Marin firm moves manufacturing back to U.S.
Loralee Stevens, Business Journal Staff Reporter
NOVATO – After eight years of manufacturing its products in China, CP Lab Safety in Novato has transferred most of the operations to a Sonoma County contract manufacturer.
According to CP Lab President Kelly Farhangi, shifting global economics now make it more feasible for small and mid-size companies to use local manufacturers.
“For us the decision was financial. We had no problem with quality,” she said.
Thirteen-year-old CP Lab makes safety cabinets, containers, funnels, gloves and goggles for research institutions, government labs, pharmaceutical companies and hospitals. Its products are used by nearly all the major research institutions and drug makers worldwide.
Biotech executive Ramin Najafi, Ms. Farhangi’s husband and CP Lab marketing manager, invented and patented the Eco Funnel, the company’s flagship product. The waste solvent funnel reduces exposure and virtually eliminates emissions of toxic chemicals, allowing workers to safely handle hazardous waste in the laboratory.
Although CP Lab doesn’t disclose revenues, Ms. Farhangi said sales have doubled four times since 2004 as the health of workers in laboratories has come under increasing scrutiny and regulation.
While the company consists only of Ms. Farhangi, Dr. Najafi and five employees, it employs a network of contract workers.
Through its distributors in the U.K., Japan, Korea and Spain, among other nations, CP Lab markets about 80 of its own products and safety products from a number of other makers.
CP Lab made the decision to outsource to China in 2001, when costs of labor, materials and engineers skyrocketed in the U.S.
“It made sense then. Labor costs, especially the cost of engineers, were so disparate. But now worker, supply and inspection costs are higher in Asia, and the cost of transportation has increased fourfold,” said Ms. Farhangi.
She and her husband returned to Wright Engineered Plastics (WEP) in Santa Rosa, one of many of the small metal and molding shops that sprang up around Agilent and other Bay Area OEMs. Most closed their doors when their largest customers moved manufacturing overseas.
At 48 employees, WEP is one of the few survivors.
But there’s a trend afoot, said WEP Chief Executive Officer Barbara Roberts.
“During the last four months, four customers who had been manufacturing in China came to us, two who had been former customers,” she said.
In addition to CP Lab, JDS Uniphase – another former customer – returned the manufacturing of some of its optics products to WEP. CoolSystems of Alameda and a maker of baby products also shifted operations from China to Santa Rosa.
The last two were concerned about the quality of materials being used, but costs were a consideration for each.
“Companies with experience doing business in China are very aware of what they pay for,” said Ms. Roberts. “Duties, fees, export and import documentation, transportation and the need in some cases to pay before shipment all add up.”
Poor quality, or the perception of it, negates the advantages of low cost. Also, factory operations in countries with weak environmental regulations are causing widespread pollution.
“The fact that pollution produced in overseas plants eventually drifts back to North America isn’t lost on U.S. companies,” said Ms. Roberts.
But labor-intensive assembly work still follows the trail of lowest labor costs. Most manufacturers of molded plastics use Chinese plants to build the molds, including WEP and CP Lab.
Tooling is still cheaper as well because Chinese engineers earn less than their American counterparts. But today’s factory tools are highly automated and designed to offer the highest level of return.
CP Lab has 16 tools capable of making 70 different products, now residing in Santa Rosa. In addition to a very slight but significant reduction in cost to manufacture here, delivery times of six to eight weeks have been reduced to two weeks, said Ms. Farhangi.
“And it’s gratifying to us to bring business to a local company,” she added.
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