atomic and molecular level.
Its first commercial product, called ConsERV, is used with heating, air-conditioning and ventilation systems. It uses a membrane with microscopic channels that allow molecules of water to pass through the filter.
Incoming and outgoing air pass through the membrane in separate channels, with the outgoing air helping to cool the incoming warm air. The humidity in the air is condensed to molecules, so it becomes vapor with no condensation. Using the membrane to bring fresh, filtered air into the home or business can save energy costs and reduce pollution, the company says.
BaySource Global assists companies in their offshore manufacturing strategies as well as working with U.S. companies who are looking to commercialize their lines within China.
www.baysourceglobal.com
Who is Responsible for monitoring Quality when utilizing low cost country sources?
China is notoriously blamed for quality issues in products sold in the West. But who really is responsible for ensuring quality can be found in products shipped abroad from China? In a former July post to 10 Linked In Groups associated with manufacturing, engineering, supply chain and quality control this was the question posed. Readers eagerly provided a total 104 responses of which 49 gave specific answers. The results could be summarized and compiled into 8 consistent categories. They were:
1. The Manufacturer – 11 respondents
2. Purchasing- the buyer- in house sourcing – 8 respondents
3. A reliable third party QC firm – 8 respondents
4. Cross functional teams (purchasing, engineering, & production) – 7 respondents
5. The company importing the goods – 7 respondents
6. In house QC – 4 respondents
7. The seller/customer – 3 respondents
8. Entire supply chain – 1 respondent
Readers also chimed in with these sage morsels of advice:
• Do not start LCC sourcing if you are not able to build the appropriate team. Consider outsourcing it to insure the quality of your supply chain.
• Specifications must be clear as to the quality standards expected and the acceptance test regime and what happens to the rejects - you do not want them to appear in the local street market if it is a branded item!
• Be present at intervals throughout the production process. The factory you visit may not be the one producing the goods.
• Establish a personal rapport with your supplier. It is good business and makes communication a lot easier.
• Arrange for acceptance testing - either by your own staff or by an outside agency in the country of origin. Nothing is shipped without inspection.
• Develop a supplier approval process.
• Allot resources for site visits.
• Get references for third party teams.
• Determine their ability to complete the contract. Determine if supplier is financially stable. Assure that they have systems and certifications, such as ISO-9001, in place.
• Ensure that they are motivated to provide quality and on-time delivery.
• Be clear why you are using a low cost country and take all costs into account - it may not be so low cost in the end.
So in summary, everyone has a stake in quality even though it is easiest to point the finger at the manufacturer (China). If we capture all the great advice from industry experts, heed the wisdom and incorporate all these due processes, everyone will come out a winner.
Linked In Groups:
GVRT Council of Supply Chain Managers
Global Sourcing
Innovative New Product and Service Innovators
ISM Purchasing and Supply Chain Managers
Offshoring & Outsourcing Forum
Procurement and Supply Chain Leaders
Procurement Professionals
Retail Global Sourcing
SME Society of Manufacturing Engineers
Strategic Sourcing and Procurement
David Alexander is President of BaySource Global, a leading China consulting firm specializing in project management, sourcing, establishing China procurement, and selling into China. He can be reached at david.alexander@baysource.net
www.baysourceglobal.com
Embracing Global Resources for Local Advantages
David Alexander
In the midst of these economic challanges, decision makers need to understand the advantages of looking globally for positive domestic results. While jobs shrink in the U.S. it has been easy to cast a dark shadow with manufacturing outsourcing as the key culprit. Too often though we sit back and scratch our heads wondering why low value add jobs have moved offshore rather than strategize on how to effectively incorporate the benefits of low cost labor with supply chain initiatives here. For marketers in the U.S. the value propositions of product innovation, speed to market and service have to be the platform which separates winners from their competition.
In the April 8 Wall Street Journal, writer Tim Aeppel features Craftmaster Furniture and their story of winning market share while competitors flounder. By combining a solid offshore sourcing initiative for high labor components and unique upholstery with the need for quick turnaround time and service, CEO Roy Calcagne has "increased revenues by 4% in an $80 billion industry that has declined by 20% in the last six months. Craftmaster has even hired 75 additional workers in a factory that employs almost 500 according to Aeppel's article."
http://online.wsj.com/article/SB123879125297987681.html
Basically the company takes the approach of a nimble and responsive partner to their customer base, while maintaining margins through low cost country sourcing. This collaborative strategy is one that has continually proven effective in the U.S. and not immediately stereotyped for the demise of overpriced, low value jobs. See
http://www.baysourceglobal.com/PortlandBusinessJournal-BaySourceWhitePaper.pdf
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