Domestic Vs. Foreign PVF Manufacturers
The number one complaint I hear from distributors is lead time.
In most articles, I address the issues and concerns of the warehouse manager and PVF distributors, even though manufacturing is my area of expertise. There is a world of hurt facing domestic PVF manufacturers these days. I have heard a lot of whining and complaining. And a lot of excuses. It’s the fault of multiple bogeymen: foreigners, unions, government.
Domestic PVF manufacturers have a number of edges in the market, but they won’t or can’t take advantage of them.
1. Buy American. This isn’t just a slogan, it’s reality for many industries. Some companies and government entities are required to buy American. Slowly but surely, this is slipping away - not because these companies don’t want to buy American - but because they can’t depend on the U.S. manufacturers to supply them with what they need.
2. Proximity. U.S. PVF companies aren’t an ocean away. This should enable them to respond quickly to customers’ wants and needs.
3. Local knowledge. U.S. manufacturers know the industries, the regulations, the language. This should be a huge advantage for the domestic producers.
4. Relationships. Most American manufacturers have built relationships with both distribution houses and end users over the years - something that is impossible to replicate in a few short years.
So with all the cards stacked against them, why are the Chinese and other foreign producers entering the U.S. market with ease?
Much like the domestic car industry, U.S. PVF manufacturers have developed some seriously bad habits over the last 50 years and they have come back to haunt us with a vengeance.
U.S. manufacturers are set up to make long, long runs of each product. (And this probably worked dandy back when there were only a dozen or so different valve types and sizes.) Equipment set-up times can take days, even weeks. After making heaps of product, they push it out onto the distributors (much like the car companies pushed product out to the dealers). Never mind if someone actually wanted the stuff or that much of it. Then they would get set up to make their next big product run. As long as the warehouses moved the material quickly, it all worked out. But as soon as warehouses were saddled with a lot of inventory that wasn’t moving, the problems started. The distributors bought smaller quantities, reducing carried inventory. Then, a large and important end-customer needed a lot of a product. The warehouse didn’t have enough, nor the manufacturer. The manufacturer was in the middle of a different product run. The manufacturing schedule was already set for the next nine months, meaning there was an insufferably long lead-time to get a bunch of those valves. Enter the Chinese, who said, “No problem! We can get those to you cheaply and in two months.”
The number one complaint I hear from the distributors is lead time. They can’t afford to carry the inventory and they can’t get product they need to their customer in a timely fashion. This total inflexibility and breathtakingly bad customer service have left the door wide open for those unknown, broken English-speaking competitors to walk right in - particularly if they are offering bargain basement prices.
It doesn’t take nine to 12 months to make even the most complicated valve or flange or pipe. It is time for the U.S. manufacturers to suck it up and learn about Lean, Pull Systems, Total Customer Service and Manufacturing Flexibility. So we know the problem - more on the solution next month.
In most articles, I address the issues and concerns of the warehouse manager and PVF distributors, even though manufacturing is my area of expertise. There is a world of hurt facing domestic PVF manufacturers these days. I have heard a lot of whining and complaining. And a lot of excuses. It’s the fault of multiple bogeymen: foreigners, unions, government.
Domestic PVF manufacturers have a number of edges in the market, but they won’t or can’t take advantage of them.
1. Buy American. This isn’t just a slogan, it’s reality for many industries. Some companies and government entities are required to buy American. Slowly but surely, this is slipping away - not because these companies don’t want to buy American - but because they can’t depend on the U.S. manufacturers to supply them with what they need.
2. Proximity. U.S. PVF companies aren’t an ocean away. This should enable them to respond quickly to customers’ wants and needs.
3. Local knowledge. U.S. manufacturers know the industries, the regulations, the language. This should be a huge advantage for the domestic producers.
4. Relationships. Most American manufacturers have built relationships with both distribution houses and end users over the years - something that is impossible to replicate in a few short years.
So with all the cards stacked against them, why are the Chinese and other foreign producers entering the U.S. market with ease?
Much like the domestic car industry, U.S. PVF manufacturers have developed some seriously bad habits over the last 50 years and they have come back to haunt us with a vengeance.
U.S. manufacturers are set up to make long, long runs of each product. (And this probably worked dandy back when there were only a dozen or so different valve types and sizes.) Equipment set-up times can take days, even weeks. After making heaps of product, they push it out onto the distributors (much like the car companies pushed product out to the dealers). Never mind if someone actually wanted the stuff or that much of it. Then they would get set up to make their next big product run. As long as the warehouses moved the material quickly, it all worked out. But as soon as warehouses were saddled with a lot of inventory that wasn’t moving, the problems started. The distributors bought smaller quantities, reducing carried inventory. Then, a large and important end-customer needed a lot of a product. The warehouse didn’t have enough, nor the manufacturer. The manufacturer was in the middle of a different product run. The manufacturing schedule was already set for the next nine months, meaning there was an insufferably long lead-time to get a bunch of those valves. Enter the Chinese, who said, “No problem! We can get those to you cheaply and in two months.”
The number one complaint I hear from the distributors is lead time. They can’t afford to carry the inventory and they can’t get product they need to their customer in a timely fashion. This total inflexibility and breathtakingly bad customer service have left the door wide open for those unknown, broken English-speaking competitors to walk right in - particularly if they are offering bargain basement prices.
It doesn’t take nine to 12 months to make even the most complicated valve or flange or pipe. It is time for the U.S. manufacturers to suck it up and learn about Lean, Pull Systems, Total Customer Service and Manufacturing Flexibility. So we know the problem - more on the solution next month.
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