Firms find rewards in moving manufacturing back to the U.S.A.

chawes@bradenton.comMay 16, 2011 

PALMETTO -- Sleek Audio has already earned national accolades for its ground-breaking earphones, which fit snugly into the listener’s ear canal and provide CD-quality sound.

Now the Palmetto company is paving another kind of path, one that leads from China back to its home state.

Sleek Audio has joined a growing number of companies that are pulling away from overseas manufacturing and instead building collaborations within their region and state. The company began the transition in early 2010 after manufacturing in China for three years. Company founder Mark Krywko said Sleek Audio lost “millions” because of quality-control issues, backed-up ordering and excessive travel costs.

Sleek Audio is now turning to another company just up the road, Dynamic Innovations, and silicone companies throughout Florida to manufacture its product.

“For a small business like ours to go to China, the savings there may seem incredible,” said Krywko. “But the damage it can do to your business can be irreparable.”

Sleek Audio’s experience is something more and more companies are going through, says Jennifer Behrens-Schmidt, president of the Sarasota & Manatee Manufacturers Association.

At least half of Behrens-Schmidt’s 50 customers at Atlantic Mold and Machining Corp. have experienced the same thing, turning initially to China because of its low labor and tooling costs and gradually discovering that the price for those savings ends up being too high.

“On a regular basis, we have companies that have had ‘the China experience,’” she said. “They get their tooling and molds built in China, only to then end up with major problems with things not being able to run the way they’re supposed to. It ends up being really costly when they can’t fill their orders.”

Bradenton’s National Prosthetic Dental Labs is another company that decided to bring its production back home from China, says Eric Basinger, executive director of the Manatee Economic Development Corp.

“We know of a large number of other manufacturers, that wish to remain private, that have some interest in bringing back production from other countries back to the United States,” he said. “Their reasons are quality control, rising labor costs, rising shipping costs or new technologies that have been developed to where labor is no longer the key issue.”

Sleek Audio found that the melding of its earphones would fail by the time the product arrived in the United States.

The problems would continue no matter how many times Krywko and his son Jason, the company’s co-founder, traveled to China to address them. All in all, Jason Krywko said he spent 80 days last year traveling to China and back.

By turning to an intricate molding process here rather than having its product melded in China, Sleek Audio saves travel and shipping costs. And it prevents its reputation from taking repeated hits because of delayed orders. The savings will more than make up for the increased product and labor costs, which are substantial, Mark Krywko predicts.

For example, a cord that costs his company $1 in China costs $22 here. And labor that can cost up to $25 an hour here in the United States can be as low as $1 in China.

But the overall benefits stretch far beyond Sleek Audio and its employees, says Jason Krywko.

“There’s a trickle-down effect,” he said. “Even though we’re likely to add only about a dozen employees here, hundreds of workers throughout our region will be affected by what we’re doing, because we’re creating joint ventures with other companies.”

The Krywkos have noticed another surprising result of their decision to manufacture here rather than in China: Their Chinese distributor is all for the change. “He’s happier than our American distributors to know that we’re going American-made,” Jason Krywko said. “They’re excited to put ‘Made in the U.S.A.’ on that box.”

Christine Hawes, Herald business writer, can be reached at 941-745-7081.

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