Fall 2004

“Made In America” takes on a new meaning for many companies in the United States, including those run by Hobart and William Smith alums

by Mary LeClair

In the 1980s, the farming industry, particularly in New York State, declined dramatically, and Ferris Industries Inc., a 100-year manufacturer of machinery for dairy farmers, realized they either had to convert to a new product line or go out of business.
Ferris began researching products that could be manufactured utilizing existing machinery and technology. In 1986, the company saw its opportunity and began manufacturing commercial mowers, said Jeff Ferris ’65, human resource manager at the company.

Since then, the commercial lawn mowing and landscaping industry has exploded, and Ferris has kept pace by introducing and patenting improvements to mowers, including the first hydrostatically driven walk-behind mower and the first independent suspension system for a riding mower. The company once thought of as soon-to-be-extinct reinvented itself and now stands among the top four manufacturers of commercial mowers.

Ferris Industries was able to quickly adapt, which is a valuable skill in today’s marketplace. Manufacturers in America have witnessed dramatic changes over the past three decades, including what it means to be “made in America.” To increase profits, U.S. manufacturers have moved their production lines offshore. Many American companies now look to Ireland for computer chips, China and Korea for castings from joint venture foundries and Germany for steel production.
Economists are forecasting that niche markets, which are highly defined and can be targeted for direct promotion, are likely to become a larger part of the U.S. manufacturing landscape.

“If American manufacturers cannot hope to match the low costs of producers elsewhere in the world, they want to convince consumers that the higher prices they charge are justified because their version of the product is special in some way,” says Hobart and William Smith Economics Professor Judith McKinney. “What this means, basically, is that the best way for American manufacturers to compete is to convince consumers that what they manufacture is somehow distinctive, and cannot be produced or reproduced by manufacturers elsewhere.”

America’s competitive edge has become technology and product design, along with a unique ability to thrive in niche markets. Several companies operated by Hobart and William Smith alums have flourished by finding and capitalizing on niche markets—making something unique and, like Ferris, continuously improving their products.

A small sampling found alums across the country manufacturing everything from medical supplies, handbags and cigars to grommets, beer and furniture. All of the alums interviewed have been able to keep more than half of their manufacturing jobs in the United States.

Establishing A Niche

William Sherman ’85	Laurence Sherman ’92

Enhancing the quality of its lines of cigars and cigarettes while maintaining their standing as innovators and leaders in the tobacco industry has been the focus for Nat Sherman International. William Sherman ’85, executive vice president of the company, along with his brother, Laurence Sherman ’92, oversees manufacturing operations in North Carolina and the Dominican Republic.

Despite their continued success, William Sherman admits achieving such numbers is not smooth sailing. “It has been a challenging time for manufacturing,” he says.

The Shermans have made strategic moves that have allowed them to enjoy steady growth for the past 15 years. They relocated their cigarette operation from Manhattan to Greensboro, N.C., and invested in new technology and machinery that is able to produce products more efficiently than before. William Sherman says it made sense to bring production lines closer to supply lines in the South, and to get established in a region that traditionally has been a better political environment for their highly regulated industry.

Of course, all that means nothing without superior merchandise. “What defines a Sherman product from the competition is the quality,” says William Sherman. “We are not about producing fast or cheap products, but about producing a quality product. If customers like it, they will come back.

“We want to be the best at what we do. You have to find your identity and keep your niche.”

As the vice president for F. X. Matt Brewing Company in Utica, N.Y., Fred Matt ’81 is all about “branding.”

Matt Brewing’s hottest brand is Saranac Beer, and its biggest seller is Saranac Pale Ale, with Saranac Adirondack Trail Mix—its famous “mixed pack” including Pale Ale, Saranac Adirondack Amber, Saranac Black & Tan and Saranac IPA—a close second.

The chief reason for the beer manufacturer’s success is a move made in 1980s by Fred’s father, F.X. Matt II to concentrate on the specialty beer market, increase the focus on new products and respond to ever-changing consumer lifestyles.

“In the 1990s, the specialty beer market exploded, and we were there to ride the wave,” says Fred Matt.

As a result, Saranac is one of the best-selling specialty beers on the East Coast. Matt Brewing prides itself on an ability to develop new products and bring them to market quickly.

In order to compensate for escalating overhead, Matt has purchased new machinery and worked closely with suppliers. The results have been an increase in productivity and a considerable reduction in product costs.

“The world is getting much more competitive, but there is always an opportunity that needs to be filled,” says Matt. “We are a high-end niche product that fills that need for our customers.”

Outsourcing and Downsizing

In response to the flat economy of the last few years, Doug Mockett & Company, Inc., based in Manhattan Beach, Calif., has done what it can to cut costs, including trimming the workforce through attrition. Yet through it all, the company has maintained its superior employee benefits, says marketer, promoter and entrepreneur Doug Mockett ’63.
Mockett outsources all manufacturing requirements for his company, which designs components for office furniture. Since his products are primarily manufactured through injection molding, which is not an intensive process requiring highly skilled labor, he can afford to keep 95 percent of the work within the United States.

Still, he continues to explore working with secondary source manufacturers in China, Taiwan and Australia to reduce costs, and where it makes good economic sense, he does outsource to other countries. For example, a stainless steel drawer-pull made in China cost 80 cents, about $6 in Austria or Germany and even more in the United States.

“Stainless steel is stainless steel,” Mockett says. “As long as the quality is comparable, why wouldn’t we buy the least expensive?”

As for the future of American manufacturing, Mockett believes production will continue to go overseas because, traditionally, manufacturing always goes to the place with the cheapest labor. However, certain niche businesses, such as the American music, film, TV industries will transcend that trend. They are at the heart of what Americans do best, Mockett says.

“There are some areas of expertise that aren’t supplanted internationally,” he explains.

In 1996, Rick Isaacs ’68 was caught in a major downsizing wave while working in management for the electronics equipment manufacturer GenRad, Inc.

“I saw tremendous change in the industry, primarily driven by the need to compete with the Japanese, who took to heart W. E. Deming’s methods of statistical quality control,” says Isaacs. “Unfortunately our company—even though our prime end-product was equipment and software to support statistical quality control—never understood how to apply its lessons internally.” The company ceased operations in 2001, after almost 90 years in business.

Making the most of the situation, Isaacs re-entered the unrivaled niche market of organ building, joining C.B. Fisk, Inc. of Gloucester, Mass. “I later realized the wonderful opportunity that downsizing gave me to return to my earlier career,” he says.

Even in this 800-year-old industry, where “glacial” is an accurate word to describe the pace of modification, changes have occurred in the past decade. A member of the company’s design team, Isaacs led Fisk in implementing computer aided manufacturing and introduced the use of modern materials such as carbon fiber.

He is proud that his work is in demand internationally and can be exported, as evidenced by Fisk recently selling one of its largest instruments to a cathedral in Lausanne, Switzerland.

“So there,” taunts Isaacs, “‘made in America’ is very much alive! It’s not for nothing that someone once referred to us as ‘blue scholar workers.’”

The Future

Joe Corasanti ’86, ConMed president and COO (left) and brother David Corasanti ’90, program sales manager, pose in the product room in the French Road location in Utica, N.Y.

Joe Corasanti ’86, president and chief operating officer of ConMed Corp. (Nasdaq: CNMD), asserts that technology and an innovative, seasoned workforce in the United States typically means superior quality.

“We’ve had medical devices that we’ve sent to Mexico and, for productivity and quality reasons, we brought them back to the U.S.A. They just couldn’t get it right down there,” says Corasanti. “So this demonstrates that not all products are suitable for outsourcing.”
ConMed specializes in instruments, implants and powered surgical instruments, and also is a leading developer, manufacturer and supplier of RF electrosurgery systems and endoscopy products. The company operates 11 manufacturing facilities, three located offshore in Finland, Mexico and Canada. The product lines manufactured in Mexico compete in markets such as China and Taiwan.

ConMed has grown from a $20 million company to one topping $500 million annually in the time since Joe and his brother, Dave ’90, marketing and program sales manager of ConMed division for Endosurgery, graduated from Hobart College.

They believe that, despite the shift in manufacturing overseas, the future looks promising for U.S. medical-supply manufacturers for several reasons. Patents on medical products have precise manufacturing guidelines that must be followed. A premium is paid for medical supplies manufactured in the United States because of this country’s controlled facilities, and because American companies can accommodate the heavy burden of U.S. government regulations that many foreign countries cannot. Meanwhile, American institutions and physicians continue to lead the way with innovations that often redefine and add finer standards of quality to the products.

Still, the Corasantis believe that outsourcing is pretty hard to ignore. The economic benefits are clear.

“In China, employees earn $2 a day,” says Dave Corasanti. “It’s going to be difficult not to consider [them].”

International economist Dr. Sandra Rivera ’85* has recently conducted research on China and its accession to the World Trade Organization (WTO). She contends that China’s recent concessions during WTO negotiations provide a prime example of the economic growth possible when a poor country seeks integration with the world economy.

For the past 10 years, Rivera has worked for the U.S. International Trade Commission in Washington, D.C., and is now a visiting scholar at Purdue University’s premier think tank, The Center for Global Trade Analysis in West Lafayette, Ind. She says growth in China and other developing countries means higher oil prices for us all.

“They will demand more and more oil from a limited supply,” says Rivera. “The price is going to go up, especially in the short run, while suppliers cannot immediately adjust.”

Although offshoring eliminates some U.S. manufacturing jobs, she says, it also yields benefits. When companies can reduce costs by shifting certain operations overseas, they increase production efficiency and decrease their costs, and often pass those savings along to consumers. As a result, consumers show their enthusiasm by buying more of the products.

Simple laws of supply and demand predict that competitive prices that result in cost savings for consumers spur quantity demanded for other goods and services. In a consumer-driven economy, price is everything.

“U.S. consumers vote with their dollars,” says Rivera. “The average American doesn’t care where a product is made. If they like the style, they buy it. They don’t look at the labeling to see where it is manufactured.”

“Niche markets are where U.S. manufacturers will survive,” she adds. While the textile and steel industries are certain to go overseas, niche markets within both industries should stay in the United States.
“American jobs are not going to go away, they are going to become more specialized,” Rivera says. “U.S. manufacturers need to keep up with and study the niches, then learn to adapt quickly to market conditions.”