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February 24, 2005

I got china-fied!

A few months ago I got... china-fied, we lost a huge job to competition in China.  It took me from sympathetic outside observer of others in this boat, to active participant inside the boat. I'm the guy at the front yelling something about  'can't beat em, join em...'

There's a bunch of guys in the back of the boat whining about how unfair it all is. Maybe...

This hurt badly, the way it happened. Plastics.com also provides internet creative services to other plastics firms as well as running our own plastics sites. A top manager of a 'not to be named' 900 million dollar custom molder/contractor told me we had been hired to provide internet strategic help along with some specific tactical assignments.

I hate it when they tell you you've got the job, to send in the invoice and THEN it falls apart. In this case it turned out another manager on the same high level as my contact killed the deal by stating "We can do this in China for one tenth the cost".

Yeah, right... It was an apples to oranges thing from the start as our plan was mainly based on extensive local work with local top management to produce a much needed strategy. Instead, they'll simply build some web programming with minimal managerial input and have a different version of the same poor quality they have now.

But what hurt was telling us we had the job... close enough to taste. Yuck!

So we're in the same boat as a bunch of other people, it doesn't feel good. Now what to do about it?

I've never been able to develop concrete opinions on the trade balance issue and our governments laissez faire attitude about it. I haven't seen compelling arguments on either side to help me form a firm opinion. Should we be doing something about this or is 'hands off' a good thing for us overall? I've heard it both ways.  Funny, I usually don't have a problem formulating or sharing opinions, hehe.

Anyway, my reaction to this is this: Overseas trade isn't going away. The big aspect of this will be China for some time to come.  One can sit and whine, or become an activist, or work the system and adapt to benefit by it.  Plastics.com has chosen the latter. 

Later this year we'll be launching some additional sites geared towards helping people who wish to deal in global trade. This is our version of 'can't beat em, join em'. We'll be servicing those people, or at least trying to.

Coming attraction: plastics.com meets a pathological liar

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Guess you could say we've been China-fied a while now. Been there, done that for 10 years in China. 'Course we were Russia-fied before that, and Spain-afied before that, and Portugal-afied before that....The bottom line is the buyer's need to look big by making his expenditures small. In theory anyway. We've done overseas molds for nearly 30 years, built then in avery country that had a mill and a drill press, and China is just the latest. Same with injection machines, first Japan -"those Nisseis will never work", then Taiwan, then, again, China. The reality is that every one of the deals that gets done offshore costs somebody here some work, maybe closes a plant, even, if enoough work gets moved. The other side of it is that most offshore contracts also benefit somebody in the industry over here. USA Molders buy foreign machines for the price, so they can get 4 presses on line for the cost of 2 or 3 US models, and then employ more press operators, etc. Offshore molds are also task specific, not built to run forever, and make work for the US toolmakers who fix them when they break down. The deal is that what goes around comes back around. We have made good money with our local people cleaning up some of the more spectacular mistakes made by naive buyers who went too far overboard saving tooling dollars, and wound up with the famous boat anchors. The competition for mold work is intense all over the world, and now the folks who used to worry about Spain and Portugal are worrying about China. Its the average shop that's getting hit hardest, because "average" is easy to compete against. "Outstanding" is a whole other issue. The trick is to find your own strength and work to it. Sharp technical people always can find work, even if some of it involves keeping our domestic buyers on a path of reasonableness, advocating a sensible mix of low-cost where its a benefit, and highest quality where it matters in the long run. We've found that you can get molds built for next to nothing lots of places, and sometimes that's good for your bottom line, and other times, if you're the buyer that cut one corner too many, then you can be driving a cab. It never changes. Experience, education, common sense, and knowing the capability of your sources will make you a success. Being too cheap at the expense of your employer gets you fired. As manufacturers, USA molders need to do what the offshore guys are doing, study the competition, (them)learn where they are strong, and where they aren't, and aim to take advantage of the weaknesses. No matter the hourly wage or the cost to run the CNC, the smartest, sharpest guy is the one who will come out ahead in the long run.

That is definately one of the best blogs I've sen in ages online. Maintain up the excellent posts.

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