The Great Wail Of “China”

Outsourcing of products and components to overseas locations is on the rise in the welding supply industry.

Toxic toys. Tainted toothpaste. Poisonous pet food.

Welcome to the realities of the 21st-century global economy.

The proliferation of imported product has become as much a fact of life in the welding supply industry as it has in virtually any other. According to the U.S. Commerce Department, in 2006 the United States imported $2 trillion worth of products from more than 150 countries. Census Bureau data indicate that in 2006 the United States imported nearly $1.5 billion in welding and soldering equipment, up from $865 million in 2001.

The five biggest exporters of welding equipment to the United States today are Japan, Germany, Canada, Mexico and China. The value of all of those nations’ welding equipment exports to the U.S. have increased in recent years, but none so dramatically as China, from which the United States now imports nearly eight times more welding equipment today than it did in 2001—from $12 million in 2001 to $95 million today. And that doesn’t even take into account products that are assembled in the United States but for which components are sourced overseas. Given recent high-profile recalls of Chinese-manufactured toys, pet food and other products, is there cause for alarm?

Welding & Gases Today surveyed distributors to find out if they or their customers felt any concerns about the safety of products in this industry that are sourced from overseas. For the most part, the answer is no. Distributors understand the economic realities that drive American manufacturers to source components from overseas or, in some cases, to move manufacturing offshore entirely, and an established, positive relationship with a manufacturer generally will not be compromised by the location of that supplier’s manufacturing facilities. Distributors also don’t hesitate to do business with a foreign manufacturer that they trust to provide a safe, quality product.

The key is the level of confidence a distributor has in his or her suppliers’ commitment to quality and safety. When that is present, the product’s country of origin becomes less relevant, although many distributors and end-users, if given the option, still prefer to buy American. But when quality is compromised, all bets are off.

End-Users Learn to Accept
“I think we all would like to buy U.S.-made products, and there is a certain type of customer that still doesn’t like buying products from overseas,” says Colorado Welding Supply (Colorado Springs, CO) President Eric Younger. However, as more and more well-regarded American companies begin manufacturing overseas, for the most part customers are adjusting. “There’s not much we can do when we start getting contact tips from an established manufacturer in a package that says, ‘Made in China.’” Even so, brand loyalty only counts for so much with some end-users, Younger notes. “Some of our customers were willing to pay more for a certain manufacturer’s products because they were made in the United States. When the manufacturer moved offshore, but did not lower their prices, it became nothing more than a name, and customers weren’t willing to pay those prices anymore.”

Over the past couple of years, Patrick Wilke, president of Sierra Welding Supply Company (Sparks, NV), has seen more and more customers asking where a particular product is made. “If it was manufactured overseas, a lot of times it won’t necessarily stop them from buying it, but they’ll look a little harder and see if there’s something else that’s American made.”

John Hutchings, president of Tri-County Industrial Supply (Alvin, TX), says 15 percent to 20 percent of his customers still express reservations about products that are made overseas. “Just about daily, I hear somebody say, ‘I don’t want that junk that’s made in China.’ But there are components inside of American brands that are manufactured overseas and assembled here, and I point that out to them. I think they know that already, and it’s just a matter of grumbling.”

A Question of Quality
Everything else being equal, Earlbeck Gases & Technologies (Baltimore, MD) President Jim Earlbeck prefers to keep his money in the United States. But he has on occasion sold welding machines from foreign manufacturers who offered technology not available from domestic manufacturers. “They were well-recognized brands with their own engineering teams and a good track record,” he says. “Right now we’re not seeing a lot in this industry that comes out of China except for low-tech stuff like chipping hammers and safety gloves. When the high-tech stuff starts coming in from offshore, then I’ll be a little concerned.”

Clovis Equipment & Supply (Clovis, NM) doesn’t stock a lot of products from foreign manufacturers other than cutting torches and regulators that he offers as less-expensive alternatives. “Safety-wise, they seem to hold up just as well,” says President Mark Steinle. “But you can tell the difference in the quality of the material. The cutting torches don’t seem to hold up as long.”

Patrick Wilke of Sierra Welding Supply Company notes that in a handful of cases he has noticed a decline in quality once a manufacturer began outsourcing overseas. “We’ve complained, and we’ve switched a few vendors because of that,” he says. “If we begin to have quality problems with a product, we have to take action. We are what we sell.”

Trust and Loyalty
Depke Welding Supplies (Danville, IL) President and CEO Curt Towne sees overseas-manufactured products becoming more and more prevalent. “Just a few years back, it was difficult to find things that weren’t made in the States. Now we’re no different than walking through Wal-Mart or anywhere else—the phrase ‘Made in China’ or wherever else is popping up on a lot of odds and ends we put on our shelves.” Although Towne notes that it’s “disappointing” to see so many suppliers outsourcing their manufacturing, especially since he sees the Chinese market as a kind of “Wild West” because “they don’t play by all the rules that we do,” it hasn’t stopped him from doing business with those manufacturers. “We put a lot of faith in our suppliers and rely on them to make the right choices for products.”

Selling product manufactured overseas is a fact of life now for welding supply distributors, observes Carol Hill, treasurer of Willard C. Starcher (Spencer, WV). She puts her trust in her suppliers to ensure that the products coming from offshore are safe. “My suppliers are very quality companies, so I expect them to be concerned about product safety. It’s their responsibility not to supply me with bad merchandise.”

For Janice Bandy, president of Metroplex Service Welding Supply (Fort Worth, TX), the reason she tries to avoid stocking too many products that are manufactured overseas is a practical one. “Our customers want product quickly, and we can’t count on that when we buy from overseas, unless that company has a location established in the United States.” Liability is another concern: If there’s a problem, she wonders, who do you sue? “Fume litigation has really made people aware of the efforts that have been put forth by our American manufacturers to represent and help all of the distributors who have gone through litigation,” she says. “That stands for a lot in our minds.”