Among American manufacturers, offshoring has always been a particularly dirty word. Taking jobs from American companies, sending them overseas ... and the end result? A competitive product at less cost. Yet, as a manufacturing alternative, it’s not always the right choice.

Offshore quality assurance and product quality, though generally better than it has been in the past, still isn’t consistent. Transportation costs remain a factor. And sometimes those necessary relationships between client and supplier — a critical element of long-term work — are not truly developed due to distance, language issues and even cultural barriers.

These are all factors that Sanmina-SCI/Turtle Lake has recognized and used to its advantage to remain competitive, both against offshore competition and in a struggling economy.

A long history

The company, a full-service enclosure assembly, plastic injection molding and aluminum die casting facility, began as Hartzell Manufacturing in 1956.

“What has always been different about our Turtle Lake plant is that it has been a dual material facility,” says Phil Sorensen, Sanmina-SCI/Turtle Lake vice president and general manager. “That’s very unusual; usually you are one or the other.”

The firm remained under Hartzell family control until the mid-1990s and did very well throughout its history.

“At the time Jim Hartzell retired, we were the No.1 molding supplier to a major paging company,” says Sorensen.
The company then passed through a series of owners before being acquired in 2001 by Sanmina-SCI, a San Jose-based Electronic Manufacturing Services (EMS) provider focused on end-to-end manufacturing capabilities and technology solutions.

“We are one of three molding facilities and the only die cast facility in Sanmina-SCI,” says Sorensen, noting that Sanmina-SCI’s has molding facilities in Mexico and China. “Only about 10 percent of our production is for our organization; the other 90 percent is for external clients. We are a fairly independent entity.”

That client base includes roughly 70 OEM users and a client base of about 150 companies with 3,500 active part/assembly numbers.
“In terms of our molding operations, we do a lot of work in the medical market, in data storage and high-end consumer electronics, along with industrial parts,” he says. “On the die cast side, we’re focused on power generation, power sports and defense.”

Competitive advantages

Over the decades, the consistently profitable Sanmina-SCI/Turtle Lake has made strategic moves that have helped it thrive. The company has posted 48 consecutive quarters of profitability.

“We never got into automotive,” says Sorensen. “We’re just not playing that game.”

But that decision is just part of a greater overall operating philosophy.

“We’ve also learned that being well-diversified is important,” he adds. “If you’re not, a bump in the road means you’ll end up in the ditch. We never let any one job get too big.”

The company has also focused on remaining competitive against both domestic and international competition, which includes keeping an eye on what’s going on around the globe.

“We’ve been aware that manufacturing costs are going up in China,” Sorensen says. “And IP issues are helping to bring some of the work back to the United States.”

Knowing that, Sanmina-SCI/Turtle Lake has recently pursued two projects to boost its competitive advantage. The first is that the firm has earned International Traffic and Arms Regulations (ITAR) Compliance.  This compliancy is required for firms that manufacture components for items used in the defense industry, which Sanmina-SCI/Turtle Lake currently does. Secondly, the company will have achieved ISO 1345 certification in October and is in the process of constructing a Class 100,000 clean room for medical assembly, a growth area for the company.

Head to head

Sanmina-SCI/Turtle Lake understands the factors that influence a company’s decision to offshore a job. That clear knowledge has helped it bring back work that was formerly completed overseas.

Sorensen says that cost remains a significant factor in the decision-making process.

“It is possible to meet or beat China on price,” he says, however, he stresses that this particular approach is not about cutting corners. It’s about making a better tool, using better machining to reduce waste and automating when possible.

“Where we compete is when we can get our NPI [New Product Introduction] teams involved from the very beginning on a project in the design phase,” says Cookie Frankenberg, program manager at Sanmina-SCI/Turtle Lake. “We encourage our customers to be involved in the entire process. Often our manufacturing and automation engineers will remark that they wish they’d been involved in the design/assembly process sooner so as to maximize the potential long-term opportunities to the customer, such as ease and profitability.”

Sorensen says this often happens on take-over jobs.

“We’re accustomed to take-over work,” he says. “That’s also where the need to have people involved in the process from the beginning is the clearest — we can see where the changes and modifications could have made a real difference.”

That collaboration helps in a variety of ways, from more efficient tooling to savings in assembly.

“We’re not the cheapest guys out there, but we don’t expect to be,” adds Sorensen. “That’s not our main focus. Our focus is on being a consistent performer that anticipates the needs of our customers and stays flexible. In fact, we often go to our customers with unsolicited ideas.

“For example, a client may be able to come to us with firm material requirements, and our staff will often suggest a better material solution, given our broad background in resins and materials,” he says.

Sanmina-SCI/Turtle Lake staff will build prototype molds that address some of the client’s concerns and run it in several different types of plastics, presenting those solutions to the customer.

That type of relationship building also translates with foreign customers as well. Sanmina-SCI/Turtle Lake has been named supplier of the year for several overseas customers including a major die cast engine part firm, and when that company was looking to outsource more of its ATV work, it didn’t have far to look.

“There are some new Japanese operating philosophies in play,” explains Sorensen. “Instead of keeping everything internal, they’re now looking for partners to take over some of the production, and then both parties have some skin in the game. Because of our relationship and performance, they came to us.”

Sorensen says there are a number of elements that helped bring in the work.

“First of all, when the customer machines our particular parts, their scrap goes down about 20 percent,” he says. “And our metal is cleaner, with less inclusions and hard spots. Those are things that can really add up to a competitive advantage.”

In many ways, offshore competition is not much different than domestic competition — it’s simply about bringing your “A” game every time.

“We really try to fire on all cylinders every time,” says Sorensen.

How this happens is really no secret.

“We’re a company that has a lot of tenure,” says Frankenberg of the 240 employees at their facility. “We really know how to support each other and make things happen. We also understand that we can’t stay in constant survival mode in this economy, either. We still have to take risks and keeping pressing forward.”

By Laurie Arendt

Laurie Arendt is editor of CRW. She can be reached at crweditor@crwmag.com

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