There's no doubt globalization has been a factor in the loss of some manufacturing jobs in the U.S. rubber product industry.
Any company with a network of factories around the world-along with the means to add more-normally will put production where it benefits them the most, be it from a cost or logistical standpoint.
One example is the Trelleborg Wheel Systems industrial tire plant in Hart-ville, Ohio. Swedish parent firm Trelleborg A.B. during the next two years will phase out manufacturing of solid tires in Hartville and transfer production to its two factories in Sri Lanka. About 115 hourly workers will lose their jobs.
A number of factors prompted the action, including the fact that Trelleborg's bottom line eventually will be bolstered by about $5 million a year. That's even after taking into account the extra freight costs of shipping from Sri Lanka, said Ydo Doornbos, Trelleborg Wheel Systems managing director.
"Industrial tires are becoming a commodity, if they are not already,'' Doornbos said. "When something becomes a commodity, it means there will be price pressures.''
A number of competitors already are moving production to low-cost countries, which will mean more price pressure. Trelleborg itself in the past decade has closed industrial tire plants in Germany and Belgium, and transferred that work to Sri Lanka.
The Hartville unit had to have a cost basis that would allow Trelleborg to compete, he said, and the wages compared to the Asian facility proved to be too much too overcome.
"Our profitability, competitiveness and growth are at stake,'' he said. "Trelleborg is looking not at one or two years, but the scenario for the next five years.''
But that's not to say that Trelleborg is inherently against manufacturing in the U.S.
Quite the contrary. In the past two years, Trelleborg units have made a series of acquisitions-including purchasing Chase-Walton Elastomers, Reeves Brothers Inc., EPG Inc., CRP Group and Kawneer Rubber & Plastics-that have added no fewer than eight U.S. production facilities. Since the beginning of 2004, the firm has boosted its U.S. employment to more than 3,000 from less than 2,000, said a Trelleborg A.B. spokeswoman.
Even Trelleborg Wheel Systems will continue to make a big push in the U.S., Doornbos said. After the shutdown, the operation will remain headquartered in Hartville and employ about 80 in the U.S., including field sales staff and workers at other distribution and warehouse locations.
Trelleborg overall has production units in about 30 countries and operations in 40, and is aiming to extend its global reach because it needs to be close to its customers, the spokeswoman said.
"That is true for research and development, sales and marketing, service and support, as well as sourcing and manufacturing,'' she said. "In our overall strategy, operational excellence plays a key role. But it is important to recognize that an efficient manufacturing structure is not only about creating a cost-efficient structure-it is also about being where our customers are.''
Servicing the customer
Trelleborg isn't the only company that follows the customer.
Yusa Corp. produces rubber automotive components in Washington Court House, Ohio, not too far from the shadows of the Honda of America Manufacturing Inc. assembly plants in Ohio. In fact, Yusa's Japanese parent Yamashita Rubber Co. Ltd. will put up a factory wherever in the world Honda establishes manufacturing, said Duane Shipley, a Yusa staff engineer.
Besides the U.S. and Japan, Yamashita has operations in Thailand, Europe and China. "We have our facilities overseas, and I think that's what pretty much every company is trying to do-position themselves so they're global companies,'' said Vincent Allgeier, vice president and general manager of Yusa's new research and development operation.
Over time, Allgeier expects that the Yamashita facilities around the globe will develop their own niches and rationalize production to some extent to take advantage of lower labor rates where possible.
Parker-Hannifin Corp.-with extensive rubber capability in both seal and hose products-is another global firm that tries to be as close as possible to customers when feasible.
But the cost of labor isn't always the deciding factor, a spokesman said. Sometimes other things are more important, such as protecting intellectual property.
"It's not always the cost of manufacturing that's the most variable cost,'' he said. "It may be possible to do cheaper, but it may not be feasible to go somewhere on the basis of cost. It's not always a question of saying, 'It costs this much here and this much there.' ''
Treating employees right
But when the decision is made that a factory must close, such as Trelleborg's Hartville unit, it's important that employees are treated fairly, Doornbos said. "That's not always the case around the world at other companies,'' he said. "People are definitely the foundation of the company.''
In the case of the Hartville plant, that meant giving notice two years ahead of time. So far, the employees have responded and work at the factory is going well, he said.
"Management is trying to create an environment where there will be no disruption in production and service to customers,'' Doornbos said. "We want people on board the whole way. Taking care of employees to me is very important.''
Production at Hartville will be at normal levels through 2007, while Trelleborg buys new machinery to be installed in Sri Lanka. Manufacturing gradually will transfer during 2008, and in early 2009 the remaining production will be transferred and operations will cease at the Hartville factory.
Trelleborg bought the former Teledyne Monarch Rubber Co. operation in 1991.
