May 23, 2017
Manufacturing Insights

Mercury Wire advocates for U.S. manufacturing

Courtesy/Ariel Rodriguez
Ariel Rodriguez, business development and marketing strategy, Mercury Wire.

Mercury Wire has designed and manufactured wire and cable solutions for more than 50 years. The company, which has 120 employees, is based in Spencer.

Ariel Rodriguez, who does business development and marketing strategy for Mercury Wire, spoke about making products in the U.S. and abroad, lean manufacturing, and plans for the future.

What do you make?

Mercury Wire designs and manufactures custom wire and cable solutions tailored to meet specific application requirements. The company's business model provides customers with access to a team of experts carefully working towards understanding their specific needs upfront in efforts to design precise wire and cable solutions that meet their unique needs. The result is a higher quality product engineered specifically for use in the target application. Mercury Wire's extended capabilities include design and prototyping, cable production, integrated assembly production, and delivery and inventory flow management.

Who do you sell to, and where are your clients located?

Mercury Wire customers span across a variety of industries and applications including industrial, communications, underwater systems and medical instrumentation. Most of our customers are in the United States with only a small percentage of products exported abroad.

What do you think the biggest misconceptions are about U.S. manufacturing?

The biggest misconception about manufacturing in the United States is the perception the per-unit cost of a domestically produced item is much higher than if it were manufactured abroad in places like China or India, for example. The biggest flaw in this approach is failing to recognize wages are just one of the many factors that determine the actual total cost of manufacturing.

It is important to note that during the last decade, the lower cost of labor offered by developing countries such as China, India and Mexico typically motivating companies to manufacture abroad have steadily increased. As a result, the wage disparity between formerly low-cost regions, particularly in China, has been slowly closing as countries continue to industrialize. While labor rates are still in fact lower in other regions of the world, additional factors considered when contemplating the offshoring of production has grown beyond the cost of labor alone. Other factors such as utility costs, productivity gains, tax rates and government policies are equally as important in understanding the total cost of manufacturing an item.

Of specific interest is the risk of losing initial productivity gains as wages rise faster than technologies and processes can evolve. Under these circumstances, organizations are not effectively able to offset the increase in wages with savings from improved processes or advances in technologies, placing into questions the true benefits of manufacturing abroad.

How do we change those misconceptions?

Awareness around evolving global market dynamics, careful assessment of the risks and benefits associated with manufacturing abroad, and a thorough understanding of your organization's strategy are critical factors in determining where best to manufacture your products. For some organizations, price sensitivities and proximity to markets served make manufacturing abroad a key and indispensable aspect of their global strategy. And it works for them. Proceed with caution however, offshoring is not for everyone. The benefits of manufacturing abroad are neither easily attained nor immediately realized. The stakes are high and in some cases, the risks may outweigh the perceived benefits. If not executed properly, offshoring may have the opposite impact on a firm's ability to service its customers in a timely and effective manner.

In the United States, manufacturing has become more competitive because of technological advances supporting productivity gains and increased efficiencies. According to 2016 research conducted by Oxford Economics, U.S. manufacturing productivity has increased by roughly 40 percent from 2003 to 2016 – making U.S. factories as much as 90 percent more productive than their Chinese and Indian counterparts. The net impact suggests adjusted wages for manufacturing workers, including productivity, are only 4 percent lower than in the United States.

Add to that the high risk of losing innovation due to low infringement regulations and enforcement, a long transit time in shipping goods back to the U.S., and a growing need to collaborate on innovation, and U.S. companies may be losing more than what they have to gain when choosing to manufacture abroad. The best strategy for your business will vastly depend on your specific market reach and overall goals. However, you might just find the U.S. manufacturing segment has more to offer than you initially thought.

What are some of the other challenges you face as a manufacturing company?

One of our biggest challenges when engaging customers is educating them on the true value a fully lean organization can offer. In the marketplace, I have observed most implementations of lean manufacturing limited to the launching of a series of tools aimed at reducing manufacturing costs. There is often little-to-no efforts around tapping into the most powerful aspect that lean manufacturing can offer, which includes building and enabling a culture with a lean mindset around continuous improvement. As such, we find customers immediately zeroing in on piece price when they hear we are a lean organization. While price is an aspect of manufacturing, the act of adding value within a lean organization spans well beyond just the manufacturing process.

As a fully lean manufacturing organization, we continuously challenge ourselves to find process improvement opportunities to add as much value for our customers as possible by removing waste, enhancing efficiencies, but also by thinking lean and partnering with them on seeking out continuous improvement opportunities. Using lean manufacturing best practices as a guide, we have experienced great success with several of our customers. By working together on streamlining the design of their product, aligning our processes with their expectations, and even reconfiguring our physical footprint in support of their goals, we have been successful in supporting their continuous growth. Once customers understand the benefits our lean culture can offer, the discussion around value is broadened to include additional opportunities such as setting up Kanbans to help free-up precious cash by effectively managing inventory levels, creating operational efficiencies through supply chain integration, and improving the customer experience by drop shipping product directly to end users. At the end of the day, customers still save money, it's just a matter of where and how they realize the most value.

What are your plans for the next year?

Our evolution from a traditional manufacturing company to a learning organization is built on innovation, lean business strategies and empowerment. At Mercury Wire, everyone has a direct impact on the creation of value and the success of our organization. This not only results in higher quality products and services, but also creates an enriched work environment that advances our mission to create greater value with greater velocity by enabling a people-centric culture based on mutual respect, curiosity and continuous learning.

Mercury Wire also recognizes its role as global citizens and strives to enhance the value we create within our surrounding community through increased emphasis on social responsibility and sustainability. Through the Mercury Wire Foundation, we support numerous endeavors with particular focus on those that empower people through learning and personal growth.

Mercury Wire's future plans include continuing to develop our lean business strategies, building relationships with customers old and new, and growing our unique, team-based learning culture. When the focus is on continuous improvement, the journey never ends.

This interview was conducted and edited for length and clarity by Laura Finaldi, WBJ staff writer

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