At first glance, simple products like metal baskets or paint brushes should not be made in America. These should be simple to make, the product should be standard, so production should go to a low-cost location. But that ain’t necessarily so. A pair of recent articles discusses how some small US manufacturers are managing to compete in seemingly staid, boring industries.
The first story is from Fast Company and focuses on Marlin Steel, a firm that once focused on wire baskets for bagel shops (The Road To Resilience: How Unscientific Innovation Saved Marlin Steel, Jul/Aug). That’s a business that eventually went to hell as cheap imports came into the market. The fortunes of the company changed with an order from Boeing.
The job that rescued Marlin Steel was small–20 baskets, a $500 order. Greenblatt was handling sales in 2003, so he took the call himself. “It was an engineer from Boeing,” he says. “He didn’t think I was in the bagel-basket business. He just needed custom wire baskets.” The Boeing engineer, who had seen a Marlin ad in the Thomas Register, a pre-Internet manufacturing directory, wanted baskets to hold airplane parts and move them around the factory. He wanted them fast. And he wanted them made in a way Marlin wasn’t used to–with astonishing precision. For bagel stores, says Greenblatt, “if the bagel didn’t fall out between the wires, the quality was perfect.” The Boeing engineer needed the basket’s size to be within a sixty-fourth of an inch of his specifications. “I told him, ‘I’ll have to charge you $24 a basket,'” says Greenblatt. “He said, ‘Yeah, yeah, whatever. No problem. When are you going to ship them?'”
It turns out that the guy from Boeing was not alone in wanting custom baskets for use in a factory. Further, lots of other buyers were much more concerned with getting just the right basket really soon than with whether the price was as cheap has possible. The image above is something used in a GM factory to hold pump housings when they are being cleaned.
So that has led to a three part strategy for winning business: Quality, speed, and customization.
Speed is part of the moat, the willingness to do a job as quickly as a customer needs it. Quality is part of the moat too. Scattered around the factory floor are “check fixtures”–simple wooden boards with the outline of a wire part etched into the surface. To see if the part is made correctly, a worker slots it into the outline on the board. If it’s made right, it fits.
Often three nearly identical images of a part are etched into the same check fixture. The one on the right is the customer’s requirement–say, a tolerance of 0.12 inches. The one in the center is Marlin’s “okay to ship” standard, always better than the customer request–say, a tolerance of 0.06 inches. The one on the left is the “Drew” standard–perhaps a tolerance of 0.03 inches–four times the precision of the customer’s spec. “If we send them that left one, they will never leave,” Greenblatt says. Toyota–legendary for its obsession with quality–was so impressed with Marlin’s exactitude that in addition to baskets, it also buys check fixtures from Marlin.
But for Greenblatt, the most important element of the moat is what Marlin didn’t have before Boeing called: engineering and design. No one at Marlin designs baskets on slips of notepaper today. Five of 28 employees are degreed mechanical engineers. “We give people slick, elegant designs that make it worthwhile to use us rather than a commodity-part supplier from China,” says Greenblatt. More to the point, says designer Alur, “people come to us with a problem and we try to solve it.” Marlin has taken something utterly pedestrian and turned it into a tool of innovation–for its customers.
So what Marlin has really done is add a heavy service element to its business. They are separated from Chinese competitors because they solve customers problems. That really is much more of a service business because it as much about doing work for them customer as it is about crafting a wire basket.
The second article is from the New York Times Magazine and deals with making paintbrushes (What Paintbrush Makers Know About How to Beat China, Jun 18). There is a companion piece on Planet Money that you can hear here.[audio http://pd.npr.org/anon.npr-mp3/npr/me/2013/06/20130621_me_18.mp3]
The article discusses two firms that compete by following strategies that are at least partly similar to Marlin Steel’s. One emphasizes quality.
Kirschner hasn’t changed a thing. He makes brushes the very same way, employing many of the same machines, that his father did 50 years ago. He told me that he sticks with the old ways because, unlike with toys and T-shirts, a big chunk of the brush business caters to professionals who aren’t merely shopping for price but rather for quality. Michael Wolf, who runs the Greco Brush Company, a supplier to professional house painters, told me that his customers need to know before each job that every single bristle on every single brush will be attached properly. One loose fiber left on a wall can damage a painter’s reputation, which in turn can hurt Wolf’s too. Wolf said that he can buy brushes for between a quarter and a dollar cheaper in China, but he is never sure exactly what he’ll get. Some orders are shoddy; others never arrive. So Greco sticks with the company he knows. “My father did business with his father back in the ’50s,” Wolf told me. “We’re keeping it going, the two of us.”
The other places its bets on custom jobs — like for a Mars rover.
At the other end of the business is Lance Cheney, 53, the fourth-generation president of Braun Brush, who told me that he would close his company rather than make the same kind of brush, the same way, for 50 years. He is constantly creating innovative brushes so that he never has any competition. Cheney makes a beaver-hair brush that’s solely for putting a sheen on chocolate. He sells an industrial croissant-buttering brush and a heat-resistant brush that can clean hot deep fryers. His clients, he said, now include General Mills (he made a brush for their cereal-manufacturing line) and the energy industry (a line of expensive brushes for cleaning pipes in nuclear reactors). He even developed Brush Tile, fuzzy panels used in artistic wall hangings. He said his proudest creation is a tiny brush that helped Mars rovers dust debris from drilling sites. When Cheney sees other firms making one of his brushes, he often drops the product rather than enter a price war.
One suspects that the article is selling the quality attributes of Braun Brush a little short. If you have nuclear reactor in need of cleaning, I’m guessing you don’t want to lose sleep over brush bristles coming apart in unfortunate places. The article reports that Braun Brush has been growing over the last several years while Kirschner’s firm has been treading water.
The question then is whether a focus on high quality is enough in and of itself. It doesn’t seem like it should be. Quality is important but it doesn’t necessarily take advantage of being in the US. Overtime, competitors in China or someplace else should be able to learn to improve quality sufficiently to give Kirschner’s brushes a run for their money. The ability to work easily with local customers isn’t as easily copied. Being able to understand a customer’s problem, propose a solution and deliver it quickly leverages being in North America and turns what could otherwise be a hinderance into an advantage.