Vollrath happy to return manufacturing to Sheboygan
From 2002 to 2010, the Sheboygan-based Vollrath food equipment company made its food pans for the international market in China -- up to 3 million a year.
The company did it because it was less expensive, "but that’s no longer the case,” Vollrath executive Guy Kwaterski told a Madison International Trade Association luncheon gathering. He is now the company’s credit director, but formerly served as its logistics manager.
A decade ago, it was something of a no-brainer for companies to ship manufacturing abroad to cut costs. Vollrath’s move was part of a wave of similar decisions that contributed to the reduction of U.S. manufacturing employment by around 6 million jobs, or roughly a third, between 2000 and 2010.
But the tide is shifting and some firms -- including Vollrath -- are “reshoring” their production in the United States.
Kwaterski said privately held Vollrath -- which had sales of between $250 and $300 million last year -- has been growing rapidly and acquired six other companies over the past four years. It is now in the process of building a 136,000-square-foot warehouse in Sheboygan, with a 20,000-square-foot link to its existing 98,000 square-foot warehouse.
That’s due in large part to a decision in 2010 -- after eight years of frustration -- to return nearly all of its manufacturing back to Wisconsin.
“The main issue was lack of control,” he told the group. “In fact, sometimes it seemed like there was no control.”
Nor did it help that the quality of the raw material was inconsistent, that specifications weren’t met, it was difficult to schedule production, that the costs of labor kept changing and the quality of finished products was poor.
“There were all types of issues,” he said. “Quality suffered, there were blemishes in some pans and customer complaints were common.”
Even after Vollrath hired a quality control manager, little improved.
The kicker, when Vollrath finally pulled the plug on its operation in Shanghai, was that the Chinese partners kept the manufacturing equipment the Sheboygan company owned and supplied to make the cookware.
Kwaterski said even though its food pans are now made by union labor in Sheboygan, it’s less expensive in the long run to manufacture in Sheboygan, where Vollrath has added 50 jobs over the past two years.
He said manufacturing, sourcing, sales and employee headaches have all been reduced by bringing production back to the Badger State.
“We now get the quality of material we want, are able to leverage our purchase capabilities, negotiate volume prices and get better terms of sale,” he said. "We've brought jobs back here, too."
The company is also gaining private label work from other companies that appreciate Vollrath’s quality and on-time deliveries, he said.
"The big thing, though, is that we are back in control," he added.
Ron Carringi, the general manager for North American manufacturing at Johnson Health Tech, also spoke at the luncheon. He said his company acquired Magnum Fitness, a Wisconsin high-end strength equipment company in August and will continue to make its products in the United States. Magnum has 300,000 square feet of manufacturing space in South Milwaukee.
However, he said many of the company’s other products -- especially those dealing with cardiovascular fitness -- will continue to be made in China.
“Our situation is more complicated than Vollrath’s,” Carringi said of Johnson Health Tech, a publicly traded firm that had $462 million in sales last year.
Though founded and headquartered in Taiwan, its marketing and R&D arms are based in Cottage Grove.
“Asia allowed us to grow fast, but it also presented lots of challenges,” he said.
Carringi said the Magnum purchase gave his company a U.S. manufacturing base -- it has 2 million square feet in Shanghai and Taiwan -- plus a low-volume, high-variety 300-product strength equipment portfolio.
He said sports teams, health clubs, universities and even high schools that want customized and special build-to-order products will be made in Wisconsin for quality control and scheduling reasons.
“For some things, it’s making more and more sense to build in the United States,” he said. “But like I said, it’s a complicated story.”
-- By Brian E. Clark