Stop Surrendering to the Asian Dragon

By Tim Grant

Recently we've received notices from both customers and suppliers advising us that there will be a disruption in their manufacturing operations during the Olympic Games in Beijing. Either their own China-based operations are being ordered closed by the Chinese government, or they are concerned that we might be ordered closed during this period and therefore disrupt their ability to produce products. We simply chuckle and reassure them that here at Actronix Inc. in Flippin, Ark., we'll be open for business during the Olympics.

It wasn't that many years ago that Actronix had considered a move to at least one low-cost country (LCC.). Back in 2003, when many of our customers had made such moves and were demanding that we do the same in order to remain a supplier to them, Actronix, a manufacturer of highly engineered cable assemblies and wire harnesses, was faced with many serious options, including closing our doors. However, with entrepreneurial ingenuity, Actronix not only found a way to stay open but also to elevate standards and improve production quality.

By making radical changes to the company's supply chain (taking inventory turns from low single-digits to double-digits, eliminating "muda," or waste, throughout the organization, automating many activities and creating distinct customer segments), Actronix was revitalized and today is thriving, growing by more than 20 percent per year over the past four years.

Further resourcefulness through a partnership with the Arkansas Department of Corrections created Actronix's second production facility on the grounds of McPherson Women's Unit Prison in Newport, Ark. This unique production facility not only has a positive impact on the community (helping train inmates and provide a means for victim restitution and child support), it also reduces the company's overhead and increases our competitiveness.

None of this was easy. In fact, many times during this process of reinvention, the management team thought out loud about how chasing an LCC strategy might have been easier. However, five years later we're proud of our decision to stay here in America. Some manufacturers chasing the dollar to China are now faced with the plethora of issues plaguing low-cost countries such as counterfeit materials, high failure rates and a limited ability to regulate.

And then there is the question of environmental impact. Manufacturing in China for consumption within that country is one thing, but some companies spend millions to convince people they are ecologically friendly, and yet ship raw materials to China and finished product back, thereby creating a larger carbon footprint. China's air and water pollution has become so bad that with the upcoming 2008 Olympic Games, China's government is ordering factory closures. China's government insists that they'll be ready to receive athletes in August. However, in doing so they are negatively disrupting the global supply chain, and the air quality isn't improving significantly. Some athletes have even chosen not to compete in the poor air quality conditions.

Actronix is proof that American companies can beat projections, keep jobs in the heartland and strive to always do the right thing. But just when will others follow suit? Meanwhile, we're happy to report that during the Beijing Olympics, Arkansas will be "Open for Business!"

About the Author: Tim Grant is president and CEO of Actronix, Inc., a manufacturer of highly engineered cable assemblies and wire harnesses for the medical, security and defense, communications and industrial sectors. The 31-year-old company is based in Flippin, Ark. More information at www.actronixinc.com.

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