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COVID-19 & Buy American?

The COVID-19 outbreak has impacted businesses and people in a variety of ways.  Fortunately, I have seen very little impact in terms of business volume but BenzForce has been impacted, both in terms of outbound shipping, both domestically and internationally, and in our supply chain.  Before I get into that I have seen a lot of call-outs to only by American and wanted to touch on that before discussing the future.

I still get frustrated when people that do not have a global enterprise understanding of manufacturing and supply chain are so forceful about buying American.  Even American “manufacturers” are struggling, in some cases, to get their products out because they are dependent on subassemblies or manufacturer parts that are manufactured in countries currently on the restricted list.  It’s common for major manufacturers to have “blanks”, such as connecting rods and crankshafts manufactured in one country, like China, and sent to the USA for final machining.  I am not sure most people think about everything that goes into a product and the country of origin for each item in the bill of material that makes up the finished good.  You would be surprised how much non-American is in most common American parts.  Most labels should read assembled or finished in America!

At the current time, BenzForce’s internal product offering is comprised of simple parts, not assemblies; each part is standalone.  I fully believe the parts I offer now are the same quality as I would receive from the best machinist in the USA and have no reason to switch, except one.  The Coronavirus has had the biggest impact on our ability to get shipments (and communication) from outside the country. 

I was in talks with Bosio who completely disappeared as soon as the virus took hold and I have many (many, many) of hundreds of parts currently being produced in China.  I also have a pallet of turbos going nowhere.  Naturally, everything is paid for which means I have reduced capital to invest in other things while I wait this out.  So what and I getting to?  In the next manufacturing cycle, I will start gathering RFQ from domestic manufacturers.  My concern is that they will not even come close on price, which is ok, but in the end, the market dictates what it is willing to pay and it will be interesting to see how big of a price increase will be tolerated.

In the long term, I think the solution is to have several manufacturers from multiple geographic locations producing parts that are offered at a blended cost.  This will reduce supply line risk and, while the price may be a bit higher, it may be lower than a fully domestic price point.

We will see!

Rodney

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