Good Reasons For Any Country To Manufacture Goods Locally

Good Reasons For Any Country To Manufacture Goods Locally

This blog space has been sitting on my website idle so I thought it would be a good space to write some of my views and opinions instead of being so selective and stiff on what I post here. So, here’s my first post in a long time but expect some more in the coming days/weeks. Sorry it’s so long but that’s a bad habit I have, which you already know if you’ve read through the website.

¶ At one time, a long-long time ago I wrote a list of 12 Reasons Why Governments and Private Investors Should Invest in Manufacturing. All of those reasons are still valid but the world we live in now is a lot different than we I wrote that so I thought I’d write an update to that.

There are a couple of thousand plus cultured marble (engineered stone) factories in the USA supplying bath and kitchen construction materials to their local construction market. A builder will go to a local marble shop because they know the manufacturer can make them exactly what they need.  Every home builder has designers who create specs for their bathrooms and kitchens. They choose colors, choice of stone (marble, onyx, granite, etc. –see the ‘Formulas’ page) sizes, design, styles and more so they’re prohibited from buying these building materials from a box-store. They just won’t work.

Back in the day we used to spend a lot of time and effort on Search Engine Optimization, SEO, on our website.  This generated thousands of leads for us from all over the world but they were from entrepreneurial-minded young men and women who were desperately looking for an opportunity but didn’t have the financial capability to set up a cultured marble factory.

This is how we got to know so many people from developing countries. We naively, but not regrettably, worked with many of these individuals, making personalized presentations, business plans and spreadsheets for various scenarios.  So, along the way, we learned a lot about many countries and why we’ve seen it difficult to sell factories in some regions.  We’ve set up factories on every continent and in many countries; South and Central America, Europe, Australia, Asia including China who saw a huge opportunity and was very eager to jump into this growing industry. It came with free training so they didn’t have to ‘invent the wheel’. They came, they liked, they bought. Period! We shipped, went to China to set up their factories and train their people.  I’ve been to ever region in China, north to south, east to west. I ate more types of Chinese food than I knew existed.  I’ve been to the Forbidden City, the Great Wall, toured the Hutongs, visited the Summer Palace, walked Tiananmen in Beijing, saw the biggest Jade Buddha in the world at the Jade Buddha Palace in Anshan and go to hug and pet a real Panda Bear at the Sichuan Wolong National Nature Reserve. Our clients in China were the best hosts and I had great experiences there.

But, selling factories was that simple, everywhere, except in Africa where we've been hearing African leaders say for 10+ years, with slight variations, “We have to quit exporting raw materials only to import them as expensive goods. Here's one of my favorites.

Now we see the same factories we set up in China exporting these building materials to Africa and African leaders continue to say they have to quit exporting raw materials only to import them as finished goods. Give it up and do something. 

1. In the meantime, it’s the unemployed in Africa who are hurt the most. There are many reasons manufacturing is crucial to every country’s economy and job creation is the most obvious reason and manufacturing creates more jobs than any other sector.  That’s why my X (formerly Twitter) bio says “Poor countries that don’t manufacture and spend their money on imports will always remain poor.” If you watch an ounce of news you’ll see Jobs –Jobs-Jobs in the news every day. Here in the USA we have Employment Situation Summary, U.S. Bureau of Labor Statistics, Labor and Labor Reports. Job Openings Report, Labor Turnover Survey and the list goes on and on. It’s not my job to know but I’m pretty certain China, Germany, the UK, France and every other developed country gathers their statistics through their various agencies too. Have you ever wondered why?  Does your country track Jobs or Manufacturing statistics? Does your government make job creation a priority? Taking a look at your unemployment rates will give you that answer. If they’re high, I’m betting they don’t.  I’m always amazed at how many young men I see gathered around under a shade tree in the middle of the day. We all know they’re just hanging out because there are no jobs.

2.  We’ve all heard the term trickle-down economics. You need crushed limestone from the quarries that also employ people. You need a driver, a truck, and fuel to move these goods, etc. Your workers now have a few dollars to eat more nutritionally so your local food market benefits. Furniture is needed at the factory and your employees homes so your (hopefully) local furniture manufacturer sales increase and it’s all repeated again. 

3. The multipliers that I mentioned above add to the GDP. Local production keeps the value-add, in country, (like the leaders talk about in my above comments) by way of wages, profits, supplier spending and even taxes for the government, rather than sending these jobs to foreign countries and then importing the finished goods. Manufacturing and exporting goods is what increases a country’s GDP more than anything. Look at Vietnam. Here in the USA, everywhere you look now you see “Made in Vietnam”. You didn’t see so many Vietnam imports 5 to 8 years ago. They went from $57B to $517B in the last 20 years. That’s a whopping 792% increase! That’s all due to manufacturing. There are many countries who are following suit and it’s time Africa  joined this manufacturing bandwagon.

4. Manufacturing locally eliminates supply-chain disruption risk.  Relying less on distant suppliers lowers vulnerability to political blow-ups, shipping crises, natural disasters, trade disputes, geopolitical shocks or simply contract misunderstandings with foreign suppliers.

5. Local manufacturing improves trade balance and foreign-exchange savings.  Local manufacturing cuts imports; eases pressure on currency reserves, and can support a stronger current-account position—particularly important for developing economies. Also, many emerging economies experience volatile exchange rates. (Ask Nigeria) When local currencies drop in value, the cost of imported goods can sky-rocket which can restrict importing goods, in our (your) case, building materials. What good is it to build a house if you can’t buy a lousy sink, bathtub, shower or toilet due to hugely inflated prices?

6. I’ve read many articles from developing countries talking about IT, Infotech, computing, etc., but before you delve into your next high-tech project you’ll want to invest a little of your time with your sanitary ware. It’s called a sink or wash basin. Sure, computing is important and without it I would not be here flying across my keyboard giving you this, but look around you and find some simple things you can ‘manufacture locally’.

7. I’ve seen some of the building materials being imported in some developing countries. Acrylic sinks, bathtubs and shower pans are worthless. They crack easily, stain and turn yellow after a short period of time and ceramic breaks too easily and need to be replaced. The products we’ll show you to manufacture will never stain and they are four times the tensile strength of ceramic or natural marble. Your local building code regulators and customers can more easily inspect your facilities and products to see the unlimited selection of products and colors that you can produce and won’t be seen with imports.

8. For those who are most concerned about the environment, keep in mind that a single 40 foot container accounts for about 1.1 to 1.4 tons of CO2 for a trip between China and East Africa and even more going to West Africa.

9. Every country should reduce their reliance on foreign suppliers. When you rely on foreign manufacturers, they can manipulate you and may eventually own you. Keep your government’s feet to the fire as they may be the personal beneficiaries of imports. Reduced reliance on foreign suppliers limits exposure to sanctions, export controls, sudden policy shifts by exporting governments or deliberate supply coercion.

 

12 Reasons Why Governments and Private Investors Should Invest in Manufacturing

12 Reasons To Invest In Manufacturing.

1.  Manufacturing creates more jobs than any other sector.

2.  Manufacturing creates more wealth than any other sector

3.  Manufacturing is what made wealthy countries wealthy.

4.  All jobs, including service jobs rely on manufactured goods.

5.  Every manufacturing job supports three additional jobs.

6.  Manufacturing locally prevents losing jobs to overseas manufacturers.

7.  Manufacturing produces exportable goods.

8.  Wealth from global trade is generated from locally manufactured goods.

9.  The economic health of every country is only as good as its manufacturing sector.

10. Manufacturing locally prevents currency flight.

11. To promote “Made In” (your country) to consume locally manufactured goods.

12.  Higher employment rates results in lower crime rates.

Now you know why manufacturing statistics are so closely watch and promoted in the USA, Europe, and China.

Cultured Marble vs Solid Surface Manufacturing

Cultured Marble vs Solid Surface Manufacturing

We get inquiries from individuals about setting up a solid surface factory who were not clear of the differences between ‘cultured marble’ and ‘solid surface’.  What we refer to as ‘cultured marble’ is called ‘solid surface’ in many parts of the world.  We offer solid surface equipment as well as cultured marble equipment so we can set up a factory to produce either. 

If someone wants to manufacture bathroom and kitchen building materials locally, a ‘cultured marble’ factory is the easiest and least expensive to set up and cultured marble is the easiest to manufacture and the least costly product to produce.

Solid Surface is a great product.  It’s beautiful, very durable, stain resistant, available in a large variety of solid and granite colors, requires very little maintenance and most important, is easy to clean, easy to repair and won’t harbor bacteria which makes it a popular choice for kitchens, commercial installations and hospitals. Solid surface is made in flat sheets that can be fabricated for endless seamless possibilities.

Cultured marble is also very durable, stain resistant, available in a large variety of solid and granite colors, requires very little maintenance, is easy to clean, and won’t harbor bacteria.  The main difference is that cultured marble is restricted to the mold that it is poured on as it cannot be seamed together like solid surface.  But, since cultured marble products are made from a wide assortment of molds, it is basically ready for the market when it is  taken off the mold.

Some quick facts:
∙    Cultured marble does not require fabrication.  Solid surface does.
∙    Cultured marble does not require a belt sander and other fabrication tools. Solid surface does.
∙    Cultured marble does not require a vacuum blender. Manufacturing solid surface does.
∙    Cultured Marble does not require a post cure oven.  Solid surface does.
∙    Cultured Marble is made from inexpensive crushed limestone that is available everywhere in the world. Solid surface requires a refined raw material called alumina trihydrate that has to be imported in most parts of the world.

There is a glut of solid surface manufacturers around the world so it has become a very competitive market.  We recommend starting out manufacturing 'cultured marble', study your local solid surface market potential before jumping into this market. Since solid surface is made in sheets (and 'fabricated' on the job-site per each job specifications), a solid surface manufacturer who can buy the raw materials locally has a huge advantage and can ship 50,000 tons of solid surface sheets in one small 20 foot container, anywhere in the world. That is a lot of solid surface for a small per-kg shipping cost. Even though it's hard to be competitive manufacturing solid surface sheets but you have a niche project that requires you to produce solid surface, let us know.

We won't sell something for the sake of 'making a sale'. We want to make sure our customers can make money on what we sell them.

You will find various sizes of cultured marble factory layouts at the bottom of this page:
http://culturedmarblemolds.com/equipment.html

Cultured Marble & Granite Table Tops

The New York City health department has identified 1700 coffee shops in the 5 Boroughs. I wonder how many of them have tables that need a face lift?  If each of these coffee shops averaged 10 tables, that’s 17,000 table tops.  And there are a lot more hotdog stands, hamburger joints, casa de burrito taquerias, fast food establishments and restaurants than there are coffee shops.  I could see a factory having more work than they could handle just making table tops.

http://dailycoffeenews.com/2013/02/13/new-york-citys-indie-coffee-shops-now-outnumber-big-chains/

Here is a photo of a couple of 30" X ½" thick (76cm X 1.27 cm) round table tops at DFW Airport.

 Making cultured marble, granite or onyx table tops is about as easy as it gets and can generate some fast cash flow.  There is little set-up/labor cost involved and you can easily calculate exactly what your material cost will be after first determining the area (sq ft or m2), then using our ‘Material Cost Calculator’ spreadsheet you saw in our last post, to determine your total matrix cost.

To determine the area (square feet, square inches or m2) of a circle, take π (Pi) times the Radius squared. (A = π x r²)

If I want to find the area of a 30” diameter table top mold, it will look like this:

(The Radius is half the Diameter)

3.14 X 15 X 15 = 706 square inches.
706 square inches ÷ 144 = 4.9 square feet.
4.9 square feet X 5.3 pounds per square feet = 25.9 (26) Pounds Total Matrix Mix.

Matrix material cost varies depending mostly on the cost of resin.  Here in the USA, resin prices vary between $1.50 to $1.75 per pound, giving us a total matrix cost between .59¢ to .66¢ per pound.  Using an even .60¢ per pound matrix cost X 26 pounds tells us our raw materials cost $15.60.

View my previous post Determining Your Material Cost to learn more about how to calculate your total matrix mix cost.

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Determining Your Material Cost

The subject of material cost to produce cultured marble always comes up when someone is putting together a business plan.  Even though your matrix only consists of 25% resin it will be your biggest raw material cost so we’ll concentrate on that first.

Worldwide, I have seen resin prices vary from $2.00 USD to $3.50 USD per kilogram.  The price you pay depends on where you buy it and quantity you're purchasing.  Here in the USA and in Canada, resin prices should be in the $1.55 USD to $1.70 USD per pound range. (Make a note that I referred to cost per pound here in the USA.  Most markets outside the US and Canada will probably use Kilograms.)  Obviously, if I’m purchasing a full 20 foot container of resin from the manufacturer I’m going to pay less per kilogram than if I buy smaller quantities from a distributor. 

Crushed limestone or calcium carbonate makes up the remaining 75% of your marble matrix.  Limestone is available everywhere in the world and is usually quite inexpensive.  Even though it’s the bulk of your matrix it’s only going to be about 10% of your total matrix mix cost.

Every manufacturer will use some consumable supplies that you’ll also want to include in your cost.  You will use gel coat to seal your marble and give it a non-porous, stain resistant quality, mold release waxes so you can easily remove your products from the mold, tooling clay to make radii when needed, tape for your divider bars, pigments for obvious reasons, etc.  These quantities will vary depending on what you’re manufacturing but I’ve found adding 20% to your resin and limestone cost to be quite accurate.  

If you know what your resin and limestone/calcium carbonate/filler costs are, you can use this Excel sheet to calculate your cost in Kilograms, or this Excel sheet to calculate your material cost in Pounds.   Both are using U. S. Dollars (USD).

Note:  There are two pages on each Excel worksheet.  Click on the tabs at the bottom of each file to view both pages.

Adding a Manufacturing System to an Existing Cultured Marble Factory

I have visited a lot of cultured marble factories that have been in business for many years, and still do not have a Manufacturing System or conveyor equipment to move the molds through the manufacturing process. There is no reason not to have this equipment. Let me explain how a cultured marble conveyor and storage system will pay for itself in a short period of time, maybe a year or less.

Labor Savings:The equipment in the photo below (I’m showing only the storage racks) was installed a little over a year ago. The shop manager in this factory told me that immediately after they installed it, they finished on Wednesday what it was taking them till Friday to complete. That’s a huge 40% reduction in labor cost! If you produced the same amount of product with only one less employee, that itself would probably pay for the equipment in a year. If you had eight employees, six people would be capable of producing the same amount of cultured marble products per day.

Increased Production:This same factory is producing between 35% to 40% more marble today than they were prior to installing the equipment a little over a year ago. It’s not uncommon to find that a cultured marble shop that is no longer taking any new customers because their production capacity is maxed out. If they would simply install some mold storage and conveyor equipment, they could possibly double their output each day/week/month. If they increased their production only 20% per year, this would pay for the equipment in a year.

Space Savings:You can save an incredible amount of space with the equipment. Each level of each section of storage rack in the photo below is 96 square feet. As you can see, there are five levels in each one of these racks. That is 480 square feet of mold storage space per one, five-level rack. If you take this 480 total square feet per storage rack set, X the five sets of storage racks, you’re looking at a total of 2400 Square Feet of mold racks. That’s a lot of molds in 480 square feet. If this factory had these molds in their factory without the storage racks, they would have wall-to-wall chaos. It would not be possible to move them through the manufacturing process.

Cut Insurance Costs: When you install your equipment, one of the first calls you should make is to your insurance company. Your workman’s comp and liability insurance premiums should drop with the installation of your equipment. You and your employees will never have to lift a mold again. When you reduce your risks, you will reduce your insurance premiums.

Attitudes: The chaos in a factory without equipment is frustrating for everybody. With a cultured marble manufacturing system, your molds will follow a systematic path through the manufacturing process. You can see this flow at http://www.culturedmarblemolds.com/equipment.html. Keep in mind that with one hand, you can easily roll the molds through this manufacturing process. You and your employees will be amazed at how easy cultured marble manufacturing can be when you have the right tool (equipment) to do the job. You’ll see an immediate improvement in attitudes and few more smiles in your factory.

Whether you have a 3,000 square foot or a 20,000 square foot factory, I guarantee you that you will cut labor cost, increase production, save space, reduce your overhead, and have happier and more productive staff in your factory.

Give me a call or fax me a hand-drawn floor plan in your factory and I’ll send you the approximate cost of what a system would cost you. We will need to know the following:

a. width, length, and approximate height of building

b. location of door - both overhead and walk in (people) doors

c. location of columns or post (if any) in the work area

d. changes in the grade or irregularities in the floor (if any) of the work area: ramps, different levels, drains, etc…

e. location of office and rest room areas

f. location of your gel coat spray booth.

Pouring Your Cultured Marble Molds Four Times a Day

I am often asked if I can turn my cultured marble molds four times per day. Of course the molds are capable of being used four times per day but the question is, is it humanly possible or even likely. The answer is no, it’s not. Even if you could, it has nothing to do with the molds but everything to do with the raw materials and equipment you use in manufacturing. A mold’s lifespan is determined by how many cycles you turn the mold and how hot you pour them.Cultured marble is made using a polyester resin with a promoter, and various kind of fillers such as limestone, granite and onyx. A catalyst is added to the mixture which reacts with the promoter in the resin, making the cultured marble cure.Several factors determine how fast your cultured marble hardens and how many times per day you can turn your molds.Promoters: Promoters are generally added to the resins by the resin manufacturers. There are different kinds of promoters, so not only the amount of promoter but what type of promoter they add will affect the cure time. The more promoter that is added, the faster the cure time will be.

Catalyst: The more catalyst you add the faster your marble will cure. There are also several different brands of catalyst and some of these are designed to give you a faster cure time. There are some products, such as bathtubs, where you don’t want to catalyze too much because over calalyzing can generate too much heat.

Climate: Heat is your friend in manufacturing cultured marble. Your cure time can be shortened a great deal with some heat. The warmer your climate is the faster your cure time will be. The faster the cure time, the sooner you can get your part off the mold and start the process over. Under ideal conditions (like a hot summer day) you may be able to get a marble product cured sufficiently to demold in a couple hours but in the wintertime, you may have to let the product sit on the mold four hours or more to cure enough to remove it from the mold.

Equipment: A heat tunnel (Equipment) is an important factor in turning your molds more times per day. You have to spray gel coat on your mold prior to pouring your cultured marble matrix on it. This gel coat has to be cured prior to pouring your cultured marble. Running this gel coated mold through a heat tunnel as you see in the photo below, drastically shortens this gel coat cure time. Heating this gel coat can cut the gel coat curing time by half or more, especially in a cold climate. In a cold climate, it is not uncommon to have a gel coat cure time of 45 minutes to one hour, and a heat tunnel can cut this time down by 50 to 60%. Having the mold warmed up during this process will also cut down your cultured marble gel and curing time considerably.

Now that you have learned some tips on how to ‘work towards’ turning your molds four times per day, let me say that it is unlikely that you will ever turn your molds four times per day regardless whose molds you use or how much experience you’ve gained working with the raw materials. It’s just not realistic to expect that in an eight hour day, you can setup a mold (divider bars), wax it, wipe off the wax, spray your gel coat, let the gel coat cure, pour your cultured marble, let the marble cure, de mold your part, and go through this process three more times in a regular eight hour day. Pouring your molds two times a day is feasible, so when you’re putting together your business plan, figure the maximum times you turn your molds will be two times per day. When you have all the facts and details, you will find that you can put together a very attractive P/L statement by planning on turning your molds only once per day, as most cultured marble factories do. If you have more questions on this, give me a call at (408) 230-3616 or e-mail me at doyle@culturedmarblemolds.com.

There is also a lot of facts on the Frequently Asked Questions (F.A.Q.) page at:http://www.culturedmarblemolds.com/cmmfaqs.html.