Oft mentioned is the outsourcing business model used by American companies. When an employer eyes lower labor costs internationally, a job position that once supported an American worker goes to a low-paid laborer in a foreign country.
Lawmakers sought to popularize an opposition to this model through insourcing, but to no avail; a Republican filibuster killed the Bring Jobs Home Act, which was co-sponsored by Senator Sheldon Whitehouse.
The act proposed a 20 percent tax credit for employers that brought jobs and equipment back to the United States from overseas facilities, in addition to dissolving the current Foreign Tax Credit, a tax policy that allows companies to file for a tax credit for taxes paid in foreign countries, such as those applying to items and supplies shipped over from the United States.
Though legal strategy failed to “bring jobs home,” one Warwick manufacturer is doing just that without a new tax incentive.
Quick Fitting Inc., a plumbing valve and fitting producer, plans to insource at least 150 positions from China and incorporate them into its Warwick headquarters facility to support greater product demand and prepare for almost double projected growth of the company.
Current president and CEO David M. Crompton, of Tiverton, founded Quick Fitting Inc. in 2004. Holding several patents on a number of lucrative plumbing designs, including its flagship ProBite™ Push Connect fitting and valve products, the manufacturer has sold millions of its products to wholesale retailers nationwide.
Crompton’s decision to insource jobs turned the heads of Senators Whitehouse and Jack Reed, who made a visit to the company on Friday to express their approval.
Located on Plan Way, Quick Fitting settled in its 100,000-square foot facility just seven weeks ago, and is leasing an additional 140,000 square feet to facilitate the exponential growth of the business. Crompton notes that the company grew 498 percent last quarter, and expects to finish the year at more than 1,000 percent.
In order to help other manufacturing companies reduce costs and increase productivity to a point where insourcing can be commercially viable, Crompton and his CFO Frank Kosky are developing a pro-bono consulting Task Force, an initiative to, according to Crompton, “Spread knowledge and advice to anyone who will listen, and turn the tide on the 37 percent loss of jobs [in the manufacturing sector].”
In order to remain competitive with China’s supply of labor and manufacturing levels, Crompton believes American companies must improve their ability to produce higher volumes of goods with less manpower, with greater automation of operations well.
The enormity of Quick Fitting’s ability to insource jobs is not a patriotic marketing ploy; it is a result of adaptation to the needs of the national market for its plumbing products. Quick Fitting can ship jobs back to the United States because its China-based facilities, even with cheap labor readily available, cannot meet the level of output it needs.
Crompton explained that as China’s labor wages increase and transportation prices balloon, outsourcing no longer becomes profitable from an economic standpoint, given the need to produce and ship more in a smaller window of time becomes the key to meeting demand.
In a 2008 study of hourly compensation costs of manufacturing employees done by the U.S. Bureau of Labor Statistics, Chinese manufacturers were cheaper four years ago than Mexico and most other East Asian countries, excluding Japan.
In an interview at the site, Sen. Whitehouse and Reed lambasted job outsourcing for resulting in domestic unemployment and tax revenue losses, a fiscal hole spanning billions of dollars, alleged Reed.
“We’re going to try everything to help grow this company,” said Reed, before praising the manufacturer for providing more jobs to Rhode Islanders, saying, “In three years, there will be 400 people working here.”
Whitehouse concurred with Reed, noting that manufacturing jobs that once employed a large number of the blue-collar workforce in the state has seen a steep decline due to outsourcing.
“We lost 20,000 manufacturing jobs in the last 10 years. I’ve visited these factories and seen the holes in the floor where a machine was unbolted and shipped overseas,” said Whitehouse. “When you lose a well-paying manufacturing job, you never really get that back.”
The Democratic senators alleged that Republican resistance to the bill was an underhanded play in the political game, given the primaries and presidential election are only a few months down the road.
“There’s a distaste for giving President Obama [or his party] any victories. There wasn’t a lot of explanation [on the floor] as to why they opposed it,” Whitehouse said, as Reed nodded in agreement.