FAIRLAWN, Ohio—Some rubber and synthetic latex glove manufacturing is quietly and slowly returning to the U.S.
And more probably will come in the next few years, according to William L. Howe, vice president, molding and coating services for Kent, Ohio-based DipTech Systems Inc. It's unlikely huge numbers will return soon from Asia, where Western manufacturers have been migrating for the last 15 years, but over time it could develop into a decent U.S. base, he said.
That's a trend Howe and DipTech, a latex machinery maker, have been observing for awhile. “As an equipment supplier, we see the leading indicators early on saying that manufacturing is coming back to the U.S.,” he said.
The whys are simple: supply chain woes, rising production costs in China and quality issues that concern manufacturers and distributors, he said.
Couple that with growing political instability in areas where manufacturing is located abroad and the conditions are “potentially ripe for a modest resurgence in dipped goods, particularly that of disposable gloves,” in the U.S., said Howe, who has a broad background spanning more than 20 years in the industry.
Add to that the dramatic rise in the price of natural rubber latex and its impact on the production of latex products. Those issues have caused U.S. firms to re-evaluate the locations of their manufacturing centers and supply chain channels, Howe said at the International Latex Conference, held July 26-27 in Fairlawn.
“The high level of automation needed for (dipped goods manufacturing) essentially has already been developed, including automatic stripping of gloves from formers and automatic packing,” he said.
Howe isn't alone in his observations. Tim Killian, CEO of Akron-based Killian Latex Inc., and D. Thomas Marsh, president of Centrotrade Minerals & Metals in Chesapeake, Va., also said they are beginning to see some specialized latex product manufacturing returning to the U.S.
Several other suppliers and manufacturers at the conference concurred, although none have been following the trend as closely as Howe.
During the conference, he presented a paper, “Shifting Trends in Dipped Goods Manufacturing,” to a packed audience and detailed the flight of natural and synthetic rubber product manufacturers and suppliers from the U.S. to Asian countries, starting in the early 1990s with the biggest mass exit occurring 10 years ago.
Disposable rubber latex gloves were a significant part of that migration. However, key dipped product segments—balloons, condoms, breathing bags and catheters—remained in the U.S.
Since the exodus of most disposable glove manufacturing, he said, several trends have developed:
— PVC gloves have become a dominant Chinese manufactured product with the U.S. market the primary consumer;
— Malaysian producers dominate disposable natural rubber latex glove production, with Thailand, Indonesia and Sri Lanka also high producers;
— Nitrile gloves, which have drawn more interest and sales because of rising NR prices, primarily are manufactured in Malaysia, China and Thailand; and
— China has been the fastest growing location over the last decade for new disposable glove and condom factories.
However, Howe pointed out that Chinese wages are rising at a 17-percent clip yearly. Citing figures provided by a Boston consulting group, he said that because net labor costs for manufacturing in China and the U.S. will converge by 2015, more U.S.-made products will begin appearing in the next five years.
Howe said that communication with Chinese manufacturers remains a source of difficulty for businesses in the U.S. and elsewhere, as is on-time supply chain channels.
“Earlier this year, as the U.S. economy started improving, container shipments out of China became more difficult to control,” he said. “Many goods were detained at the China port for weeks awaiting availability of shipping containers, due to shortages.”
U.S. draws interest
Spurred by some growing dissatisfaction with the China glove supply chain, Howe has seen renewed interest in dipped goods manufacturing in the U.S. for firms that left America for Asian sites years ago. Examples he gave include:
— A breathing bag manufacturer of both latex and chloroprene bags has begun a major expansion at a production facility in the U.S. rather than consider a location in China or elsewhere in Asia.
— A longtime disposable glove distributor of latex and nitrile gloves, after experiencing supply chain irregularities and pricing increases over the last few years, has acquired a factory in the U.S. suitable for production of more than 200 million disposable nitrile gloves annually. Dip equipment is in the early engineering phase, and the plant is scheduled to be on line in 2012.
— A supplier of natural rubber latex electrical linemen's gloves recently expanded its U.S. operation rather than locate the factory in a latex producing country because the product has strict quality requirements that dictated the location of its operations remain near its customer base.
— “In a sister industry, a PVC disposable glove manufacturer and glove distributor recently commissioned a new dip line capable of producing 30,000 disposable food-handling gloves per hour at a U.S. location, spurred principally by a primary customer in the food industry” who did not want sole reliance upon Chinese sources, in case another hiccup occurs, for its glove inventory.
In addition, more contract latex product makers have popped up on the sparse U.S. rubber latex manufacturing landscape of late, Howe said. They make dipped goods from small to moderate quantities. “Manufacturing small volumes of specialty items in Southeast Asia or China typically is cumbersome and difficult to control regarding product quality.”
Although DipTech is primarily a machinery producer, it also has a contract product manufacturing business, called AmeriDip, which has been growing steadily for the last few years.
“Does this mean that by the year 2015, disposable gloves can be made at a lower cost in the U.S. than in China?” Howe asked. “Don't scoff too quickly. Given rising labor costs in China, shipping costs from overseas, cost of quality, and opportunity cost lost due to supply chain issues, it may very well happen.”