EHC (ELECTRONIC HARDWARE)

About

In the late1990s Electronic Hardware Corporation (EHC) of Farmingdale, NY had reached a vital crossroads in its history. The manufacturer of injection-molded plastic knobs, dials, and pointers to the builders of consumer and commercial electronic devices was awash in spiraling costs. Its competitive ability was under fire. No matter what it did, internally EHC couldn't make a profit. "We were treading water at best," says Steven Sgammato, President of EHC. "We ran the gamut of incorporating new efficiencies and nothing worked. It all came down to labor and overhead since there's minimal automation in our processes." As manufacturers struggle trying to deal with offshore competitors, many have chosen outsourcing to third world nations as their only answer to survival. EHC executives felt that developing direct relationships with assembly plants in China might be an effective way to lower manufacturing costs without the risky capital investment of building, then maintaining a plant. In the end, not only would this decision turn a $750,000 annual loss into a $1.2 million profit in three years, it would also reveal an entirely new and lucrative revenue stream.

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