Businesses Battle Overseas Competition

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February 16, 2011
Idaho Business Review
By Brad Carlson

The demand that Fresh Air Manufacturing Co. (FAMCO) owner Marty Artis sees for his new ventures isn’t much better than the recession-battered appetite for his core wholesale business, but he’s pleased anyway.

“It’s new revenue to me,” he said.  “We have the same number of remodels and housing starts.  I’m just closer to more new buyers.”

Overseas competition is making some Idaho businesses re-think operations.  Approaches include finding markets with less global exposure, setting up manufacturing in Idaho to compete on quality, or getting a matching grant to help develop new markets and products as Artis did.

FAMCO manufactures HVAC and roofing products in Meridian.  Artis in late 2008 started a wholesale roofing accessory line to diversify, and at the end of last year launched a retail segment – mainly by revamping his Web site.  He used the first $15,000 of a $75,000 matching grant qualifying through the Northwest Trade Adjustment Assistance Center for the retail Web project, by documenting how foreign competition undercut him.

“I’m constantly solicited from Asia [companies] to manufacture my metal and plastic vents,” he said.  “I don’t want to do that.  I want to innovate and make products here.”

Advanced Precision Machining Inc., Meridian, exited the semiconductor industry seven years ago and pursued segments that were less global.  Sales specialist Jeff Brackus said the new niches are growing.  Manufacturing is a hot industry now but remains very competitive, he said.

Buck Knives moved to Post Falls from California six years ago.  Lower business costs and some incentives enabled Buck to build a factory with ability to track control quality, costs and reduce import issues.

Ed Endebrock, who owns Hydraulic Warehouse in Lewiston, is renovating a building in Craigmont for Ende Machine & Foundry, where he will produce hydraulic pump and motor parts he now imports from China.  Making the parts here will control quality, shorten lead time substantially and improve cash flow, he said.

“When they are good, they are good,” he said of the imported parts.  “If they are bad, what do you do?  It’s not cost-effective to send them back.”

The City of Craigmont received a $500,000 Idaho Community Development Block Grant for infrastructure at the planned business park that will include the foundry.

Idaho officials are working with in-state businesses, courting new businesses and targeting foreign direct investment as part of Gov. C.L. “Butch” Otter’s Project 60 effort to grow total economic output.

“It’s not our job to pick winners and losers,” Otter spokesman Jon Hanian said.  “It’s our job to provide the level playing field and predictability businesses look for.”  Competitive tax and other business costs help, he said.

At FAMCO, Artis enlisted manufacturing specialists at Idaho Tech Help for assistance during and after the construction boom.  The first project was to streamline instead of expand.  The second was to identify revenue streams that could be pursued or expanded, which led to the new roofing products.

Artis must submit a new application and documentation each time he seeks a new phase of the U.S. Economic Development Administration grant through Northwest TAAC, which he matches dollar for dollar.  Future infusions likely will go to Web designers to optimize the retail site, and to product design and marketing specialists, he said.

“This does not fix worldwide imbalances and inequities,” Artis said.  “This gives FAMCO a boost, a shot in the arm to address the positive things.”

Patrick Meuleman, client development manager with Northwest TAAC in Boise, said the program seeks businesses that show sales or production declines over two 12-month periods; have reduced staff, hours or wages; and can prove foreign competition affected them.  The money goes to third-party service providers and cannot fund physical assets.

Reprinted with permission