Paper Tiger, Part 2

The best part about this blog is that we typically write about things we know something about. Or we take an issue and apply it to our lives...real time, on the ground type stuff. Many blogs guess, pontificate, or lie - for what? Many blogs take news stories and make it "breaking" news on their blog. Worthless.

I find it humorous how little the "news" affects my daily life. About the only news that truly affects my day to day operations in my life are announcements of new restaurants, and a smattering of the local issues, such as if the Madison city council is making some new kooky decree designed to affect my behavior.

An example of this is the new decree in Chicago that banned fois gras. Damn! Now THAT affects me. I LOVE the stuff and now I can't get it in Chicago any more.

Conversely, many blogs do quite the opposite of what we do here. They make wild guesses with NO background in anything, have no clue what is really going on in the world and basically sit on their asses and make shit up or sponge off of others original work.

I wish a turd like Paul Krugman could follow me around for just one day to see what it is like to actually go to work for a living, making decisions all day that affect myself and others around me. Instead, Paul gets to MAKE SHIT UP like most journalists, with his feet planted firmly in the air. And then bloggers tear apart his MADE UP columns and the dreary cycle repeats day after day, week after week.

With that said, I would like to take a few minutes of your time. Please go with me for a walk through my warehouse. A few days ago I wrote a book review of Minxin Pei's book about China and their present conundrum. I would like to take a look at the categories of things that I sell and see if the Chinese have penetrated the HVAC industry. For those not in the know, I own a business that sells Heating, Ventilation and Air Conditioning parts and equipment on the wholesale level. In other words, if your furnace or air conditioner breaks, hopefully I would be the one to sell the repairman a new part or piece of equipment. We do no retail business.

I will break it down by category.

Test Instruments
My main line of meters in made in Taiwan. The quality is very high and their US agent really does a grerat job of standing behind the product if there are any problems. My low end lines are all made in Korea. the more complex instruments, such as combustion analyzers and carbon monoxide detectors are all made either in Germany or the USA. There simply isn't any Chinese representation to speak of in these categories on my shelves. The products are certainly out there, they just have not been able to penetrate this market.

Hand Tools
My high end line, Knipex, is made in Germany. My main line, Klein, is made in the USA. I also sell a lot of Crescent branded tools, which are a mixed bag. Some are made in Taiwan, some in the USA. The quality is good on the Taiwanese tools. All of my soldering/brazing equipment is made in the USA. There is no Chinese representation in any of the tool lines I sell. In the trades there is most certainly a stigma associated with Chinese products. They are simply rejected by the professionals, in my field anyway. I have seen some Chinese tools creep in slowly to my industry. But these examples are few and far between and I don't have enough of them in the field to make a call on their quality.

Electric Motors
This one in interesting. I sell fractional horsepower (less than one horsepower) motors of all shapes and sizes. Until about five years ago, all of the fractionals were made in Mexico, with the exception of one vendor. Now, a lot of that production has been moved over to China. Not all of it, but a good amount. The results are intresting. The sizes from one quarter horse to one horse have performed pretty well out in the field. I notice no larger failure rate on these than the Mexican made ones. But on the smaller motors, such as unit bearing or "watt" motors the results have been disastrous. For some reason the Chinese made versions of these are real stinkers. GE was the big player in this game and moved the production on these motors from Fort Wayne, Indiana to China several years ago. I assume the increased returns are more than made up for by cost savings.

Copper
In my industry we sell a lot of copper tube, fittings and wire. All of these products are made in the USA. It must be a logistics issue. Lately we have had some Asian companies (I can't remember if they are Chinese or not) try to make inroads on the fitting market with little success. All of my soldering and brazing alloys are also made in the USA.

Equipment
Several years ago the Chinese made a stab at the residential HVAC equipment market with disastrous results. The equipment, it turned out, didn't meet minimum efficiency requirements at the time and had to be all sent back and re-made. Lead times were inexcusable. It is hard to sell air conditioners "on the water" if you know what I mean. No attempt has been made since by the Chinese. Many equipment manufacturers here in the US do use many Chinese components such as motors, contactors and capacitors in their units.

Components and Controls
Strolling down my aisles, it is apparent where the Chinese shine in my industry - cheap, high volume components. Things like capacitors, transformers, pulleys and the like are all made in China. Most of my contactors are still made in Mexico. Most of the thermostat production is in Mexico, but there is some coming from China now. My malleable and brass fittings all come from China.

Chemicals
All of the solvents and other caustic chemicals in my warehouse are made in the US. The refrigerants are made all over the world, mostly in Europe. Only one chemcial was found to be made in China, a refrigerant that has pretty low volume.

Filters
Clean air and filtration is a large part of my business. I can hardly get domestic companies to get me product in a timely fashion, much less a Chinese (or any other foreign company) firm. One company from China did try to get me to purchase the raw materials from them and have me assemble the filters but that is a no-go for many reasons.

Ventilation Equipment
All made in the USA. Again, must be logistics. Although I wouldn't doubt for a second that many of the components in the equipment come from China.

Compressors
The compressor is the heart of any air conditioning or refrigeration system. Think of it as the tube to your TV. All of the hermetic compressors for residential and light commercial units are made in the USA. The only foreign production is for smaller fractional horsepower compressors for refrigeration (NOT air conditioning) and that production has gone to Brazil.

From this very unscientific activity is is apparent that the Chinese have not penetrated the HVAC wholesale distribution market to any extent. I assume lead times are key. We don't need air conditioners in the North in December, nor furnaces in July. I don't know if the Chinese have penetrated other wholesale industries such as electrical and plumbing but I can only assume they have had a little more success in those fields.

This isn't to say that the Chinese won't or can't penetrate my field. Personally I like selling American made products and my customer base prefers to buy them. Generally they are of decent quality where with some of the imports it tends to be a crap shoot at times. But you never know what can happen. I sure hope it doesn't - I don't want my store to look like Menard's or Home Depot someday where EVERYTHING is made in China.