As lead times shrink and the cost advantages of importing products erode, many manufacturers are finding viability in on-shoring production to domestic sources.
That’s the lesson R. J. Vedovell Inc. is learning.
While being a distributor of industrial rubber products was historically profitable for the Zeeland-based company over its 45 years in business, the company began to shift its strategy during the past seven years from strictly importing and distributing products to now doing more in-house manufacturing.
This shift was largely driven by customer demand for a greater variety of products with shorter lead times, as well as the diminishing benefit of buying from overseas vendors, said Robert Karabensh, quality manager at Vedovell.
“Being a distributor, we have to go overseas for some of these rubber products — it’s part of doing business,” Karabensh told MiBiz. “But more importantly, the cost-benefit of doing business overseas is going down, plus the lead times are astronomical to get your products in from overseas. So, more and more, you’re seeing a turn where it’s not that great of a value to buy overseas.”
That realization continues to fuel the steady growth Vedovell has enjoyed since 2008. As more companies in-source their operations and close international factories, Karabensh said he thinks Vedovell will continue to grow its manufacturing arm to accommodate those customers.
Additionally, Karabensh said Vedovell wants to encourage the growth of domestic manufacturing, especially in West Michigan, to provide better products when their customers want them.
“Having to go overseas for products just to be competitive has changed our thinking, and that’s why we’re looking to do more manufacturing here,” Karabensh said. “We have customers right now who know we buy from overseas, but they have to have certified Made-in-America products. So, we’re finding more and more of a demand for us.
“You can’t always just sell the cheapest product. People have started to realize that there’s some value to American-made products.”
Karabensh anticipates this realization will drive demand for products that are certified as being entirely made in the United States as many companies close their overseas manufacturing plants. He said this in-sourcing trend led some of Vedovell’s customers to ask about the company’s in-house manufacturing capabilities, capabilities that, until recently, Vedovell did not have.
The new direction began when Karabensh joined the company. Because of his background in manufacturing, Karabensh saw a missed opportunity that didn’t occur to owner Rudy Vedovell. To offer better service to Vedovell’s customers, the company had a chance to manufacture some of the more basic components in-house instead of buying in large lots from overseas suppliers.
“I was looking at some of the products he was purchasing and asked if maybe we should consider manufacturing some of these,” Karabensh said.
On-shoring the manufacturing began with more basic products like custom spliced o-rings and gaskets.
“Slowly, we began doing more of what we call ‘splicing’ of o-rings, custom-made o-rings,” Karabensh said. “Eventually gaskets came into the scene, and I said to Rudy, ‘Why don’t we start making these? It doesn’t look all that hard.’”
This year, the company added a new capability, frame gaskets, that Karabensh hopes will net the company even more business in other industries.
“We don’t have a customer on board yet, but there’s a lot of potential right here in West Michigan,” Karabensh said. “Several environmental test chamber manufacturers use this type of product.”
Manufacturing custom parts dovetailed with the company’s flexible approach to business. With a shop of only 10 employees, Vedovell couldn’t directly compete against larger distributors with a global reach. Instead, Vedovell focused on offering customers value the behemoths couldn’t: versatility and agility.
“Being small, we have a lot of competition out there. What’s really been our strong point is our ability to react to our customers’ demands,” Karabensh said. “We are a much smaller company, so we can react quickly, and I think, especially in this day and age, that seems to be what people are looking for as far as having to deal with vendors.”
Currently, manufacturing makes up only 5 percent of Vedovell’s $5 million total annual sales, but the company plans to grow that piece of the pie since demand for custom parts with short lead times is growing, Karabensh said.
“Our focus is to keep bringing more and more manufacturing to this area (West Michigan),” Karabensh said. “They (customers) want to have the product in their hands the day they purchase it. Being small has been a big advantage for us, just for the reaction time.”
The industries Vedovell currently serves include automotive, medical device and water filtration. However, wind turbine manufacturers recently were one of the company’s strong market segments.
“When wind was a hot topic, we were doing quite a bit of business making seals for the wind bearings,” Karabensh said.
Looking forward, Karabensh said the company will increase its focus on in-house manufacturing to take advantage of the growing demand for American-made goods and just-in-time, custom production.
“Our focus right now will be primarily on gaskets and products we can make right here in our own facility,” Karabensh said. “We think the opportunity is to keep promoting manufacturing and production right here.”