America’s Toilet Turnaround

By JAMES R. HAGERTY WSJ.com

 After Years of Moving Work Overseas, Remaining Factories Ramp Up U.S. Output

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David Walter Banks for The Wall Street Journal

Toto’s toilet plant in Morrow, Ga., uses a combination of manual craftsmanship and robotic labor to help reduce costs and cut production time.

PERRYSVILLE, Ohio—In previous management jobs, Jim Morando watched Chinese imports engulf the U.S. market for vinyl tiles, wood flooring and window blinds.

Now, as president of Mansfield Plumbing Products, a toilet manufacturer here, Mr. Morando says he has decided to “stand and fight.”

After decades of losing out to foreign rivals, U.S. manufacturing of toilets is making a surprising, if modest, comeback—mostly under foreign ownership.

Mansfield Plumbing, owned since 2004 by Organizacion Corona of Colombia, is spending $9 million to expand the capacity of its Perrysville plant by nearly 50%. Another toilet maker, Toto Ltd. 5332.TO -1.61% of Japan, is installing new casting machinery to raise capacity at its Morrow, Ga., plant about 5%.

How Toilets are Made

David Walter Banks for The Wall Street JournalNearly finished toilets move through a Toto factory in Morrow, Ga.

 

American Standard Brands, bought earlier this year by Lixil Corp.5938.TO -1.13% of Japan, is installing a new kiln and refurbishing other parts of its Nevada, Mo., plant, boosting capacity 5% to 10%.

The toilet turnaround is a microcosm of U.S. manufacturing trends.

“The days of chasing cheap labor around the world are coming to an end,” said William Strang, who heads the operations division for Toto in the Americas. Toto is reducing trans-Pacific shipments and relying more on U.S. and Mexican plants for its sales in North America.

Making toilets requires lots of manual labor—”very much like making pottery,” as one industry executive puts it. That is why most production moved over the past two decades to lower-cost countries, mostly China and Mexico.

The work is demanding, requiring muscles to lift bowls and tanks, as well as a delicate touch to smooth surfaces.

“You need the strength of a football player and the hands of a sculptor,” Manfield’s Mr. Morando said as workers in muscle shirts hoisted newly baked porcelain on a recent afternoon.

Three-quarters of the 10.6 million residential and commercial toilets sold in the U.S. last year were imports, estimates Victor Post, vice president of GMP Research Inc., a research firm based in Mount Pleasant, S.C.

There are just seven toilet plants in the U.S. today, down from 48 in the late 1970s, Mr. Morando said.

Much of that capacity may never return, but industry executives now see U.S. production as a viable alternative. Even if they don’t build new plants in the U.S., they are more inclined to add capacity in nearby Mexico rather than in China so they can reduce shipping times. In addition, ocean-shipping costs and Chinese wages have risen, making production there less attractive.

The biggest U.S. toilet suppliers are Kohler Co., with an estimated 24% of the U.S. market, followed by American Standard, 18%; Toto, 9%, and Mansfield, 8%, according to GMP.

Kohler has kept three U.S. toilet plants—in Kohler, Wis.; Brownsville, Texas, and Spartanburg, S.C.—and runs a large plant in Monterrey, Mexico. Many smaller U.S. suppliers moved all their production outside the U.S.

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When he arrived at Mansfield in early 2006, Mr. Morando said, the factory in Perrysville was “on the ropes,” with production costs about 20% above Chinese imports.

But Mr. Morando wanted to keep production in the U.S. That would allow the company to differentiate itself by stressing its ability to get products to customers faster, respond quickly to changes in consumer preferences, and offer a “Made in U.S.A” label, which Mr. Morando believes is increasingly appealing.

To cut costs, Mansfield automated administrative processes such as order-taking and reduced inventories, among other things. Workers, represented by the International Brotherhood of Teamsters, accepted a wage freeze that lasted until 2012 and shouldered a larger share of health-care costs.

“We’ve worked together to get them through a rough time,” said Mike Markham, secretary-treasurer of the Teamsters local that represents workers.

Mansfield employs about 480 people in Perrysville, up from 370 four years ago, and expects to raise that head count to about 550 within six months, Mr. Morando said.

In Georgia, Toto has increased automation. New Motoman robots, from Japan’sYaskawa Electric Corp., 6506.TO -2.18% spray glaze on the toilets, a job done by people in many factories. Those new robots are about twice as fast as the previous ones used by Toto.

Still, much of the work needs to be done by hand, partly because the clay used to make toilets is fragile during the production process and could easily be damaged by machinery. People don’t need to be reprogrammed every time a style changes slightly.

Clay arrives at the plant as powder. Giant blades stir the powder with water into a gray soup, pumped via pipes and hoses into molds. After the clay bowls emerge from the molds, workers use sponges to smooth the surfaces.

“The human hand is much more sensitive and capable” than a robot for such tasks, Toto’s Mr. Strang said.

The workers bond the rim of the toilet to the bowl by hand. A custom-made machine gingerly grasps the clay bowl and turns it upside down so workers can inspect the underside.

Then a conveyor belt moves the toilets into a drying room, where they sweat out excess liquid. After drying, the robots spray on glaze, a liquid that provides the hard, shiny surface.

Then the toilets spend roughly 18 hours baking in a kiln at a temperature of 1,800 degrees Fahrenheit. Next come final assembly and testing.

Annie Shannon whacks each newly baked toilet with a wooden mallet. “It should sound like a bell,” said Ms. Shannon, who has worked in the plant for 15 years. If the sound is flat, there might be a hairline crack in the porcelain.

One of her colleagues puts sponges in the new toilets and flushes. Mr. Strang explained: “We want to make sure if we put four sponges in, four come out.”

Write to James R. Hagerty at bob.hagerty@wsj.com

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

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