Pros and cons regarding partnerships between lakes area businesses and Asia brought the global market discussion to the forefront Wednesday in Brainerd.
Jeff Zernov, owner of Nature Vision Inc., which employs about 17 people in Brainerd, will leave next week for his third trip to Asia this year.
"Wal-Mart may be where America buys, but is not where American manufacturers can sell goods," Zernov told those gathered at the annual Brainerd Lakes Area Development Corp. meeting Wednesday. "That's why I am in Asia."
More than 100 people filled the tables at the annual lunch meeting at the Ramada Inn.
Zernov was the featured speaker discussing connections from Brainerd to Beijing. In the nation's capital there have been recent conversations debating what the loss of manufacturing jobs means for the economy and the nation and whether America was moving toward a market of ideas versus goods.
Zernov has been involved in manufacturing and development.
Reggie Clow, incoming BLADC president and owner of Clow Stamping in Merrifield, said his company also is feeling the effects of the global market. The manufacturer employs about 280 people. He said his efforts are aimed to keep business here, although he has customers who want price reductions, and he said the steel tariffs affect his business.
"We are in a world market and people want product cheap," Clow said. Clow Manufacturing's business with Japanese firms is growing.
Zernov agreed with Clow's assessment of greater communication challenges and other hurdles in transport time and infrastructure in Asia. But he noted Chinese schoolchildren learn English as a basic course and are encouraged to take an additional foreign language. Clow said there are also concerns of freight costs and an inability to provide quick deliveries or quick changes.
Zernov said the Internet allows twice daily communication.
Clow said in the last year and a half there has been a lot of talk about China. Even sales representatives suggested Clow buy tooling from China. Wages and benefits are a big subject in the equation. Clow said the average manufacturing job pays $54,000 annually. Labor costs in the United States account for about 20 percent of costs while in China the cost is 2 percent.
Clow said his efforts are going into reducing costs by 5 percent to 10 percent through reducing waste. A consultant is coming in to look at that.
Zernov said the Chinese population is 1.5 billion but less than 100 million people are employed. And they are willing to work for 25 cents and 28 cents an hour compared to $30, $40 and $50 per hour for labor in the United States. Zernov said people in China are glad to make $50 a month. "I would rather be dealing locally," Zernov said. " ... I'd love to be employing people in Brainerd, but I can't."
But he said manufacturers are being forced to look at other options to survive. As manufacturing changes, Zernov said America's advantage is in great ideas, creativity, new product development, new markets and greater understanding of the product to market cycle.
"We know how to sell our product," he said. Zernov's company has products for sport fishing. He said in China fishing is for food, not sport.
"... We have to broaden our thinking," Zernov said regarding the global economy, global competition and business survival. "... because if we don't we are going to lose everything we have. ... I'm just the messenger. Don't shoot me."
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