April 10, 2013, Timonium, MD - Over 35 manufacturing stakeholders attended a Regional Manufacturing Institute (RMI) Breakfast Series event in Timonium to hear from one of the first Maryland companies to buck the outsourcing trend by bringing some of its overseas operations to the State.

Dale Williams, Chief Operating Officer of Chesapeake Bay Candle, recounted the unique story about why Chesapeake Bay Candle brought some of their manufacturing business from Asia to open a new facility in the U.S. in June, 2011. According to Williams, at the start of 2008, Chesapeake Bay Candle found itself at an interesting crossroads. The home-grown Maryland candle business started in 1994 in Annapolis by Co-Founders Mei Xu, and her husband, David Wang. From humble beginnings of developing candles in their basement out of soup cans, they expanded rapidly and eventually were importing candles from their own China and Vietnam manufacturing facilities to meet the demand from U.S. clients.

They wanted to make sure they were managing the business effectively so in early 2008 they hired an outside manufacturing veteran to help them expand their business. “When I joined the business, things really looked good, but then came the great recession later that fall,” said Williams. The firm needed to take a hard look at the business as they realized their major niche was making one product really well from factories based overseas for the U.S. market. “We were very vulnerable to events that could impact us beyond our control,” said Williams. Years earlier, the company had been forced to expand manufacturing into Viet Nam when the U.S. Department of Commerce imposed 110% duty on China candle imports.

As Chesapeake Bay Candle moved most of its candle manufacturing to Vietnam, they discovered that their new manufacturing location didn’t insulate them from external shocks. As manufacturers continued to flee China for the lower labor in Vietnam, prices for Vietnamese labor skyrocketed by 46%. “We had to take a hard look at the full cost of our product imports throughout the whole supply chain,” said Williams. They looked at labor, freight, lead time, compliance costs and third party testing. “All of these prices were going up,” he said. Chesapeake Bay Candle was in the fashion business with fragrance as the centerpiece. “We had lots of design work, lots of SKUs and working capital tied up in inventory for as long as five months,” he said. Meanwhile, clients like Target and Bloomingdales wanted more candles and they wanted them cheaper and faster.

The evaluation process helped the company project trends in the industry and prepare to respond to them. “We wanted to have enough self-awareness to understand why people buy from us,” said Williams. In conversations with customers, the company recognized that clients valued Chesapeake Candle for its fashion leadership and prolific product design capability. It had become an industry force for it ability to both forecast and interpret trends and also provide good customer service. They also realized the fading labor benefit from its overseas production and the continued impact of higher transportation and inventory cost. They began to evaluate the benefit of producing product closer to their U.S. clients.

Once the decision was made to explore setting up a facility in the U.S., they needed to evaluate the best location for their business. “We looked at several states and alternative locations and then realized that we wanted to be in Maryland where we were headquartered,” said Williams. They decided that an existing building facility in Glen Burnie would provide the ideal location and set out to create process layouts, engineering requirements and purchase the necessary equipment needed to set up operation.

“We learned some hard lessons in setting up a manufacturing operation in Maryland,” said Williams. The amount of regulations and permitting requirements were very complex. “It took twice as long and ended up being twice as expensive to establish our operations due to the myriad of code requirements, hazmat and fire control retrofits,” he said.

“While we have enjoyed very good productivity from our Maryland plant, we don’t want other manufacturers to have to go through the learning curve of what we experienced,” said Williams. He encouraged the State of Maryland to do a better job of developing closer cooperation between the State and counties related to permitting hurdles faced by manufacturers. “The process was very discouraging. Nobody had the answers,” he said. I can’t imagine too many other companies putting up with what we experienced,” he said.

Williams said that Maryland could attract more manufacturers to set up operations in the State by providing “how to guidelines” for setting up facilities in the state and establish a concierge service of “knowledgeable officials” to help companies get through the process. Chesapeake Bay Candle had to hire a myriad of service providers to comply with codes that weren’t well understood by the enforcement agencies or by their hired expert consultants.

“At the end of the day, we made the right decision,” he said. Despite the arduous regulatory process since opening the facility in June 2011, the firm has been able to double their shifts and double their production capability.

Timonium, Maryland- February 26. On Tuesday, RMI Chairman Drew Greenblatt, President of Baltimore-based Marlin Steel Wire Products, joined National Manufacturing Association (NAM) Chief Economist Chad Moutray to speak at an RMI breakfast event on the topic of “America’s Economic Recovery and What it Means for Manufacturing” at the Timonium Crown Plaza Hotel. Over 60 manufacturers and manufacturing stakeholders attended the event.

Greenblatt emphasized why he is bullish on American manufacturing. He cited several reasons why American manufacturing is having a renaissance including the “re-shoring” of American manufacturing. He also pointed out that China is losing its luster as a top investment location for America’s manufacturers citing labor costs skyrocketing by 20 % annually and the continued inattention to the rule of law. “U.S. manufacturers are weighing the options and many are realizing it is become a more profitable option to either re-shore or to not move their operations overseas at all,” he said.

Additionally, Greenblatt emphasized some key reasons why American’s manufacturing is on the cusp of a renaissance including American’s cheaper energy reserves, the impact of skyrocketing freight costs; and the need to service clients requiring speed-to-market. “Manufacturing jobs are great jobs. They pay $77,000 per year and include benefits. We need those jobs to broaden our US middle class and end the recession.”

NAM’s Moutray painted a mixed picture for 2013, citing the headwinds from Washington’s inability to address the country’s deficit problems and other headwinds from Europe; he highlighted the strengths in the economy as positives for manufacturing including a housing recovery, modest consumer consumption and increased exports. While only four out of 10 of America’s top exporting markets had a positive growth trends last October, he said today “8 out of 10 markets are growing” and that’s good for our economy. Further he said the U.S. had 5.5% increase in exports last year and predicts that we should do much better in 2013.

“Clearly there are signs that manufacturing, with good paying jobs with benefits, is making a comeback, said Mike Galiazzo, President of RMI. “Manufacturing innovation, technology and re-shoring are rebuilding our middle class today,” he said.

Jeff Fuchs and the MWCC are winners with this exceptional event and outcomes. Great program, speakers, exhibits and attendance. – Mike Galiazzo

Lean is the most significant way for private and public organizations to get better results. Lean grew out of the manufacturing sector but today it is applied in other sectors like education, government and health.

The Maryland World Class Consortia is hosting the Mid-Atlantic Lean Conference November 7 & 8, in Baltimore County with thirty-two concurrent presentations by lean experts and practitioners who will share lean success stories, lessons learned, and tools every organization can use right now to improve performance. This is a high value program offered at a great price. RMI is a sponsor and [Read more...]