We recently announced that one of our house brands, Kindergard baby safety, will be moving manufacturing from China to the United States starting in 2024, and no later than 2025. We’re intent on securing business with the quintessential American company Walmart, and are talking with Walmart about their MADE IN AMERICA initiatives. We should have a positive Walmart update for you by this Fall.
Here’s a top level look at the strategy behind moving manufacturing back to the United States.
Over the past few decades, China has been a global manufacturing powerhouse, attracting multinational companies with its low labor costs and extensive supply chains. However, recent geopolitical uncertainties, rising costs, and concerns over intellectual property protection have prompted many companies to reconsider their manufacturing strategies. As a result, an increasing number of businesses are exploring the possibility of moving manufacturing operations from China to the United States. For us, the pandemic and related manufacturing shut downs underscored an aspect of business found in MJ DeMarco’s best selling book “The Millionaire Fastlane.”
“The Commandment of Control requires that your entire operation, from product development, to marketing, to distribution, to other operational components, be within your sphere of influence, or diversified from influence. It’s owning what you build, effectively giving you black-swan insurance. It’s immunity against catastrophic events that can derail your gig overnight.” – MJ DeMarco
Rationale for Moving Manufacturing
Geopolitical Stability: One of the primary reasons Kindergard is relocating their manufacturing operations is to reduce geopolitical risks. The United States offers political stability, a transparent legal system, and protection of intellectual property rights, which provides a more secure environment for businesses. By moving operations closer to home (and in our case, literally to our home county in Florida,) we can mitigate potential disruptions caused by trade disputes, tariffs, or political tensions.
Resilient Supply Chains: The COVID-19 pandemic exposed vulnerabilities in global supply chains, emphasizing the need for greater resilience. Concentrated manufacturing in a single country like China left companies highly susceptible to disruptions caused by lockdowns, transportation limitations, or unforeseen crises. By diversifying manufacturing locations and bringing production back to the United States, companies like Kindergard can establish more robust and flexible supply chains, reducing the risk of future disruptions.
Cost Considerations: While China’s labor costs have traditionally been lower than those in the United States, the gap has been narrowing. Factors such as rising wages in China, increased transportation costs, and a changing regulatory landscape have eroded the cost advantages previously associated with manufacturing in China. Additionally, advancements in automation and technology have made it increasingly feasible to offset higher labor costs through productivity gains and operational efficiencies in the United States. American ingenuity is starting to level the playing field. We’ll pit skilled adult labor and automation in the United States against labor law violations and low tech imperfections in China every day. Cheaper doesn’t mean better, it just sometimes means cheaper. You get what you pay for.
Potential Benefits of Moving Kindergard Manufacturing
Job Creation and Economic Growth: Bringing manufacturing back to the United States for our 50 year old legacy America brand can have a significant positive impact on job creation and local economies. Manufacturing operations create jobs across various skill levels, fostering economic growth and reducing unemployment rates. Furthermore, a revitalized manufacturing sector can support ancillary industries, such as logistics, research and development, and innovation, contributing to long-term economic prosperity. We’re talking with some existing manufacturing partner prospects here in the United States, and we provide overhead absorption and additional level loading for production here. All stages of the supply chain benefit by bringing manufacturing home to America.
Quality Control and Product Innovation: Proximity to manufacturing facilities enables closer supervision of production processes, ensuring stringent quality control measures.
Companies can maintain higher standards, reduce defects, and enhance customer satisfaction. Additionally, localized manufacturing facilitates faster product development cycles, enabling companies to respond more rapidly to changing market demands and innovate more effectively. The engineers were in discussions with started working today on concepts we discussed today that could have decades worth of positive impact on the factory, the supply chain, and our customers.
Environmental Considerations: Manufacturing in the United States can offer environmental advantages, particularly in terms of reducing carbon emissions associated with global transportation. By shortening supply chains, companies can reduce their carbon footprint and contribute to sustainability goals. Additionally, domestic manufacturing enables better compliance with stringent environmental regulations, fostering a more eco-friendly approach to production. If we’re truly worried about climate crisis, diverting manufacturing away from the biggest violator, and bringing manufacturing under strict environmental controls in the United States will have a positive impact on sustainable and responsible production. Using less hair spray can’t hold a candle with regard to environmental impact to switching manufacturing from China to the United States.
Challenges and Considerations
Higher Labor Costs: Manufacturing in the United States often comes with higher labor costs compared to China. However, advancements in automation, robotics, and artificial intelligence have made significant strides, reducing reliance on low-cost labor. Companies must invest in advanced technologies and retrain their workforce to leverage automation effectively, ensuring competitiveness while maintaining quality. We’re working on the numbers now, but from a philosophical standpoint, automation is better than child labor. If we pay employees more in the United States, so be it.
Infrastructure and Supply Chain Readjustments: Shifting manufacturing back to the United States requires substantial infrastructure investments and supply chain readjustments. Kindergard is assessing transportation networks (and this is part of the reason Walmart becomes a logical retail distribution partner,) logistics capabilities, and raw material availability. Collaboration with government entities and strategic partnerships can help overcome these challenges and accelerate the transition. We’re on pace to radically change our industry within 24 months and we’re shining a spotlight on the transition at the local, State and Federal level. We’re not looking for a handout, as the company is a for-profit company. However, we will be a great American success story when the transition is complete.
Skill Gaps and Talent Acquisition: A potential challenge for companies relocating manufacturing to the United States is the availability of skilled workers. Manufacturing processes have become increasingly advanced and require a technically proficient workforce. Companies must invest in training programs, forge partnerships with educational institutions, and collaborate with local communities to bridge the skill gaps and ensure a capable workforce. It’s not like I can just move Kindergard into my garage and start manufacturing. The good news is the skill set to do what we want to do exists across America, with manufacturers with excess capacity and engineers who are world class. Originally I thought we might have to build the skill set we needed, but now I am of the opinion that we can find manufacturing partnerships to do what we need to do without reinventing the wheel.
The shift of Kindergard manufacturing operations from China to the United States represents a strategic move for small businesses like ours aiming to enhance their resilience, mitigate risks, and tap into new opportunities. We’re a more attractive distribution supplier for companies like Walmart when we have mastered what MJ Demarco coined as the element of Control. While challenges such as labor costs and infrastructure adjustments exist, the potential benefits, including job creation, quality control, product innovation, and environmental sustainability, make the move worthwhile for many companies. With careful planning, investment in advanced technologies, and collaboration with stakeholders, Kindergard will position itself for it’s second 50 years of success in the evolving global manufacturing landscape. We’re bringing manufacturing back to America.
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