Sharpie maker Newell is moving more jobs from China as prices rise Reuters reports
(Clarifies that Newell is moving production of kitchen appliances to China)
Written by Jessica DiNapoli
NEW YORK (Reuters) – Pen maker Sharpie is offloading production of kitchen appliances in China and moving to Tennessee as it faces “uncertainty” over tariffs ahead of the U.S. presidential election, Newell CEO Chris Peterson said. interview with Reuters.
Peterson clarified in the interview that the supply-chain changes are not the answer to the election campaign of the Republican president Donald Trump to continue to increase the prices of goods made in China and many others if he wins.
“Trump is talking about very large tariffs on Chinese imports,” said Peterson, adding that Democrats are debating whether to keep those that are already in place, since Trump's first term as US President and expand this year. “There is a lot of uncertainty. We just want to minimize exposure regardless of the outcome.
“It's hard to move chains in real time,” he added.
Newell is automating its production in the US to make the higher wages in the United States work, he said, adding that moving production to the country also saves on time and costs of variable goods.
“If you have enough automation, the economy works,” he said. “That's our sweet spot.”
American companies importing goods from Asia have faced a series of problems in the past few years, including rising prices, delays and costs during the pandemic, and, most recently, Houthi rebels attacking container ships passing through the Suez Canal.
Peterson, a former Procter & Gamble (NYSE: ) executive who became Newell's CEO last year, is a member of the Business Roundtable, an influential group of CEOs who met with Trump and President Biden's chief of staff in June. Peterson was present, said a spokesman for Newell.
He added that, as a maker of consumer products whose pens, baby car seats and food storage containers are found in 95% of US homes, “we don't believe it's our place to represent a single political point of view.”
Newell already produces most of the products that make up its stationery business including Paper Mate pens, Expo markers and Elmer's Glue at its factory in Maryville, Tennessee, a small town south of Knoxville, Peterson said. The company earlier this year moved more production of its stationery division from China and South Korea to Tennessee because the plant could be expanded, he said.
The company has “flying” projects to move its kitchenware production from China to Vietnam, Thailand, Indonesia and elsewhere, Peterson said, adding that Newell is not leaving China but “reducing our dependence.”
Newell acquired Jarden Corp, maker of Crockpots, Oster blenders and Mr. Coffee makers. Coffee, a $16 billion mega deal in 2016 aimed at negotiating better prices with a major customer, Walmart (NYSE: ). But Newell has struggled as inflation-weary shoppers cut back on anything but essential purchases.
Newell was downgraded from last year as its market share declined. So far this year, its shares are down 6%, compared with a nearly 10% gain in the S&P index.
The Atlanta-based company has this year accelerated its earlier efforts to reduce its reliance on China for manufacturing, Peterson said on a July 26 conference call with investors. Newell expects less than 10% of the company's U.S. business to be exposed to Chinese manufacturing by the end of next year, compared to 15% currently, Peterson said. Five years ago, the number was around 35%, he said.
Outside of China, Newell has found it difficult to find factories that make finished products next to those that make parts, Peterson said.
“The ecosystem is very well organized in China, both a good complete integration and component parts,” he said. “The production of raw materials is in China, so, it is difficult to move when you have that change.”
The company is in the middle of a production plan, including automated production, aimed at transforming the business and increasing its opportunities.
“We are moving to jobs where people manage robots and also manage automation,” he said, adding that this change makes the company pay higher wages.
The average wage for Newell's jobs at his Maryville, Tennessee plant is currently more than $20 an hour, he said.
“My goal is to increase our average wages in our manufacturing industry, by moving our workers from manual work to multi-skilled jobs,” he said. “If we do that right, we can bring more manufacturing back to the US”
Restocking an additional stationery business earlier this year added about 70 jobs at the Maryville plant, a spokeswoman said.
