The American Chamber of Commerce in Shanghai

 

 

AmCham Shanghai's Manufacturers' Business Council hosted a half-day factory tour to the Suzhou Industrial Park plants of Caterpillar (Suzhou) Co., Ltd., Solatube CECIC Daylight Technology Co., Ltd., and Suzhou Bibixi Communication System Co., Ltd. on February 8.

The first stop on the tour was Caterpillar’s Suzhou 74,561 square meter assembly facility. General Manager Duane Symes discussed the company’s decision to locate the new plant in Suzhou, the plant’s new LEED environmental sustainability certification, employee training programs, and the challenges of the Made in China label. Set up to serve the markets of Asia, Africa, and the Middle East, Symes noted that their Chinese products use the same standards, production and assemblage processes as in their other factories around the world. Fifty percent of the components are locally sourced in China and Caterpillar has been developing their steel mills in China for 20 years and operates its own component facility in Wuxi. Each machine assembled in the Suzhou plant goes through a complete inspection where a final detailed review identifies even the smallest issue not up to Caterpillar standards. Moreover, Caterpillar invests 250-300 hours of training for each worker to ensure that the manufacturing process is both effective and efficient.

The labor market was an important consideration when choosing to locate in Suzhou,. The locating team originally thought hourly workers and skilled welders would be difficult to find while quality-trained engineers would be widely available. In actuality, the opposite was true. Caterpillar found it difficult to find engineers with experience (preferably 2+yrs). In response, the company partnered with local tech programs and universities to develop the local labour force. Economic downturn-instigated downsizing also enabled Caterpillar to relocate skilled engineers from its plant in Tianjin. The most important consideration, however, was not the labor market capacity or possibility for facility expansion, but rather the ease and characteristics of the transportation system. The size of Caterpillar products shipped overseas requires a roll-on-roll-off port where machines can be directly driven onto ships. Such ports in China only exist in Tianjin, Shanghai, Hong Kong, and Suzhou.

AmCham Shanghai members also visited Solatube, a joint venture founded in 2008 to research, develop, and manufacture Tubular Daylighting systems. Participants saw a demonstration of various types of lighting fixtures that allow the use of daylight instead of artificial lighting in offices, warehouses, and even Olympic facilities. Using a method comparable to lighthouse technology, Solatube uses optic lenses to bend light and maximize the amount of natural sunlight captured. A patented Spectralight Infinity tubing with 99.7% spectral reflectivity is used to transfer the rays of sunlight to a diffuser, illuminating a room.

Solatube representatives explained the approach and difficulties of not only selling such high-cost, high-efficiency, specialty products in China, but also of creating a market for such green tech goods. Most of the company’s products are still exported overseas, where the lighting has been popular with large warehouse distributors in the U.S. since the technology’s creation 20 years ago. After the presentation, participants discussed the various business benefits and challenges of locating in an Export Processing Zone.

The third factory was the plant of Suzhou Bibixi, which produces connectors and jumper cables for the broadband and wireless industries. During a comprehensive tour of the 5,000 square meter facility, participants learned about the company’s daily system for immediately addressing any small issues that arise during the production process. Manager of China operations Brian Noll described the company’s division of production among its facilities in Suzhou, Syracuse, NY and Praestoe, Denmark. He pointed out that the Suzhou facility has a more labour-intensive process than its Syracuse counterpart and subsequently processes just 3,000 units an hour compared to the 12,000 units processed by automation in Syracuse. However, the defect rate in Suzhou is far lower. Noll also noted the high labour turnover rate in their factory; he emphasized the importance of a streamlined production process and explained the incentive system for the highly efficient workers.

- Chantal Grinderslev