 |
| Larry Kraft, owner of Cascade Quality Molding, found new opportunities—and met his wife, Chen Tingxue, his translator—in China. Chen now works for the company in Yakima. |
If necessity is the mother of invention, curiosity could be
the father, as the experience of Larry Kraft, owner of Yakima-based Cascade
Quality Molding, attests. Seeing his business of supplying plastic products to
Boeing suppliers endangered by the rise of Chinese competition, he ventured off
in 2005 on an odyssey to China that changed his company and his life.
Within
a year following his return, Kraft managed to broaden his client base by 20
percent, boost sales by 30 percent and raise profits by 20 percent. He is now
married to a Chinese woman, and his company has a branch in Shanghai, unusual
for a small business with fewer than a dozen employees. The China office
recently helped Cascade develop a promising relationship with a German supplier
to Boeing. And Kraft may soon begin the process of manufacturing complex
plastics for the Chinese aircraft and medical instruments industries.
Doing business with China was the furthest thing from
the eastern Washington native’s mind in the 1980s and 1990s when his
business was strong. In its heyday, his plant employed 20 workers manufacturing
plastic products from customized molds for 40 clients in the aircraft, medical
and electronic industries. Products included hydraulic and interior components
for aircraft, plastic molded enclosures for electronic instruments, and medical
instruments and laboratory products.
But sales dropped off during the 2001 recession and remained
flat through 2003. The outlook was discouraging. “Before, we would win about 50
percent of our bids,” Kraft says. “But in 2003, we only won two new contracts
out of 102 bids.”
He soon discovered the reason. “Our [domestic] competitors
were buying molds—the most costly item in the production
process—from China for about half the price.”
Kraft didn’t want to buy from China. “I am conservative and
as ‘Buy American’ as anyone. I still only buy American cars.”
Yet when he traveled to China to learn more about his new
competitors, he was profoundly moved by his experience.
“I was astounded by the massive population, and the size and
ability of manufacturers there,” Kraft says. “I came home humbled.”
He reluctantly decided to contract with Chinese companies.
“I had to do something or shut down,” he notes. But if he was going to do
it, he wanted to do it right: He wanted to avoid the quality problems many
other companies had experienced. He visited Chinese factories and monitored his
projects, and ended up making more than 40 trips there over the past five
years.
His travels took some unexpected turns that entrenched him
more deeply into the culture and economic landscape. The first occurred in
2007, when a large Boeing subcontractor made him a “very generous offer” to
manage a partnership with a 150-person Chinese company to produce interior
plastic parts such as window shades, overhead finishing and seating for the
Boeing 787. Kraft turned over the operations of his Yakima plant to a
trusted manager so he could focus on the challenges of ensuring the Chinese
factory did quality work on time and at a consistent price.
Kraft’s life took another dramatic shift in 2009, when he
married Chen Tingxue, who had translated for him in China. The two opened a new
Shanghai operation to act as a liaison between Cascade Quality Molding and its
Chinese manufacturers.
The decision to move his commodity manufacturing to China,
he says, helped to stabilize the company, allowing it to search for new sources
of growth. Now, its Yakima operations focus on higher-end plastic products
demanded by medical and aircraft customers.
“We have added 5,000 square feet [in Yakima] to accommodate
more machinery for high-quality reflective and paint coatings,” Kraft explains.
Ironically, some of the new capacity may be used for manufacturing parts for
Chinese aircraft and medical device companies. “These industries are booming in
China now,” says Kraft.
Meanwhile, Cascade’s Chinese operations are in the process
of negotiating an outsourcing deal with a German aircraft component
manufacturer. And Kraft expects to receive more orders from United States
companies that would prefer to work through a trusted American partner with a
system in place to ensure quality and to oversee the entire process.
“We also have streamlined the logistics, shipping and
customs work needed to ship efficiently” from China, he says.
By embracing China, Kraft has created a new survival
strategy in an era of increased foreign competition. He moved commodity
manufacturing to China, creating new potential for growth at the low end of his
product line. Presently, he is contracting with a Chinese company to mass-produce
a household appliance.
Kraft also learned that there were limits to what Chinese
manufacturers could handle. With its new focus on high-end manufacturing,
innovation and design, his Yakima operation is more profitable and capable of
taking on more lucrative jobs from customers both here and in China.
The United States still could have an important
manufacturing role in the competitive new global economy. Although China
continues to improve the quality of its goods, Kraft says Americans are still very
creative and keep making new products.
But to remain competitive, many manufacturers like Kraft
will have to look at the world differently. Before, he was provincial; now,
Kraft says he religiously follows international news. He has to. Cascade Quality
Molding may still be a small business, but it operates on a global scale.