Hamilton Beach Working to Diversify From China to Indonesia
China-dependent supply chains developed because of the demands of retailers to sell products at low price points, a panelist explained at the Commerce Department's first supply chain summit, but the company is working to change that.
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Michael Bunge, vice president for global supply chain and operations at Hamilton Beach, said his company couldn't keep up with demand for bread makers during the COVID-19 pandemic, and it made the company start to reevaluate the supply chain.
Bunge, who was on a panel about the private sector perspective at the summit last week, said it has been very easy to manufacture in China. All the components needed for Hamilton Beach's blenders, bread makers and drip-coffee makers are available within a one-hour drive of the Guangzhou port.
"These are from factories that are advanced," he said. "They’ve been doing this for 20 years. That’s driven this concentration of supply."
Bunge said that while Hamilton Beach has not moved any production to the Western Hemisphere in this re-think -- some of the capabilities are no longer here since assembly all moved to Asia -- the company is working "really, really hard" on establishing manufacturing in Indonesia, partly in hopes that the Generalized System of Preferences benefits program will be renewed.
"Indonesia is a former GSP beneficiary. We’re working very, very hard right now to ramp up a supply chain that supports small electrical appliances."
He said it's extremely difficult without outside investors, because although Hamilton Beach moves a lot of units, the prices are low, so its capital for this kind of change is limited.
If this new supply chain does get established, "there will be some componentry that still has to come out of the Pearl River Delta," he said.
Sameera Fazili, Industry Policy and Trade Fellow, Roosevelt Institute, who moderated the panel, said that when she worked in the White House in 2021, "I was getting frantic calls" from businesses that had shortages preventing them from importing products. "They did not know the problems in their supply chains," she said.
She praised Intel, Dow and Hamilton Beach -- the three companies on the panel -- for uncovering the risk in their supply chains, and acting.
Lisa Schroeter, global director of trade and investment policy at Dow, identified the war in Ukraine and Houthi attacks in the Red Sea as current supply chain disruptions. But she criticized domestic polices, such as workforce protections to prevent illnesses due to formaldehyde exposure, and the possibility of U.S. cooperation with a global push to reduce single-use plastics as ways the government could be harming supply chains rather than helping.