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More Manufacturing Work Reshored to Machining Company in Ohio
A machine operator at Carmichael Machine checks parts that were run on a Mori-Seiki sub-spindle, live tooling, Y-axis lathe. In 2012, Carmichael made the decision to begin replacing older 2-axis lathes with multi-tasking lathes to enhance its ability to compete with offshore pricing and to shorten lead times.
Photo courtesy of Carmichael Machine
Many American contract manufacturers are beginning to see that bringing work back from China is creating new profit centers. Carmichael Machine Corp. is one such company that has, on several occasions, seen work come back from China when OEMs started to become aware of the problematic nature of doing business overseas.
"Companies are finally awakening to the fact that price per part is only one factor in the equation of company profitability; the costs of marginal quality and erratic delivery are now being invited to the discussion," said Mike Browning, sales account manager for Carmichael Machine, in an interview.
Recently, Carmichael landed another lucrative contract from an American OEM that builds hydraulic cylinders. "During the initial contact with the person, he said 'We've been purchasing our parts from China and we're going to move them back,'" said Browning. "This was always the death knoll for me. I used to hear that a lot—they would say it's quality, it's delivery, but it always came out to be price. But in the last couple of years, that is not necessarily the case. This case here is unique. I'm not dealing with a purchasing manager or a buyer; I'm dealing with the staff manager of a product line. He's an engineer who's been working with us for nine years. He got promoted to this position."
The analysis started when the OEM's engineer did a study of the poor quality and erratic deliveries, logistical issues, and what it was costing for this particular line in China. By performing the study, he was able to convince his supervisor and other company officials of the practicality of getting a quote from a domestic source. "I think he sent out about six [requests for] quotes," Browning recalled. "He said that we were right in the middle, but [they] were not looking strictly at price. 'We're looking at the value you can offer us,' he said. This is a ten-part package, and we did a study quote on three of them. So he said to quote on the rest of them. The bottom line is our prices were 30 percent of minimum of what they were paying overseas."
Carmichael Machine utilizes automatic, multi-spindle screw machines, CNC lathes, and machining centers—both vertical and horizontal—that can produce parts up to 12 inches in diameter. Carmichael also offers precision secondary and finishing processes, such as broaching, tapping, grinding, and honing.
An inspector checks parts at Carmichael Machine. First articles, finals, and in-process inspections are often handled on CMMs. The company recently purchased an additional profilometer to enhance its on-floor inspection capabilities.
Photo courtesy of Carmichael Machine
The company specializes in mid-range production runs from 500 to 500,000 parts for custom, tight-tolerance applications. Carmichael, a division of The McGregor Metalworking Companies (www.mcgregormetal.com), offers metal stamping, metal spinning, machining, welding, assembly, and tool and die design and construction at its plant in Springfield, Ohio.
Carmichael was able to secure the OEM's lucrative contract. It's a $300,000 machining contract for one year, and will be a continuing contract. The second portion of the contract is for extremely tight tolerance, precision parts. The first package is for more standard, moderate-quality parts, and there are 10,000 to 20,000 parts for each version. "Another package we're going to look at with the same OEM is 22 parts, which we're in process of quoting," said Browning. "So, what they're doing is reviewing every part that they've offshored in the last few years as a potential to bring back to this country."
Quality issues were foremost in the mind of the OEM's engineers. The broker they purchased the parts from in China had to contract for one year's worth of parts, usually made in monthly batches.
"If the OEM had quality issues, they were stuck with a month's worth of bad parts," Browning affirmed. "The broker then has to get someone to run a temporary production run to make a better part. I don't think the quality from China has changed that much, but it's just more evident because people in the OEMs are pointing it out more often. Occasionally, the OEM might want to tweak one of their products for a special application," Browning continued. "But they might have a month's worth of parts that they can't change. Also, the OEM would assemble the parts, but problems with the parts would not show up until the end of the process. So this was primarily a quality issue."
At one time, the OEMs would only allow purchasing agents to make the decisions about purchasing parts and components for their products. It appears that many OEMs are moving away from solely relying on purchasing agents for final decisions on part and component purchasing.
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