One Company’s Struggle to Move Manufacturing to the U.S.
Some companies are shifting production to domestic sites, but controlling costs takes some work
By: TARUN SHUKLA June 2, 2015 11:36 p.m. ET
Coming home isn’t easy.
Ranir LLC learned that lesson all too well. The company, based in Grand Rapids, Mich., has long used factories overseas to make many of the dental-care products it sells to big retailers like Wal-Mart Stores Inc.
Two years ago, though, Ranir executives were frustrated by the shipping costs and communications hassles associated with a plant in Asia that made replacement heads for one of the company’s most popular electric toothbrushes. Ranir was considering bringing production of the replacement heads to Michigan in 2013 when Wal-Mart, one of the company’s biggest customers, announced an initiative pressing its suppliers to make more goods in the U.S.
That helped seal the decision. Ranir Chief Executive Christine Henisee moved production of the replacement heads to Michigan. But the company knew that for the U.S. operation to be profitable, big changes would have to be put in place to bring down costs.
Ms. Henisee says the company had tried shifting some production to the U.S. before. But, she says, is “this is one of the first times that we actually have been able to bring products back in with a manufacturing concept that allows for total cost to be competitive.”
To lower costs, Ms. Henisee told her engineers to design a system that stripped out most of the manual labor. They worked with a German company to develop a machine that works in five steps, from machining the brush-head bristles to inserting a metal pin in the assembled head. The company has two of the machines and expects to make about seven million to eight million refill heads a year to meet current demand, with the capacity to go higher.
Ranir, which mainly makes items that retailers sell under their labels, also needed to redesign the brush head itself. In the new design, which the company is seeking to patent, the parts are more exactly molded to fit with the machines as opposed to the hands of human workers.
The company spent close to $3 million developing and installing the new largely automated system. The U.S. facility is now ramping up production, and the company says the U.S.-made replacement heads will be available in Wal-Mart stores in the coming months. Fewer than a dozen people have been hired for the new operation at the company’s Grand Rapids facility, according to company officials, who declined to say how many workers there were at the previous plant in Asia.
Ranir is building a similar line in Germany for the European market—a project that entails an additional $3 million. Still on the drawing board, Ranir says, is a way to automate packaging of the replacement brush heads.
Leave a reply →