Quality Issues Bring Production Home

When the risks of defective or tainted products become too much for manufacturers to offshore

Claude Hayes chooses his words carefully when asked whether product quality has improved since his company moved some manufacturing operations back to the United States from China.

"Let me say this: In China the product quality has certainly improved over the last five or six years," says Hayes, president of Desa's retail heating division. "Today in China I see shops with computer control machinery that are very modern and set up with good flow and good quality."

Even so, Hayes says when the company's heater production returned to the United States there was a noticeable quality difference. "Our head of quality measured some of the products we built here last year versus the product from China. We had both products out there, and we did see an improvement in the product in the United States versus that of China."

Hayes wouldn't disclose what gains were made after production was transferred from China, but did say "it's a pretty good number."

Apparently, Desa isn't the only manufacturer noticing that products made in China don't meet internal quality standards. In a recent AMR Research survey, 24% of 113 executives polled cited quality as the greatest sourcing risk they face in China, topping raw materials costs as the top concern. The quality factor could push more production capacity back to the United States, notes Kevin O'Marah, chief strategist for AMR.

"People are scared that they're going to get junk from Chinese plants," he says.... "So China looks risky in terms of product quality and safety."

See Also

Welcome Back U.S. Manufacturing

The public backlash over tainted and potentially dangerous products made overseas contributed to Buena Park, Calif.-based Dr. Fresh Inc.'s decision to transfer production of its dental hygiene products back to the United States, according to the Orange County Business Journal. The company, which sells products under its own brand name and licenses owned by companies such as Cadbury PLC and Church & Dwight Co., said in late June that it plans to manufacture the formerly offshored products in a new 5,000-square-foot lab at its recently expanded 100,000-square-foot headquarters, the Business Journal reported.

While Dr. Fresh was not impacted by any product recalls, founder and chief executive Puneet Nanda told the publication that his company is trying to "reassure our customers" that its products are safe after it was discovered last year that some Chinese plants were making toothpaste that contained poisonous ingredients.

Some medical device manufacturing may also be making its way back to the United States. According to supply chain management consultant Michael Donovan, in the fall of 2007 a U.S. maker of invasive medical devices transferred production from China to the United States for quality reasons. Although the company that made the move is publicly held, Donovan, president of R. Michael Donovan and Co., would not name the manufacturer to protect its anonymity.

Similar moves are being made in other industrialized nations. German toy maker Steiff said on July 2 that it was moving production of its stuffed animals from China to Germany because the Chinese-made products didn't meet the company's expectations, according to published reports. Another German manufacturer, Bellicon, moved production of its trampolines back home because of quality concerns. "We had to do so much extra follow-up work in Germany, such as dealing with customer returns, that when we calculated it we had barely saved anything," manager Heiko Schmauck told Reuters news service.

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