Bullish on America
Tuesday, April 01, 2008

Gus Ramirez’ announcement of opening new manufacuring facility in Maquoketa, Iowa– April 1, 2008

I believe that America is the best place to manufacture engineered products, especially for use by North American and South American customers. Over the years, HUSCO has established three international facilities, and the result of each facility has been to increase our exports to these markets from the USA over time.  Many fear the job migration out of the United States will continue to accelerate, but for many companies such as HUSCO, international facilities and suppliers enable us to grow faster at home and abroad resulting in employee and business growth.  The reality is that the shortage of skilled employees that exists throughout the United States would make it difficult to repatriate many of those jobs which have left.

There are many headlines concerning Wisconsin manufacturers who have shut down facilities.  HUSCO fully intends to continue to grow its business and employees in the United States.  However, Wisconsin is indeed a problematic state to manufacture products for markets which have global competitors.  Even though we intend to grow our presence in the United States, job growth and investment will go to those HUSCO facilities which are the most competitive.  Competitive costs can often be confusing since there are many aspects to full costing of products in a given facility.  These costs include direct cost of manufacturing (labor and materials), manufacturing overhead, quality cost, the availability, reliability and capability of skilled labor, and logistics cost (cost to bring in materials plus shipping cost).

To increase our competitiveness in North America, HUSCO recently made the decision to invest in a third manufacturing facility in the United States.  Some have asked why a new facility when there is capacity in Waukesha and other existing global facilities?  The answer to this question is that having factory space and people to produce are not the primary drivers to investment decisions.  Competitiveness and reliability drive our decisions.  Optimum facility size coupled with globally competitive material cost are other important inputs.  Management believes that large facilities are inherently more costly due to their difficulty to manage which often result in more overhead and lower productivity from a workforce that may not be as attached to the business.  Small facilities on the other hand may not have the critical mass necessary to attract and develop the skills and capabilities needed to be globally competitive.  HUSCO assesses these factors and drives its investment decisions on the combination of what it believes to be best for HUSCO long term.

After considering a number of options, HUSCO has decided to locate our new manufacturing facility in Maquoketa, Iowa.  After losing manufacturing jobs for many years, Iowa has become very aggressive in insuring that incentives and worker skills are superior to those of most states.  The package of incentives offered by Iowa compared to Wisconsin was far more attractive, and we judged the availability and reliability of the work force available in Iowa to be attractive.  HUSCO expects to grow the new facility to its "optimal" size of approximately 200-250 associates during the next several years as a result of business growth and rationalization of HUSCO's North American facilities.  It is our objective to make the new facility the lowest cost facility in the United States for hydraulic controls by utilizing HUSCO’s most modern assembly equipment and processes in a low overhead facility which is well supported by the community and state.  Grants will be available to offset incremental capital and training costs.  Nearby manufacturing facilities report that the labor force in the area we are considering is highly competitive, very productive, well educated, and reliable.   

The decision to invest in the United States reflects our view that well run facilities staffed by capable personnel and equipped with state-of-the-art machines  can provide product of the highest value to our customers. This is our goal and commitment.