Some time after Peerless Industries Inc. decided to outsource a portion of its manufacturing to China in the mid 2000s, a strange thing happened.
The Chicago-based manufacturer of audio/visual mounts began noticing its patented products "showing up on the Internet, around the world," recalls company President and COO Michael Campagna.
"And not in our boxes," Campagna adds. "And not in our sales."
Nearly two years after Peerless pulled out of China, the company still spends "over seven figures every year chasing, litigating and trying to shut down the knockoff artists," Campagna says.
"You can buy Louis Vuitton and Gucci purses all over China for real cheap," Campagna says. "Everyone's getting knocked off."
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| Campagna: When Peerless looked at the total cost of doing business in China, "we made the strategic decision in 2009 to bring everything back." |
The cost of intellectual-property protection was just one factor that pushed Peerless out of China, where the company had sought to perform aluminum die-casting more cheaply than it could in the United States.
When company leaders analyzed the cost of freight, the cost of carrying extra inventory, and the cost of conducting additional product inspections due to quality concerns, "we found that the total cost of manufacturing in the U.S. was not that much more than manufacturing in China," Campagna explains.
"So we made the strategic decision in 2009 to bring everything back," he says.
In May 2010, Peerless consolidated its China operations and two of its Illinois sites into a 319,000-square-foot facility in the Chicago suburb of Aurora. The new 22.5-acre campus, which also houses the company's corporate offices, employs some 400 people.
The timing of the move was fortuitous, Campagna says. The company took advantage of the slump in the commercial real estate market and the collapse of the auto industry in 2009 to purchase the building and the die-casting machines at a deep discount.
"We paid pennies on the dollar for our equipment," Campagna says.
