Imagine being a wholesale distributor of truck tarps and other cargo control supplies. Then, imagine placing an order from a manufacturer in China and then having to wait months for it to arrive. If you could get those same materials here in the U.S., wouldn’t it make sense to do so?
Lead time has become a big problem for American companies purchasing goods from overseas. It is especially troublesome when buying from China because shipping from that part of the world is a time-consuming, multi-layered process. It has become so cumbersome that a number of U.S. companies have brought production back home. They simply cannot wait for overseas manufacturers any longer.
THE PRICE NO LONGER RIGHT
Mytee Products, an Ohio-based company that supplies truck drivers with everything from tarps to ratchet straps, explains that when their competitors began looking overseas years ago they did so because the price was right. Back at the turn of the 21st century, China was aggressively competing to become a global manufacturer. Their prices reflected as much.
Fast forward to 2018 and it appears as though Chinese workers are no longer willing to work so cheaply. Labor costs are rising, as is the cost of everything from fuel to industrial equipment. This is causing the prices of Chinese goods to rise as well. Suddenly the price is no longer right for American companies.
It is true that truck tarps made in China might still be less expensive than those made here. But the price difference is no longer nearly what it was. And when you take into account the lead time required for shipping, the advantage of that lower price almost always evaporates.
KEEPING THE TRUCKING INDUSTRY STOCKED
A big problem that Mytee Products and its competitors have is keeping trucking companies stocked. It is definitely a good problem for both of them and their customers. With the economy expanding, there is more freight to move across the country and more trucks moving it. All of this equates to a higher demand for truck tarps, ratchet straps, winches, bungee straps, and on and on.
Companies like Mytee Products cannot keep their customers well-stocked if they have trouble keeping their own warehouses full. Thus, they can no longer afford the excessive lead times necessary to buy from China.
BRINGING THE WORK BACK HOME
The result of all of this is work coming back home. At least one Indiana company that has been purchasing from China for years is now manufacturing its own truck tarps and ratchet straps in-house. Every day, their team of manufacturing experts are cutting and measuring material, sewing it together, and packaging finished products for sale.
There’s nothing wrong with bringing jobs back home, is there? Absolutely not. And because trucking is considered one of those great American jobs that does so much for our domestic economy, seeing cargo control manufacturing coming back home is a good thing. It amounts to American manufacturing supporting an industry that is ultimately the foundation of our national economy.
Economics is a funny thing. One of the fundamental laws of doing business is keeping costs as low as possible in order to maximize profit. So companies go wherever they need to in order to function at the highest level of profitability. Sometimes that means going overseas.
However, another fundamental law of business is that competition stabilizes things and keeps everybody honest. China was ultra-competitive for a while, but they have lost much of their competitive edge simply because they are so far away. Meanwhile, cargo control is starting to return home.