Michael Araten knows a thing or two about bringing manufacturing back to the United States. Araten and his company, the Rodon Group, got many accolades and a visit from President Barack Obama a few years ago after shifting assembly of its K’nex brand of plastic construction toys from China to Rodon’s plant in Montgomery County, Pennsylvania.
As global supply chains melted down recently in the pandemic, Araten ratcheted up his evangelism for repatriating production to America, a process known as reshoring. He and Rodon are encouraging other U.S. manufacturers to evaluate the true costs for producing overseas — including soaring costs and shipping delays — and to bring back some manufacturing to American companies like Rodon, which employs 128 people who make precision plastic parts.
“All of a sudden, the stuff you thought you were saving on overseas, you’re not saving,” said Araten, who is chief executive of Sterling Drive Ventures, the family firm that owns Rodon Group. “I saw this happen in the Great Recession: There’s a shock to the economic system that causes people to really look at their total cost of ownership.”
Reshoring efforts have received renewed interest during the pandemic, spurred by frustration with supply shortages and price increases. On Friday, Intel announced plans to build “the largest silicon manufacturing location on the planet” near Columbus, Ohio, a $20 billion investment to address the global undersupply of computer chips whose production is dominated by Asia.
Some advocates say domestic manufacturing is at a turning point, after years of contraction. The pandemic has stirred a close scrutiny of weaknesses in supply chains and raised the possibility of reshoring as a potential solution. But changing course after five decades of offshoring primarily to Asia will not happen quickly, experts say. Reincarnated U.S. industries will likely require more automation and create fewer direct jobs than the uncompetitive factories that shut down in recent decades.
The decision to bring back manufacturing is not casual, and requires thinking through every step of procurement, production, and packaging, said Araten. Global supply chains that have evolved in recent decades to produce a stunning banquet of affordable merchandise are immensely complex, and not easily dismantled and rebuilt.
A big investment in automation
To compete with low labor-cost manufacturers overseas, Rodon invested heavily in automation and robotics. Much of Araten’s workforce is concentrated in high-skill jobs, such as fabrication and maintenance of the sophisticated stainless steel molds used to make plastic parts, and the supervision of the robotic injection-molding presses. Rodon has about 250,000 square feet of manufacturing, office, and warehouse space at two locations in Hatfield.
In a typical production run, Tammy Shiber, 59, a quality inspector who last week marked her 34th anniversary at Rodon, oversees a fleet of automated machines making fine mesh discs that serve as filters in the bottom of single-serving coffee pods. A robotic arm withdraws a sheet of discs from the hot mold, passing them through an automated visual inspection to ensure the perforations are open, separates the discs from their plastic trees (the leftover plastic runners are recycled), and then circles back to collect a new batch of discs. Over and over again, 32 presses produce 8 million discs a day.
It’s fitting in the pandemic that much of Rodon’s new business is in the medical field. One company hired Rodon to provide plastic parts for its COVID-19 test kits, a business that has accelerated with the surge of the omicron variant. Rodon also recently developed special plastic handles for cartons that can withstand the supercool freezers that store some vaccines.
After Araten heard about a shortage of medical swabs needed for COVID tests — there are few sizable domestic producers, and hospitals depend on imports — Rodon developed a flexible nasal swab from medical-grade plastic in consultation with Fox Chase Cancer Center. It’s now making a million of them a week. It wants to expand production, but new equipment is back-ordered — waiting for imported parts stalled in the supply chain.
Most of the plastic pieces Rodon manufactures perform vital support functions, such as the threaded seals on food and beverage containers, or components for windows and doors. Toys make up less than 10% of its business —the K’nex line for which the company is known was sold off in 2018, though Rodon still produces them under contract.
Rodon’s supporting role as a supplier for products made by other manufacturers means there is a limit to how much influence its efforts can have on complex global supply chains. “We’re not the general contractor for the world,” said Araten.
‘Greater control over our destiny’
Attention to reshoring is not new — America has been losing factories and jobs to low-cost countries since the 1970s, and offshoring periodically becomes a hot political topic, especially during economic downturns.
Reading Truck, a Berks County, Pennsylvania manufacturer that builds distinctive tool-box service bodies that are fitted to truck chassis, wanted to reclaim manufacturing it had outsourced to China about a decade ago amid concerns about the quality of the steel and aluminum fabrication done by overseas suppliers. It brought the manufacturing work to its plants in Pennsylvania and Oklahoma, and has no regrets.
“Having the manufacturing done locally here in Reading and in Claremore, Oklahoma, gives us a greater control over our own destiny, especially in the fragile ever-changing environment that we’re currently operating,” said Balint Peto, the vice president of procurement at Reading Truck. The company has 1,200 employees at 22 locations, but more than half are in Reading.
