Last week NPR reported on an unexpected US manufacturing success story: Georgia Chopsticks, a new company that produces chopsticks for – you guessed it – export to China. When you consider that one third of the world’s population uses chopsticks, it comes as no surprise that there is plenty of room in the market for new producers. Indeed, Georgia Chopsticks plans to ramp up production within the year from two million pairs per day to 10 million per day.
Why Move Production So Far Away From the Consumer?
From a supply chain perspective, we have to ask: why make chopsticks in the southern US, so far from the primary market? In this case the answer is threefold: raw materials, labor, and quality. Clearly China is capable of making chopsticks, but when Georgia Chopsticks’s owner looked for a place to set up his production facility, he found that the small town of Americus, Georgia offered plenty of trees of a type that yields good chopsticks, had a 12% unemployment rate, and while labor is more expensive than it would be in China, the quality is better.
Why It Works in this Case
In this instance, finding raw materials, labor and the potential to produce a high-quality product made it worthwhile to set up production far away from the customer. This is working out because chopsticks are not perishable, demand doesn’t fluctuate, and is it unlikely that chopstick design will change anytime soon. After all, they’ve been around for over three thousand years.
© 2011 – Rick Pay – All Rights Reserved
Authors: Paige McKinney, Rick Pay