Clarksdale is known for its blues music but there’s nothing downbeat about the success the Delta town has achieved on the reshoring front with the arrival of AirGuide Manufacturing.
Rising transportation costs, long lags between orders and delivery and an inability to keep sufficient inventory of manufacturing material on hand led the maker of products for the HVAC industry to shift its operations from Mexico and China to both Clarksdale and the company‘s longtime headquarters in Hialeah, Fla., near Miami.
AirGuide and formerly Houston-based sister operation Arcalux — a maker of specialty lighting for infection control — will soon be joined in Clarksdale by American Green Technology, which is moving its outdoor induction lighting operation from Livonia, Mich.
Next up is a doubling in plant size, said Doug Marty, CEO of the half-century-old, family-owned AirGuide, which specializes in making HVAC grilles, registers and diffusers for both the residential and commercial markets..
“We’re making contingency plans for expansion of that already,” Marty said. “We’re looking at adding another 60,000 to 65,000” square feet.
The expansions are based on anticipated demand for Arcalux’ infection control lighting from hospitals, urgent care centers, nursing homes and daycare centers, Marty said, as well as expectations for high demand for American Green Technology’s energy-efficient lighting for parking garages and highways.
“We’re in the process of closing” American Green Technology’s Michigan plant, he added.
The move to Clarksdale has it origins in
AirGuide’s decision to shave its Miami-area workforce from 240 to around 160 — a move Marty says AirGuide achieved without declines in production numbers or quality standards.
To make the downsizing work, it needed more rapid production and an increased range of products. The manufacturing outsourced to workers in Mexico and China could not meet the new demands, according to Marty.
“We needed to move rapidly and come out with new products.”
As it ramped up its HVAC product lines, AirGuide did not want to double the materials inventory that would be required at its outsourced operation near Mexico City, he said. “We also had some lag time issues. They couldn’t get the product out as fast as they could two or three years ago.”
AirGuide’s product transporters frequently encountered two- and three-day delays at the U.S. border with Mexico, according to Marty. “It got to the point we just didn’t want to do it anymore.”
Mississippi was an option “and we went for it,” he said.
As in Mexico, lag times became a problem in China, where AirGuide had a couple hundred contract workers making HVAC products. However, unlike Mexico, the decision to leave China came hard for AirGuide, which had a substantial equipment investment in its operation there, Marty said. “We owned the dies and the tooling, but we got into the same situation [as in Mexico] with logistics. From the time we placed an order and received it, it was about 75 days.
“The quality was good but the logistics and amount of inventory we had to carry” became problematic, he said.
The capper came with “severe” import tariffs on aluminum announced by President Obama, Marty added.
“We got out before the tariffs came back. What we did there is now primarily in Florida and partly in Clarksdale.”
Marty first scouted Clarksdale at the invitation of a friend who had some specific buildings in mind. But riding around on his own, Marty spotted the buildings vacated by Taylor Chair. “They looked like they would work,” he said, praising the help he later received from Gov. Phil Bryant, the Mississippi Development Authority, Clarksdale Mayor Bill Luckett and Clarksdale/Coahoma County Chamber of Commerce Executive Director Ron Hudson in gaining use of the publicly owned building.
Marty sees more manufacturers returning to the United States from Asia, Mexico and elsewhere. Production costs — including wages — are drawing ever closer to levels that can be achieved in the United States, he said.
But if Washington wants to add some serious speed to the process, it must get more generous with export incentives and give U.S. manufacturers more ability to compete globally, Marty added.
“We are in the Dark Ages when it comes to that.”