Solid Height - Spring Manufacturers Institute

“The lure of cheap labor and other cost drivers
will continue, no doubt, because of the need of
large users of our product types to further explore
and pursue offshoring to low-cost country sources
where appropriate,” says Puz. “However, sitting here
in 2006, I think we’re all a little wiser about what is
involved in sourcing products in general, and springs
specifically, overseas, especially in China.”
“The things that we all knew could very realistically
go wrong, somehow inevitably seemed to
do so: unannounced material changes, production
pre-runs not complying dimensionally with original
sample submissions, logistical snafus and the like,”
continues Puz.
“Also, the sheer number of springmakers in
low-cost countries – particularly in China – makes
it difficult to distinguish between those that are
truly capable of consistently, effectively supplying
U.S.-based production lines and those that are not,”
he adds.
Puz also addresses the ”save money at all
costs” attitude of OEMs that prevailed in the early
2000s. He sees the pendulum swinging the other
way regarding some aspects of the business. For
example, the large OEMs now realize that they
cannot compromise their new product launches
by depending entirely on LCCs for support. “These
companies are now counting heavily on innovative
launches as a means of breaking their products out
of what some call the ‘commodity syndrome,’ ” says
Puz. “In short, as large OEMs seem to be increasingly
choosing to wage their own competitive wars
on the front of differentiated new products [vs. price
points alone as key drivers], we view this as both a
challenge and opportunity to provide valued designbased
input.”
Puz is secure in the knowledge that springmakers
are the best engineers for designing
products that include springs. “As springmakers,
we can provide very targeted information, specific to
the function of our products in their applications.
This, combined with full service, product launchrelated
support, forms the basis of our new value
proposition that may have been somewhat undervalued
during the ‘save money at all costs’ era that
plagued our industry during the dark years of the
early 2000s,” he says. “This is where North American
springmakers have a clear advantage over the
LCC competition.”
“Is overseas sourcing still a looming threat?” he
asks. “Sure, you bet. But in our view, the criteria
by which value is assessed in 2006 fortunately
provides a more favorable landscape for the battles
we’re now fighting. We now see that these battles
are winnable.”
SAIC USA Inc.
Detroit, MI
Tom Shen is the chief North
American representative for SAIC
USA Inc. His perspective is a bit
different because he is selling
Chinese-manufactured springs
to U.S. companies. Though he
agrees that there are some leveling factors between
U.S. and Chinese springmakers, he pinpoints the
issue we all know well: The labor cost in China is
cheaper than it is in the U.S.
“Surprisingly, 30 to 40 percent of the spring
companies in China are actually owned by foreigners
or are joint ventures,” he says. “These foreign
investments have an inherent advantage over the
locally owned companies that make up the balance
of the spring companies in China for one reason:
The joint ventures and foreign-owned companies are
more able to invest in state-of-the-art equipment.
That eliminates the technology barrier to doing business
with China.”
“In China, the technology and the equipment are
at the same level as in the U.S.,” insists Shen. “The
only real difference is that the labor cost is cheaper
than in the U.S. In fact, Chinese labor costs are low
SPRINGS July 2006 17