After years of sourcing struggles, United States dryer maker cuts China out

Qatar Tribune

16 hours ago

Agencies
Denis Gagnon had long wanted to establish a manufacturing firm supplied only by American-made parts, a vision shaped by his experience in the international corporate world and his assessment of business risks offshore.
He was an outlier in an era of globalisation when businesspeople, including his US peers, waxed lyrical about outsourcing from Asia to minimise production costs.
The Gagnons, including his son William, run a medium-sized company called Excel Dryer in the US state of Massachusetts.In 2018, the year US President Donald Trump raised tariffs on Chinese imports in his first term, the father and son knew they had the right plan. Their conviction was reinforced earlier this year when the world's two largest economies escalated duties on each other's imports.
'The tariff increase only solidified our decision to move forward,' said William Gagnon, who is now executive vice-president of the company.
After eight tough years searching for a motor supplier outside China, the maker of electric hand dryers achieved its goal of sourcing 100 per cent of its parts domestically by 2023, William Gagnon told the Post.
Today, Excel Dryer does not have to worry about paying tariffs on imports from China. The move to source goods locally came as the Trump administration pushes to restore US manufacturing in industries ranging from shipbuilding and copper to rare earth metals.
'We are happy we don't have to worry about it,' William Gagnon said. 'We're not on the edge of our seats worrying about what's going to happen. We are able to focus on more important and strategic things.'
s While sourcing most components in the US was simple enough, replacing the firm's Chinese motor suppliers turned into a slog for the family-owned company, he said.
Excel Dryer evaluated at least a dozen American motor suppliers before selecting one, the executive VP added.
'It was difficult to find an American motor vendor that could match the size, performance and costs of motors made in China because of the volume and lower labour costs,' he said.
'That's why other companies, like our competitors, have moved away from domestic sourcing in favour of importing components or the whole product to stay cost-competitive.' Excel Dryer was looking for 'reliability and consistency' when the Gagnons set out to source all components from the US.
'However, US parts often come at a higher cost,' he said. 'Chinese suppliers dominate on price, but longer [order] lead times, inconsistent quality and growing geopolitical tensions add risk.'
He called the search for a motor supplier 'very thorough', covering performance, durability, cost, production capacity and reliability. Although he did not disclose the costs involved, he described it as a 'significant effort' and not an 'easy process'.
Excel now gets its dryer motors from Scott Fetzer Electrical Group, based in the US state of Tennessee. William Gagnon said the company allows Excel to communicate directly with its management and negotiate purchase deals.
The American vendor ended up offering higher 'quality control', shorter order times and 'greater supply chain stability' than Chinese counterparts, he said.
'Keeping the product American-made is not easy. It's taken a lot of focus and effort by us.' Excel Dryer does not disclose what it pays for motors, but William Gagnon said that American and Chinese engines have about the same 'landed cost' when factoring in tariffs.
Still, many Chinese analysts doubt whether American firms can follow suit and decouple from Asian suppliers.
Charles Chang, a finance professor at Fudan University in Shanghai, pointed out that other American light industrial firms facing Trump's tariffs had tried to replace Chinese suppliers with American ones but usually ended up paying the duties anyway or raising prices.Most companies are too 'fragile' to afford the higher-cost, harder-to-find American suppliers, he said.
'These stories are popular, the workaround concept, but it's a small percentage, a very small group of people.' Excel, founded in 1997, does not disclose revenue or output figures but calls itself a mid-sized company with more than 15 per cent growth in annual revenue.
The executive VP said Excel would not raise prices on account of onshoring its dryer motors. Prices start at US$535 per unit on Amazon, compared to an average of US$400 – US$500 per unit, across brands, as estimated by the US-based online B2B retailer HomElectrical Electric Supply.Excel Dryer has saved money by shipping hundreds of dryers to countries that lowered duties on US imports after April 2, when Trump raised tariffs worldwide, the executive VP said. Some countries managed to get the US to lower tariffs by easing their own trade barriers that had long irked American exporters.'It's helping us to export because [Trump tariffs] reduce barriers to export into those markets.'