One of the great advantages for companies that make product both abroad and in the U.S. is the ability to control their fate. In the case of quality control, firms that manufacture here are able to shape their own destiny as they reassure customers that product will get to them in a timely—and profitable—fashion.
At Kronotex USA, Travis Bass, executive vice president of sales and marketing, said the key word for him is control. “Manufacturing our products in the U.S. gives us control over every aspect of quality assurance. We consistently test and record key performance points of our incoming raw materials as well as our work in process during each phase of our production. Stopping a problem before it starts allows greater productivity and efficiencies.”
Better service and consistent quality are the two main advantages of having a manufacturing facility in the U.S., he noted. “Lower inventory carrying cost has also been a keen benefit.”
At American Marazzi, Hector Narvaez, executive vice president, sales and marketing, couldn’t agree with Bass more. In the U.S., he noted, the company’s customers are more demanding. “With that, we have to expect more from our manufacturing operations. While much of our machinery and techniques come from Italy, we are able to use the power of the Marazzi Group to bring any new technology available to the U.S. to make the best product here. Because of the U.S. mentality for service and quality, we push the envelope a little bit more.”
Marazzi currently owns and operates a total of three factories in the U.S. “Life isn’t always easier because we manufacture in the U.S.,” he explained, “but the good thing is, we’re able to bring to market a product that can be difficult to transport, make it here and give our customers the very best looks very quickly. Being able to make tiles in the U.S. allows us to be flexible.”
According to Harry Bogner, senior vice president, hardwood, Unilin Flooring, a majority of the company’s products are manufactured domestically and produced from raw materials “responsibly sourced and harvested.”
While many of its competitors were treading water during the economic downturn, he explained, “the financial stability of our parent company allowed us to continue investing in our already state-of-the-art domestic production facilities and in new technology. Leveraging this domestic technological leadership, our Mohawk, Columbia and Century hardwood brands have continued providing customers with uninterrupted levels of product innovation, fresh designs and customer service.”
Driven to succeed
Xavier Steyaert, CEO of IVC US, said because the company’s Belgian and Luxembourg manufacturing facilities are driven by German quality standards—“which are the most demanding in Europe”—the company’s products were successfully sold in the U.S. for six years. “Our quality standards have always been very specific and elaborate,” he said. “Any developments in our quality include an increased eye for detail since American homes tend to have larger rooms with more windows, which are elements that typically make imperfections more noticeable.”
Instead of relying on an overseas facility that is servicing the entire world, IVC’s Dalton operation can plan its own production that is driven by the demands of U.S. customers. “Domestic production allows us to be more efficient from a working capital perspective. When we were importing product from Belgium, we kept much higher inventories to ensure U.S. customers would not be at a loss from ordering overseas. Now that we are manufacturing in the U.S, our inventories can be replenished much faster.”
In addition, since IVC has an in-house team dedicated to product development, the company is able to take new products to market much faster. “We also have control over our design investments.” Additionally, he said, domestic production enables “more collaborative relationships with our North American customers. Now we can easily bring customers in-house to work on new products.”
No freight means new channels
Another big advantage to manufacturing in the U.S. is the elimination of freight costs from overseas. “This limited our importing activity to products in the upper price points,” said Paul Murfin, president of IVC US. “We’re now able to manufacture entry-level products, which is opening up new channels to us such as property management. When we were importing we could not hit these price points.”
Bass concurred, saying shorter lead times have improved customer service. “If you’re out of a product because a customer’s demand has spiked, it can be replenished in three weeks rather than three months.”
Regarding distribution, he noted, Kronotex USA is using a lot less warehouse space. “Our distributors have benefited from better product availability. With our product, raw material costs are relatively consistent (in total) around the globe. For example, we may have a lower wood cost than Europe, but our chemical cost is higher. Transport and logistics costs, particularly with fuel prices rising, are significant.”