U.S. manufacturers can still compete

Augustine Die & Mold Inc., a manufacturer in Somerset, expects more than 500 percent revenue growth this year. Its sister company, Augustine Plastics Inc., also anticipates a strong year. When many U.S. manufacturers struggle, it’s a breath of fresh air to see this kind of success.

So, I asked President and CEO James Brown how the two companies are able to not just compete, but also grow. It’s especially impressive when you consider that he said many customers aren’t just asking for price decreases, they’re demanding them.

First of all, the company understands its niche — low to medium volume in aerospace, defense, health care, energy, and water and wastewater treatment.

There are interesting onshoring dynamics, as well. Brown continually keeps an eye out for acquisition opportunities, particularly across borders.

“Because if I can find an opportunity to produce less expensive product, it gives us a competitive advantage,” he says.

For example, he went down to Juárez, Mexico, to look at an injection molding company that was for sale. The material and utility costs were similar; the biggest difference was labor.

He says a U.S. plastics operator, with wages, payroll taxes and benefits, will cost between $19 and $22 an hour. By comparison, the labor cost down in Mexico, fully burdened, is less than $4.

So, how can you compete with that?

In Mexico, several people are positioned on each side of a conveyer belt. In the U.S., one person and a robot arm can equal the same output.

“The end result is, when we ran the math, there really wasn’t a significant economic benefit to us acquiring a Mexican-based operation,” Brown says. “Because through technology, I was able to create work cell systems that could be as effective as what I was competing against in Mexico.”

And customers are realizing this, too, he says. Unless there’s a large enough quantity, overseas production doesn’t deliver the savings they hoped to achieve because of costs like shipping, storage, working capital, etc. And that’s good for manufacturers like Augustine Die & Mold and this month’s cover story Channellock, which almost exclusively produces Made in the USA tools.