Automotive parts suppliers need to be quick studies in working with Chinese companies if they’re going to be successful, said Tom Seboldt, vice president of O’Reilly Auto Parts.
Seboldt addressed the Automotive Specialty Products Alliance (ASPA) annual program luncheon held Wednesday. Suppliers face issues such as lead times/order cycles, ensuring quality product, handling at distribution centers and planning for holidays and shutdowns when dealing with foreign manufacturers, especially China, he said.
A perfect example of cultural differences is the difference between how holidays are handled in the U.S. and China. "Many people, sometimes 40 percent, don’t return to the factories after the Chinese New Year because they’ve made enough money to return to the Chinese countryside," he said. "Can you imagine that? Hiring 40 percent of your employees after the holiday?" After a two- to three-week shutdown during the Chinese New Year, it’s back to square one, he said.
Ensuring the product that arrives from China is what a company ordered is paramount, he said. "There are a lot of good businesspeople in China. They want to make a good product, but you still have to check and make sure what you’re buying and putting into a box is what you spec’ed six months ago," Seboldt said.
Regardless of what Americans hear about labor or currency issues in China, there are many sectors of manufacturing that won’t come back to the U.S., he noted. There are some exceptions, but he believes the bulk of manufacturing will remain in countries like China. "They have the people nobody has. They’ve got the infrastructure the roads they have now compared to five or 10 years ago are amazing," he said. "China is here to stay."
Seboldt noted that Chinese companies are improving lead times. "They’re now making product, and when you order it, it’s immediately taken from their warehouse," he said. "We’ve gotten products from China, from ordering, manufacturing to clearing customs in under 50 days."