One cannot read the news lately without coming across some discussion of the back and forth currently going on with respect to punitive tariffs being imposed by one county or another on imported goods. Whether one agrees with these policies or not, we will all have to deal with the wide-ranging tentacles that global trade has on our day to day lives.
Over the past couple of days, the US government imposed a number of broad ranging tariffs on imported goods that directly impact the types of products that Vanguard produces. These tariffs cover everything from rubber tubing and hose, to gaskets, to the machinery used to produce these types of products themselves. Though on surface this may appear to be a windfall for our products in the US, there is bound to be some level of retaliation, and as a global supplier of our products to Europe and the Far East, we need to be prepared to deal with the consequences of these actions.
In addition to the direct effects, some of the actions have had indirect effects on supply channels causing prices for raw materials to increase unexpectedly.
At Vanguard, our overall philosophy has been to be globally competitive through innovative materials, engineering, and production techniques without having to count on government intervention or low cost imported products. With our 50+ years of know-how in engineered elastomers, we have been able to be cost competitive with our wholly US manufactured products on a global scale. Even with these newly imposed tariffs, our goal and focus will remain the same, without taking advantage of these political situations to scrape out some level of desired price increases.
If your off-shore supplier of tubing, seals, or gaskets becomes non-competitive, or if you experience new “timeliness of supply issues” with them as a result of these events, we stand ready to supply you with economical alternatives immediately.
With any luck, the tough talk and posturing will calm down soon, and a sense of normalcy will return to the global markets as opposed to the turmoil that currently exists. We have not yet reached that point, however. In the meantime, as it is up to us as manufacturers to put plans in place that allow for competitive, reliable supply of products to service our customers.
American Made Products
According to a survey earlier this year, 26% of the nation’s employers plan to reshore jobs by the end of 2014; companies from Apple to Ford to Walmart are once again investing in America, returning their business to U.S. soil.
The trend is known as reshoring, and it’s taking on momentum in a major way. While one of the reasons for it could be considered pure patriotism—and American consumers’ desire for Made in the USA products—there are substantial reasons, based on economics and logistics, that make reshoring highly preferable to outsourcing. Just ask the countless American manufacturers who sent business (and almost six million jobs) overseas between 1999 and 2009, only to find that it was far less profitable than they’d expected.
What many of these manufacturers realized the hard way is that outsourcing is fraught with problems. According to this article on how the practice went “horribly wrong,” many companies quickly found that outsourcing “changes the business model and introduces many challenges.” One of these many challenges—and ultimate problems—is the long, complex supply chain involved when a company outsources.
An international supply chain is very difficult to control and manage. Foreign subcontractors are far away, often have less experience, and can even be involved in major safety and human-rights violations. Any money saved was often ultimately lost when trying to fix the problems that occurred. The quality of products and services suffered greatly, as did many companies’ reputations.
Add to that the fact that American labor is now almost equally competitive, economically (check out this infographic), and you find that outsourcing just doesn’t make sense.
At Vanguard, we fully support the reshoring initiative. But we don’t take part in it—because we never outsourced in the first place. All of our products and parts are made here in the U.S.—unlike a good portion of the products made by our competitors—and we have always kept production here.
Many of our clients and the industries we serve, including the military, food, and medical industries, require domestic traceability, and we can provide that. And because we never sent work overseas, we’ve maintained expertise and won’t have to relearn production.
As our elastomeric molding and businesses continue to grow, we will continue to proudly make and sell American products. We applaud all of those manufacturers who are investing in America, and we look forward to seeing the reshoring trend continue.