Embrace the Change: Globalization and Outsourcing Are Real
- By Kojo Amegashie
- Oct 01, 2004
Not long ago, few self-respecting companies, especially stores, would touch a
remanufactured toner cartridge. In the drill-and-fill era, few tests were performed.
Drill, fill, out the door! Though drill-and-fill has gone mostly by the wayside,
its past reputation still persists to some old-timers.
The present-day remanufacturing business has evolved from the past. It is still
fast-paced and competitive, and superior products are demanded of all remanufacturers.
Toner cartridges are end-user based and require uniformity in performance. Even
though a lot of brain power goes into the process of remanufacturing, the customer
(end user) is the ultimate judge of the product. With eye-catching boxes, creative
and interactive Web sites and aggressive sales forces pounding on doors and offices
to distinguish each company from the competition, today’s remanufacturers
have taken a strong stance in the market. Most remanufactured cartridges now appear
in mainstream stores around the world, and most stores sell a combination of both
the OEM and remanufactured cartridges.
A question that inevitably arises about globalization and outsourcing is “How
relevant is U.S.-based remanufacturing?” It is a real investment in the U.S.
economy in general and the communities around the United States in particular.
In the labor-intensive area of remanufacturing, cost is allocated for the ongoing
training of new and old employees so that they stay current with changes in the
industry. The income paid to the employees, whether local or from other communities,
help sustain their respective communities. An induced effect of the employee-earned
wages would include employees purchasing gas from the communities in which they
work, or running on their lunch breaks to grab sandwiches and other items.
Cost of materials purchased from local stores benefits the U.S. economy and local
communities. Indirect effects include: purchasing insurance for the company and
other costs associated with running any company, and benefits for employees and
their families. The direct effect of purchasing from aftermarket companies and
other U.S. suppliers adds value to the U.S. economy.
But today’s toner remanufacturing business is characterized by intense competition
within the U.S. market (new markets are opening up), and outsourcing has become
part of the strategic business moves by U.S.-based companies, often from markets
in foreign-based companies, notably China and Korea (the Asian markets). The gap
between wages paid to employees in the United States and those paid in low-wage
nations is wide. Coupled with that, workers in many foreign countries do not enjoy
the protection of the types of laws that protect U.S. workers.
A growing number of U.S. companies are outsourcing to reduce expenditure, and
few will dispute that outsourced companies seem to have the upper hand in competition
with U.S.-based companies. Outsourcing has become an effective weapon in cost
cutting and staying competitive.
No matter how much people complain about outsourcing, the process is inevitable,
difficult to control and continues unabated. If a business can get a good product
for less than the cost to produce it, it will certainly take that advantage. Human
nature is to criticize the output from the competition — no matter where
it comes from. This is not a new issue; it is an old issue going by a different
name. Many years ago, “Made in Japan” evoked a certain ambivalence in
Americans and in many parts of the world. With the right changes and belief systems,
Japan changed its image to become one of the leading industrialized nations in
the world. China also had these issues, but its reputation is gradually becoming
respected.
Similarly, the emergence of aggressive advertising in many newspapers has coincided
with unprecedented challenges from established companies. Lexmark’s attempt
to lock out the supplies markets is notable.
Finding the right supplier is not as easy as opening a magazine and calling the
first supplier. Despite the existence of a good deal of suppliers in the market,
certain knowledge is transmitted by word of mouth: an understanding of where to
call for the best parts with the best deal in the market. (To minimize the hassle
of looking around for a great deal, some aftermarket companies pursue remanufacturers
with zeal to announce the good deals they have available. Take a manufacturer’s
word for it — we keep our ears open.)
The remanufactured cartridge business is in constant motion. The most visible
is the outsourced markets. If we embrace the challenge posed by the foreign markets,
we will have the opportunity to grow by being innovative in our collaborations.
To accept the reality is the best way to help us truly strategize.
Kojo Amegashie is the operations manager for Preferred Cartridges in Minnesota.
He can be reached at (763) 424-9280, e-mail kojo@preferredcartrides.com
or visit www.preferredcartridges.com.
This article originally appeared in the October 2004 issue of Recharger.