• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • WEBINARS
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Blogs » Think Tank » A Transport Tech Company Brings Manufacturing Back to the U.S.

Think Tank
Think Tank RSS FeedRSS

Coronavirus / LTL/Truckload Services / Sourcing/Procurement/SRM / Sustainability & Corporate Social Responsibility / Automotive

A Transport Tech Company Brings Manufacturing Back to the U.S.

August 10, 2020
Robert J. Bowman, SupplyChainBrain
A Transport Tech Company Brings Manufacturing Back to the U.S.

In the wake of the coronavirus pandemic and rising overseas production costs, many American companies are thinking about returning at least some manufacturing to the United States. But XStream Trucking Inc. has wasted no time in doing just that.

Born in the San Francisco Bay Area, XStream is a design and engineering firm that sells fuel-saving hardware for commercial trucks. Its flagship product is TruckWings, hinged panels that seal the gap between tractor and trailer, and which deploy at speeds of greater than 50 miles per hour to cut down on drag, improving fuel economy by around 5%. When the truck slows down, the panels fold in.

Engineering of the device began in 2015, with extensive research and development required, notes chief executive officer Daniel Burrows. When actual manufacturing commenced, it took place in garages in the Bay Area and Phoenix, Arizona.

Soon, production scaled to the point where XStream began offshoring in China, Taiwan, and Mexico, following the lead set by so many other American manufacturers seeking cheaper labor and materials. Now, however, the company is leading the move back to the U.S., to the point where is has already onshored 60% of its production requirements domestically.

The move offshore made sense at the time. In 2018 and 2019, Burrows says, unemployment was so low that “we couldn’t actually hire people in America.” It had gotten to the point where the company would waive requirements for drug testing and 10-grade math skills just to get individuals into the plant.

Even before the pandemic hit, reminding U.S. companies of the fragility of long supply lines in China and elsewhere, change was in the air. Chinese manufacturing wages were on the rise, and turnover in the plants was distressingly high.

Then there was the trade war that broke out between the U.S. and China, resulting in the threat, and sometimes reality, of high tariffs on many imports. The actual picture seemed to change weekly, as tariff hikes were announced, postponed, then suddenly put into place.

“We were scrambling to figure out what it meant,” says Burrows of the on-and-off tariff war. XStream would be caught with containers on the ocean at the moment a tariff was announced, resulting in a substantial drop in profitability. For a small company, lacking the time and resources to deal with the complexity of geopolitics, it was “a hammer blow.” Nor could it predict how the dispute would play out in the months and years ahead, making it impossible to build a secure and reliable supply chain.

The coronavirus only served to underscore the problems that XStream was having with offshore manufacturing. The company had a certain edge over many other businesses caught in the pandemic, given that the industry it was serving — commercial transportation — was considered “mission-critical.” But it was still vexed by varying levels of inventory between, say, the U.S. and Mexico.

“The Ohio plant might be up and running, but the Mexico plant would have a different policy and not be able to fulfill our customer,” Burrows recalls. “There was a mismatch of public policy issues, and we didn’t have a ton of inventory built up.”

XStream knew the decision on where to put manufacturing was more than a matter of comparing labor costs, even if the wage gap between China and the U.S. was narrowing. It needed to look at the total bill of materials cost, including shipping, operational complexities, and the risk of business interruption. (Again, the ever-shifting tariff landscape was making that last consideration ever more critical.)

Finally, there was the growing complexity of XStream’s own supply chain, which necessitated narrowing the physical distance between producer and customer. The heavy and bulky TruckWings panels require specialized tubing and aluminum-formed mounts that have to be laser-cut and formed, along with wire harnesses that are made from scratch, ultrasound sensors, an electronics box, and pneumatic system, all of which must be sourced from multiple specialty manufacturers. In addition to the two providers in Ohio, XStream works with suppliers in Pennsylvania and Phoenix, then assembles many of the units at a site in North Carolina.

Automation is key to many manufacturers’ ability to operate plants in the U.S., reducing their reliance on human labor. Burrows says XStream’s plans rely on a mixture of advanced machinery and people, in both high- and low-skill jobs.

By relocating much of its production to the U.S., XStream reduced order lead times and total costs, and at least partially insulated itself against shocks to the system caused by tariffs and the coronavirus. But just a couple of years ago, such a move wouldn’t have been possible.

“Frankly, [American] suppliers are a little bit hungrier for the work today,” says Burrows. “In 2018 and 2019, a lot of them couldn’t hire enough people for the work they had.”

As for whether XStream intends to maintain or even increase its dependence on domestic production, Burrows says the company has no long-term strategy toward that end. “It will depend on relationships with our individual suppliers,” he says. “It wasn’t like I said to my supply-chain manager, ‘We’ve got to onshore.’ It just made sense over time. American manufacturers produced a better combination of price, lead time and quality.”

Next: How the pandemic is affecting global sourcing strategies.

RELATED CONTENT

RELATED VIDEOS

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Biden Urges Businesses to Vaccinate Workers; J&J Plant to Stay on Hold After Inspection

    Coronavirus
  • Gig Worker

    The Gig Economy Is Booming, Despite Debates Over Workers’ Rights

    Logistics
  • Supply-Chain Issues

    Fed Sees Supply-Chain Issues Growing Despite Better U.S. Outlook

    Coronavirus
  • A Stress Test for Supply Chains, Part 2

    Watch: A Stress Test for Supply Chains, Part 2

    Coronavirus
  • Canadian National Railway

    Century-Old Rail Rivalry Flares Up Over a $30 Billion Prize

    Logistics

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

Yang Ming 6 River Systems ArcBest
Armada aThingz BluJay
Burris Logistics DSC Logistics DCSA (Digital Container Shipping Association)
DHL Resilience360 Flash Global Genpact
Geodis GEP GreyOrange
Honeywell Corporate Honeywell Intelligrated Infor
Inmar Kibo Commerce Kinaxis
Logility Magnitude Software MPO
Old Dominion Oliver Wight OpenSky
Paccurate Ports America Purolator
QAD Precision Red Classic Riskmethods
S&H Systems Snapfulfil TGW Systems
Tradepoint Atlantic Transportation Insights Watson Land Company
Westfalia Technologies Workjam
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing