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Made in the USA: Faster lead times, better control

Volume 27/Number 26; April 28/May 5, 2014

By Ken Ryan

One of the major storylines in 2013 and early 2014 was the decision by four major flooring companies to build LVT production facilities on U.S. soil. The benefits Mannington, IVC, Shaw and Mohawk expect to reap from this move include shorter lead times, better quality control, quicker turnaround for sample replenishment and back-order fulfillment.

It comes down to this, according to David Sheehan, vice president of commercial hard surfaces for Mannington: “Those who have the inventory that can serve the customers’ needs get the business. You control your own destiny by having manufacturing here.”

Flooring is not the only industry making this push. According to the Boston Consulting Group, more than half of U.S.-based manufacturing executives at companies with sales of more than $1 billion plan to re-shore production to the U.S. from China—or are actively considering it.

When considering the cost of transportation and logistics along with the quality of the workforce here (productivity improvements due to automation are trimming per-unit labor costs in the U.S.), it’s very easy to justify bringing that production back to the U.S.

Indeed, as the cost of freight coming into the U.S. remains high, the opportunity for domestic manufacturing will continue to be strong, experts say. Some flooring executives suggest this onshoring may be the beginning of a manufacturing renaissance in the U.S. If true, that would represent a very positive sign for the economy (only 9% of U.S. jobs are manufacturing related, according to statistics), particularly the ability to grow and retain jobs here.

Speed to market

MP Global Products, a manufacturer of acoustic and insulating underlayments, is currently assessing commercial storage facilities in strategic locations around the U.S. with the intent to warehouse inventory regionally and add inventory capacity to more quickly fulfill customer orders.

“Certainly, to fulfill an order, delivering from a regional storage facility is a lot faster than waiting for product shipped across the high seas,” said Jack Boesch, director of marketing at MP Global Products. “Right now, we are looking at locations that are close to our largest customers.”

Manufacturing close to the customer enables companies to offer a wide array of available products without lengthy lead times required to ship items from other countries.

Speed to market is critical in today’s market. Having the ability to deliver in five to 10 days, as would be the case with many domestic plants—compared to, say, 15 weeks from a facility overseas—offers a major competitive advantage. A company with overseas operations can try and build up their inventory, but one missing SKU could cost a large-size order.

“Availability, quality control and quick supply are three key benefits to selling domestically manufactured tile to the domestic market,” said Lori Kirk-Rolley, vice president of brand marketing at Dal-Tile Corp.

Kirk-Rolley said the tile industry in particular is known for style and sophistication that was previously limited to European markets; however, with advancement of design and manufacturing technologies, companies like Dal-Tile are helping the domestic tile market make significant gains.

Green benefit

Products that are produced domestically also have a sustainable story to tell in terms of fewer transportation miles, less fuel costs and better monitoring of manufacturing efficiencies. That is the case with Dal-Tile, which recently completed

the Environmental Product Declaration (EPD) development process for all products manufactured in its North American production facilities. “With third-party validation from PE International and certification by UL Environment, Dal-Tile is the first manufacturer in the ceramic category to voluntarily disclose cradle-to-grave impacts from all Daltile, American Olean, Marazzi USA and Ragno USA products with UL Environment certified EPDs,” Kirk-Rolley said.