Latest / Pitch to Product / Why It's 5x More Expensive To Manufacture In America
Transcript
- Dan Peter 10-2-26: It w it just doesn't work out the numbers. But you have to decide whether or not you want to be that cost ineffective to get started on your business, right? Yeah. The our clients can, we would never I wouldn't recommend we wouldn't partner with our client that way because they're gonna automatically fail with that that kind of money invested. Hey, welcome to another episode of Pitch the Product Podcast. This is a one that you called out this morning. You said, Hey, I got something we want to talk about. And here we are. I'm Peter. I'm Dan. And we are sponsored today by ArmGlide. Yeah. So in the link, check it out. This is one of this is an amazing product. Steve just went over to the Potucket. It is actually no, they're now the Woos, right? Polar Park. Yep. And they had a amazing day. The mascot loves it and so does the team. So if you have shoulder problems, get your arm glide today. Good. Well, Pete, I this was a spur of the moment podcast. Sander came into my office this morning and I keep bugging Sander about, you know, we let's try to do some more domestic manufacturing of product. so you know, I wait a minute. I didn't know this was a glasses on. Well, 'cause I can't no, I can't read. Small print here. So I'm not trying to look sophisticated. I'm not trying to look smart as we would say in New England. no, this is something that obviously is a a bone of contention with some of our clients that wanna make something in the United States. And again, we always tell people we'd love to do that. The aggravation of dealing with a coun company that's you know ten thousand miles away or eight thousand miles away is well this is also proof that we do have domestic manufacturers. Yes, right. For certain products. But I I again when he came in today, he I kept bugging him about, hey, this guy's bugging me, this manufacturer who I'd done business with previously wants to you know, wants to help us with manufacturing. And again, my background goes back to you know, working with domestic manufacturers as well as oversea manufacturing. And I'd love to give, you know American companies the opportunity to earn our business. And this guy assured me that he could compete, relatively speaking, by the time you get tariffs and by the time you get shipping involved that he would be competitive. So I said, well, you know, let's give it a shot. We'll give it a shot. So this is a silicon piece that we had quoted. and again, this is probably one of 50 products that we've quoted domestically this year. and not to my surprise. I mean, I was hoping, but I'm just gonna re read the numbers for you. Yeah. so a the overc this is a silicon piece, so it's a a piece that goes It's a silicone molded tool. So yes. Well it's a sil no, it's actually a silicone molded piece that's made from a tool. Right. Okay. Yeah. And this piece goes onto a w you know, a product. So it's one of many pieces that go go get made to support a a full product. Okay. And you know, the quote was for two let's just start with two thousand, because that's generally what we'd like to you know, keep as a smaller order. the piece price on this is sixty cents, right? So, you know, one of many pieces that are gonna make up a product that, you know, potentially could this is one component. Yeah. So again, this is this goes back to validate and prove that we have multiple factories that are gonna do each of the components. We bring it back together in our assembly facilities. And that is how we have a network of manufacturers to get your job done. Correct. This piece was 60 cents. the tooling on this, you know, was roughly twenty five hundred dollars to tool up this one particular part overseas on a tool that could run a million pieces. Right, class A or class B tool. Right. So again, the domestic manufacturer, it took, you know, several attempts to get pricing from them. It took like five emails. the one we get in China happens pretty quickly. Because they understand the drawings and we've been doing business with them a long time. They they just they get us. this new supplier, Domestic, had you know hundreds of questions. And by the time we got the quote, was you know, again, probably two or three weeks went by. so just to share with you the tooling costs. again, this is a $17,774 tool to us. So that would be. What's twenty five hundred, you know, that's what five, six times more expensive to to manufacture the tool. What was the domestic tool? What was the overseas tool? twenty six hundred, twenty five hundred. So, you know, there you go with just the tooling alone, which we've always said it's you know, that is the barrier to I mean, well that that that's a non we we can't make it in the United States with a tooling charge of that high. It just it it It w it just doesn't work out the numbers. But you have to decide whether or not you want to be that cost ineffective to get started on your business, right? Yeah. The our clients can, we would never I wouldn't recommend we wouldn't partner with our client that way because they're gonna automatically fail with that that kind of money invested. they just won't have any. I'll let you finish and then we'll go back and we'll give all the reasons why. So yeah. So twenty five hundred versus seventeen thousand. Is that what you said here? Twenty five hundred versus eighteen almost eighteen thousand dollars just just for the tool. the Quote per piece is $3.19. So again, 60 cents goes into $3.19. what? Six times? Yeah, I should have brought my calculator for this one. You should have prepared me. So no, six, no, more than that. Seven, eight, nine. Yeah. Yeah. It's quite a difference. The point I'm trying to make is that the the total part sixty cents goes into this. That's like it's like eight X. No, yeah, six X, whatever. Yeah. Point is is that we cannot manufacture this particular part in the United States. Even a simple part that does not get touched by, you know, li a labor forced. Right, there's no labor involved in this. It just goes into machine, it comes out of a machine, it pops into there is labor involved, but because we just got done saying that we have to assemble this as part of multiple parts that go to make up the product itself. Right. So again. If we're gonna make it in the United States, we're gonna have to find a labor force that's you know inexpensive and that doesn't that doesn't even then the comparison here is we've taken taken the simplest part that everybody domestically has this type of machinery. This can be made in the United States, right? Everything we touch can be made in the United States. But if you're willing to spend eight six to eight X more, is the consumer gonna pay for that, Dan? No, not at all. Not at all. So Again, the rant that I have today is that I've seen this now probably 50 times this year. There's not a single time when we've gotten a quote for a simple part that could be manufactured in the US with limited touches. we're still, you know, five or six times more than what the price would be overseas. And this piece price of three dollars and nineteen cents is actually more than the final product's gonna cost, you know, overseas that we can now sell for nineteen ninety-nine in You know, as a retail price and a cost of three dollars and nineteen cents, we we're paying that for a single part of multiple parts. Right. So I we just want people to know that we do this every day. We try to find ways to have something made in the United States all the time. It just doesn't work out. And this is proof of it. And I just wanted to share that today because it's frustrating that our team has to spend this much time to get a quote and then be this disappointed with the numbers. Look at let's let's have an honest business conversation. We've been doing this for a long time. There's plenty of podcasts that we say this, right? We're now in a prove it society. Like I want to prove it to you that this is what what why it makes no sense. So let's go that. I I mean, you you had 50 of these. Bru Bobby and I probably talked to 50 people that ask this question almost a every week, right? And when you start off and you don't know what you don't know, it seems very logical, right? All the news. Everybody says, we should do more domestic manufacturing. We should do this. So why not make it American made? Do you think for a second that if the costs were equal, I we would not like, why would I want to go overseas to make this? Absolutely. We would we we get the product to the market faster. we don't have the issues with tariffs and customs. Of course we would want to make it in the United States. Okay. So The biggest reason why is because would you rather have this part for sixty cents or three dollars and sixteen cents? Correct. And would I rather have a twenty five hundred dollar tool versus an eighteen thousand dollar tool? Right. Right. That means even if I round it up. The best business practices are, you know, what does not make sense. What that means is I have $15,000 more not invested in the tool, $15,000 more invested in my product. Because how do you make money in business? Margins. Margins. And what do you have to have? You have to have a product to have margins on. Right. If I have more product, can I get more profit? Correct. That's that's just the math, people. Like I can't I can't even stop it. So let me ask you, why are we dumb? Why are we wasting any time trying to get domestic manufacturing quotes? You did fifty times this year? Yeah, we've done it about I would say it's fifty fifty times. I mean, I've read a bunch of these and I've never said anything like we are today, but What does that cost us on the human capital? I know the accounting can't on answer that because we don't like again, that's not something that we focus on. But what would you think the time, effort, human cost would be to us? Yeah. I mean, there's there's several thousand dollars invested in our time to to to make sure yeah, for a for a quote over the course of an an entire year. But So this podcast really is the only way And again, we get talked into it by our domestic suppliers when we say, Look, I don't think you can compete. with our pricing that we receive overseas. And they insist that they can. so we do give them a shot. But you know, this is again proof that f even if the price was the same, they they came in at a dollar instead of 60 cents. Right. by the time you had, you know, shipping and all that, it might be more equal. But their tooling is, you know, five or six times, you know, that of what we could get overseas. And the one overseas, folks, just so you understand, that's a one-time charge. If we need to retool, you'll never have to pay for the second tool. If the factory will do it for free. It's already the million half million to a million piece unit. We've already, you know, they've already made their their investment back, you know, on all the millions of pieces they or even hundreds of thousands of pieces. Let's let's talk about also why it's so important. So first of all, let's just focus on the tool, right? If I the the big talk is obviously tariffs, right? In the last two years, that's all w everyone's talking about. Are there tariffs on bringing the tool here, the way we operate? Like do I have to pay twenty five if do I have to pay tariffs on twenty five hundred dollars? No. It's over there. Right? Do I have to pay tariffs on the sixty cents per unit? Yes. Yeah. Even if I had thirty percent or forty percent or whatever those tariffs are, yeah. It's still cheap. That's a good question. I'm not sure on the tariff if we have to if I wanted to bring it here, I'd probably have to pay some sort of tariff. Yeah. But Do I bring it? At least the freight you would definitely freight's where the cost of their tool goes. Very heavy. Why would I do that? Why don't I just leave it where I can make it? So here's what I always tell people also the reason why we don't want the factory to ever be the partner or make the tool for you and run it over per piece price, I'd rather you own the tool. Why is that? Because At the end of the day, I don't want anybody using that tool and we're well, we're not using it. Yeah, plus you can also depreciate it. You can depreciate it. It's an asset. So there's a million reasons why this is your first real investment. And I know it's a big one, but yeah, if you're getting quotes for your domestic tool for $18,000, this is a good reason to give us a call because that same tool you have proof here on a simple silicone product is a fraction of what you would do. Yeah, just to get back to your tooling thing. So obviously it's an asset, but you also want to own the asset because you don't want someone running parts off of your tool. Thank you. And if it's owned by the factory, then they have every right to great point. So, you know, you do want to, you know, keep that proprietary asset in your pocket. Not to mention the fact that when you move on from, you know, y if it's an acquisition and you want to sell your your brand and your or your product, the tools go with it. The tool goes with it and it's an asset. You can you can make money on your tool or at least get your money back. Right. But again, th the today's rant you know is more about you know, I immediately said to Steve, let's do a little quick podcast because I I've got to start talking about the effort that we put in seemingly every week to keep business here in the United States or at least manufacturing. And this is the simplest silicon piece that you can make. You couldn't screw this up. Right. Well, not even screw it. I mean, w no one's gonna screw it up. Yeah, no matter where you're doing it, because it's that simple. But there's just no labor involved either. So we're talking about just the raw piece coming off a machine and Part is five or six times more expensive. So all the tariffs and all the shipping, we would never even equate to close, you know, yeah to break even on on making it in the United States. So again, yep, more proof. So what about I want it made in America? Don't people pay more for made in the USA? Yeah. Well, just ask yourself that question. people ask me that all day long. If they did, I would manufacture everything in the United States. But no one's paying seven, six to ten X more for your product. You had your margins on it. Like you're you're trying to sell something that the consumer world won't will not accept. Manufacturing didn't leave North America. Consumers needed it to leave North America to buy products. We would not have the abundance of products if we didn't have them at the price points that they get made at. Right. And that's just it. Like once you understand that, yes, people in the military, you look at I appreciate you. When you're in those theaters of conflict, I don't want to say war, but in theaters of conflict, I get it. I I support. Everything that you guys that that the men and women of the military are doing, I can appreciate that. Yes, fundamentally we want to, but there's also a reason why you're there because we're trying to keep peace. This is a this is a global economy region of the world that makes our products. Right. And until that changes, and we've tried to change it, we've moved to other places, the quality sucks. Right. It's not as good. You know, and I I just also noticed on this quote I'm looking at it for the second time, I guess. I looked at it this morning. This is also an aluminum aluminum. mold here in the US at 17,774, where we're doing stainless steel tooling overseas. So not even a comparison. I mean this is not going to produce a million parts. It might produce a hundred to two hundred thousand parts. So again, this it's just a non factor. So hopefully we can put this to rest. That absolutely if you've got a great idea and you want to bring it to market, we're excited to help you. you know if your first comments are I want to make it in America, what unfortunately We're not the right company for you. we we just we can't allow our clients to do that because it's just too expensive. Even if your name was Rockefeller, we would pass hard because yeah you you have to have margins. And the way to get margins is to buy the product cheap or inexpensively, and then you sell it for four or five times what you pay for it with the value add that your product has. So that is That's the formula. We can't change it. Well, we we kind of built it so that I mean we knew how it worked and we just put a system around it so that it can work for the for the people that were calling us. And, you know, I'm gonna say that now it's easy if you don't educate yourself, you will fall into the trap of ignorance. You will go spend money with someone that is going to fail you. And it's not that they're gonna fail you. You're gonna get exactly what they told you you were gonna get, but you weren't educated or you didn't learn enough to know what you should have known. Now that you know, like G.I. Joe said, knowing is half the battle. Right. So this is a great podcast. Thank you guys for watching. Again, this is brought to you by ArmGlide. This is a product that will help you shoulder recovery. it's measurable. It's got all the quantitative numbers. It has the ability to help you heal faster. And I we're I believe there's th three resistance there's three different products for light, medium, and and heavy. Yeah. And again, this is a trusted client, a client that trusted us to help them deliver something that we saw. And if you don't, if you want to see, if you want to hear, if you want to listen, you know, please contact it, but go and buy one first and you'll see it for your for yourself how well this works and what it does for you. Great. Thanks, guys. Now, like us, follow us, share, share, share. You know somebody out there that needs to hear this, share it with them, share it with your friends, share it with someone that needs to get to it. This is all about shares right now. So thank you guys. Appreciate it.