A few weeks ago I had lunch with one of our competitors. He and I have an amicable relationship, and we get together occasionally. I share this with you because that meeting motivated me to write this post. During lunch he bragged how his Chinese-made cabinets are at least 30% cheaper than our USA made ones (he swears these savings already account for all logistics issues). He went further to brag about his software team in India, and the kind of skill set he can hire for $20k per year. Finally, he was proud that his US based team was mostly sales and marketing with a few people “operating screwdrivers”.
I don’t have anything against outsourcing to China, India, or any other country. I enjoy as much as anyone else buying $0.99 Hot Wheels cars at Walmart for my kids. That’s not the point. I run a high-tech company. Creative Electron, the company I started in my garage in 2008, develops and manufacturers x-ray inspection systems. As the company grew over the years, we had plenty of opportunities to outsource. We didn’t.
Creative Electron team in one of our production lines in San Marcos, CA – 2014
Instead, we developed a business model around the core belief that made in USA is the right thing to do. Part of this strategy is gratitude to a country that gave me a lot. I moved to the USA in 1998 to work for the Department of Energy, at a place called Fermi National Accelerator Laboratory (Fermilab). It was my first job after college, so I started as an entry-level engineer. I went to back to school nights and weekends to get a MS, PhD, and MBA while working full time at Fermilab. In a few years I was promoted to Department Head, leading an incredible team of scientists, engineers, and technicians in the development of complex electronic systems for nuclear and high-energy physics research. This country is one of the very few places in the world where hard work and perseverance are proportionally rewarded.
After almost a decade at Fermilab, it was time to move on. The entrepreneurial bug called me to San Diego to start Creative Electron. Our first customers were the Department of Defense and the Department of Homeland Security. Together with other US government agencies that joined us later on, funding was secured for the development of an incredible product line. We are very proud of the services and products we are able to deliver to these organizations.
But gratitude is part of the reason we still make our x-ray machines in California. It still makes a lot of business sense to make things in USA. Forget about the 30, 40, or 60% savings people talk about. Innovation is priceless!
Here are some other important reasons to keep manufacturing in America:
1. Quality Control: This one is easy. It is much easier to keep an eye on your manufacturing line when it’s a few feet from your office instead of thousands of miles away. If something goes wrong you can address it immediately. It also helps a lot if you don’t need to wait months before getting a new batch of parts.
2. Customer Service Model: From the inception of the company I’ve been a believer that we should not have a customer service department. Instead, we have a customer support manager who is also our director of engineering. He receives support requests and routes them to one of our developers. Yes, that makes hiring developers a bit more challenging, because not only do they have to be awesome technically, but they also need to be awesome with customers. Having customers talking to developers directly allows us to get things fixed fast – without any bureaucratic red tape. The added bonus is that developers think twice before releasing product that might bite them later.
3. Innovation Speed: We are the underdogs in the x-ray inspection market. We don’t have a huge marketing budget or an army of salespeople pushing our products. Instead, we do spend every penny available in innovation. The fact we can change things fast – and learn from our mistakes fast – has allowed us to quickly improve our product line. We are in a constant dialogue with our customers, both big and small, to understand their challenges today and tomorrow. This focus on product performance for ultimate customer satisfaction has landed us major worldwide accounts.
A lot has been said about outsourcing, offshoring, and reshoring. You know what is best for your company – Made in USA is what works for us.
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