The tariffs imposed by the Trump administration have had a significant impact on various industries, causing widespread challenges. As a small business owner of Tenikle based in San Diego, we specialize in selling a unique consumer-grade silicone product resembling octopus arms with suction cups, designed to hold iPhones in various positions. Previously manufactured in China, the recent tariffs have necessitated a shift in our production strategy.
Navigating through the complexities of addressing these tariffs has been a formidable and almost insurmountable endeavor. Over the past seven years, Tenikle has generated a modest $24 million in revenue since its inception on Kickstarter, even securing an investment deal with Daymond John on Shark Tank. The future of my business, my small team, and my family’s financial stability hang in the balance, prompting urgent action in response to the tariff challenges.
In a proactive move to adapt to the changing landscape, I have decided to relocate our manufacturing operations to the United States, aligning with the administration’s objectives. This strategic decision not only aims to safeguard our business but also signifies a shift in the way we perceive and manage supply chains, potentially offering a lifeline to other brands facing similar predicaments.
Numerous companies find themselves in a similar predicament, frantically seeking alternatives to mitigate the tariff implications. Silicone consumer goods are prevalent across various sectors, including infant care, kitchen utensils, toys, fashion accessories, beauty products, health items, tech gadgets, sporting goods, and more.
Initially, exploring various options such as circumventing the tariffs or waiting for their removal proved unfeasible. Considering manufacturing in countries like Vietnam, Malaysia, Mexico, or Thailand posed logistical challenges and uncertainties, prompting me to explore domestic production.
Upon investigating the U.S. manufacturing landscape, I discovered that most silicone molding facilities were geared towards industrial contract manufacturing for sectors like aerospace, pharmaceuticals, defense, and automotive. However, there appeared to be limited options for consumer goods production domestically, leading me to delve deeper into the requirements and reasons behind this gap.
While Chinese factories offer advantages like low minimum-order quantities, cost-effective product development, and affordable items, American manufacturers are optimized for large-scale, high-margin contracts, posing challenges for smaller-scale consumer goods production. This mismatch highlights the need for a more adaptable and responsive manufacturing approach in the U.S. industry.
One reason why others aren’t doing it is because they haven’t considered this solution: adopting China’s factory model. When thinking about producing in the USA, the question arises – can it be cost-effective? A closer look at China’s factories reveals an interesting pattern. Most of them, similar to my overseas supplier, are small satellite shops equipped with just enough machinery to fulfill received orders. These shops operate with efficiency, low overhead costs, and basic technology, making them capable of high output. While the manufacturing of items like iPhones involves advanced processes, for products made of silicone, rubber, and plastic, the machinery is uncomplicated. It is highly automated, efficient, and cost-effective – a model that I can replicate. With this realization, the decision was made and the plan put into action.
My new manufacturing startup, to be established in Riverside County, California, will mirror this Chinese model. By doing so, it aims to replace the challenges associated with working with overseas factories, such as costs, minimum order quantities, and customer experience, with the added advantages of local production.
The quoting strategy for my startup is to emulate China’s supply chain: “Provide us with your final landed cost per unit in 2024, inclusive of shipping and existing 2024 tariffs, and we will devise a plan to match it.”
Dispelling the myth of China’s “cheap labor,” I believe there is another reason why consumer goods manufacturing isn’t prevalent in the USA. The industry has been stereotyped as unattractive and labor-intensive, perpetuating an outdated image of sweatshops filled with workers. This misconception has deterred American companies from considering domestic manufacturing. However, a comparison of the wages of manufacturing workers in China and the USA over the past five decades reveals a significant shift. Chinese manufacturing labor now earns approximately 31.5% of what their American counterparts earn in U.S. dollars, a substantial increase from just 2.5% in 1995. This suggests that Chinese labor is not as inexpensive as commonly perceived, especially considering the level of automation in many production processes.
Analyzing the numbers, U.S. manufacturing can indeed be competitive. By conducting some basic calculations on U.S. labor costs, raw materials, energy consumption, and packaging, I discovered that manufacturing in the U.S. could be more cost-effective than my previous landed cost of goods sold in 2024, even after factoring in tariffs and a reasonable profit margin. This revelation prompted me to explore further and share my plans on X and LinkedIn, resulting in eighteen new contract manufacturing inquiries.
It appears that I have stumbled upon an overlooked opportunity. By embracing the efficiency and cost-effectiveness of China’s factory model, I aim to revolutionize manufacturing in the USA.
After receiving interest from manufacturing clients and private investors within a few days, I was amazed and felt compelled to proceed. It became clear that there are additional advantages to onshoring beyond just avoiding tariffs, which prompted me to move forward with establishing my factory. These benefits include a significant reduction in COâ‚‚ emissions, as a single container traveling from China to the USA emits a substantial amount of carbon dioxide. Onshoring also helps avoid global supply chain volatility, leading to faster lead times and reduced freight costs. Moreover, manufacturing domestically provides protection against intellectual property theft and aligns with the growing trend of “Made in America” retail initiatives. By avoiding customs complexities, improving transparency, and eliminating financing costs associated with long shipping times, onshoring in the USA offers numerous advantages for businesses.
Funds are being sent to a U.S. entity, contributing to U.S. jobs and helping reduce the trade deficit. Adding jobs to the U.S. economy is beneficial, but the question of who will perform the work arises. Many of the positive unemployment statistics we see today are influenced by the gig economy, such as Uber and Doordash, which may not accurately reflect the challenges faced by many Americans.
Prepare for the rise of robots. Establishing manufacturing infrastructure in the U.S. is crucial to stay relevant in the age of advanced humanoid robotics. While the impact may not be immediate, countries with the necessary infrastructure will have a competitive advantage when robots can be trained to perform assembly line tasks like employees.
The belief that overseas supply chains are essential for consumer goods is false. Onshoring production to the USA offers numerous benefits beyond avoiding tariffs, leading to lasting positive effects for brands.
A manufacturing revolution in the U.S. was already necessary, and recent tariffs have accelerated this need. The changing global landscape, strained relations with China, automation through AI, and unsustainable trade deficit and debt-to-GDP ratio highlight the urgency for better job opportunities. With humanoid robots on the horizon and a diminishing talent pool for producing quality consumer goods at scale in the U.S., investing in U.S. manufacturing is a strategic and long-term move.
Establishing a U.S. factory and launching the startup Stuff MFG is a decisive move. While navigating uncertainties in supply chains, livelihoods, and reputations, committing to American manufacturing is a bold yet necessary step. It aims to safeguard brands from the impacts of tariffs and challenges in the global market.
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