When asked why D’Addario
& Co, the world’s largest manufacturer of guitar strings and other musical
instrument accessories, is always searching for new reshoring opportunities, its
president, John D’Addario III, can quickly pull from a seemingly bottomless
supply of reasons.
“Rising labor costs in Asian
factories, freight costs…I could go on and on,” remarked Mr. D’Addario. But his
reasons for reshoring extend far beyond the typical glut of offshoring issues. When offshoring problems combine to form complex and costly multi-layered challenges, reshoring
often provides the most elegant and effective solutions.
“First and foremost,” said
Mr. D’Addario, when asked about the impetus behind his company’s continual drive
to reshore, “the costs have been rising, in terms of labor and benefits in
Asia, in just about every factory.” But that’s just one piece of this particular
puzzle. “We spent a lot of money with a firm in Asia that was our eyes and ears,
in terms of quality,” Mr. D’Addario continued, “And still when the product gets
here we have to do inspections to ensure that we are comfortable putting our
name on it.” Whatever value D’Addario once found in sourcing production from Asia,
it disappeared quickly when expenses started accumulating. “Having local manufacturing,
and having it within a controlled work cell, made a tremendous impact in
quality and in our confidence in the product.”
These offshoring issues, and others
related to inventory control, freight costs and even intellectual property protection,
have presented expensive challenges for D’Addario. But they aren’t the only
ones fueling their reshoring decisions.
“After the recession, a lot
of businesses had to look themselves in the mirror and find a way to be
competitive,” remarked Mr. D’Addario, “and that included us, too.”
This realization inspired the
company to become uniquely able to design, manufacture, package and ship its
products from its Long Island, New York corporate headquarters. Now when the
company needs to source specific parts or components, it identifies local
suppliers. For example, they’ve found a company that does “injection molding,
literally around the block from us,” Mr. D’Addario said, “who we’ve found to be
very competitive.”
Just five or six years ago, D’Addario
was offshoring about 15% of its finished goods, with the remaining 85% being
produced domestically. Since that time they have ratcheted up their reshoring
initiatives, elevating their percentage of USA-produced goods to about 95% and
creating an estimated 25 to 30 additional local manufacturing jobs—and that’s not
counting the ones created by their local manufacturing partners to keep up with
D’Addario’s orders.
Through its dedication to
reshoring, D’Addario has granted itself incredible leverage, flexibility and
confidence in its products and future. As their reshoring success stories
continue to replace their complex offshoring challenges, the company gets to
pass the benefits on to its customers in many ways— D’Addario products carry
the Made in USA label, as well as the higher level of quality that people
expect.
Written by David Patrikios
Find out more on the interview at WSJ Marketwatch:
Thanks to D’Addario & Co
for sharing this post with the Initiative.
Awesome blog... Great article writing stuff
ReplyDeleteIt is refreshing to read the "Made in USA" label still has meaning. Definitely appreciated this.
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