With offices, agents, and customers throughout the world, Environmental Packaging Technologies (EPT) is indisputably a global enterprise. So it's especially striking to see the improvements this Houston-based company has made by converting from offshore to domestic manufacturing.

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EPT produces and distributes several kinds of packaging for moving large volumes of bulk product. lts BIG Red Flexitank is a single-use polyethylene liner used to transport liquid in a 2O-foot container.

EPT used to manufacture the BIG Red Flexitank in China, shipping U.S.-made materials there for assembly, then bringing the finished product back to the United States. By 2008, that strategy was starting to wear thin.  “We started having quality issues in China, and the time zone difference made it difficult to control,” says Nancy Wendrock, President of EPT.

Quality is a critical issue for this product because even a small leak of a non-hazardous liquid could leave EPT liable for thousands of dollars worth of cleanup.  “We decided to take control and manage our own future,” Wendrock says.

Once company officials made this decision, they started crunching numbers. “We determined that we could produce in the United States at or below the cost we were paying in China,” Wendrock says. Labor is more expensive here, but EPT could create a highly automated U.S. factory that would require only eight employees, compared with the 40 at the China factory.  The company also would save on transportation because it would no longer need to ship materials overseas.

The company opted to build its new plant in Zeeland, Michigan.  At the time, the crisis in the automotive industry made Michigan especially attractive for a high-tech factory. "Many qualified, technical-oriented individuals in that part of the country were either out of work or had smaller workloads, so EPT could tap this talent pool,” Wendrock says.

The new operation started producing Flexitanks in 2009.  Because EPT was already distributing product from the United States, the only major change the new factory created in the company's distribution involved customers in the Asia Pacific region, who previously were served directly from the China factory. “Most of our customer base is in North and South America, Europe, and South Africa," Wendrock says. For those customers, the move to Michigan has shortened the distribution pipeline.

Moving manufacturing to the United States has helped EPT reduce costs by around 18 percent.  “Our quality issues have dropped to near zero," Wendrock says. "That has been the biggest savings, because a single leak can cost us from $10,000 to $80,000.”

For a company based in Houston, manufacturing in Michigan also simplifies daily operations.  "We can react to changes with a phone call, rather than spending one month addressing them," Wendrock says.

Nearshoring has worked so well that EPT plans to move production of a second product, the Dry Liner, to the United States in 2011.

Along with cost and operational efficiencies, the move to a U.S. plant has brought EPT a significant competitive advantage – the right to display the Made in America logo.  "That makes a huge difference all over the world," Wendrock says. Customers equate American production with high quality, and EPT has earned that perception by implementing tougher standards in its new facility.  Those improvements have attracted higher revenues and a larger, more demanding pool of customers.


Inbound Logistics. January 2011