The cost of shipping a 50-foot-tall tank filled with sand around the world can add up, so Parkson Corp., a supplier of process engineering components and systems for water and wastewater treatment, works with manufacturing companies worldwide to produce that tank as close to its final destination as possible.
“Over the past four to five years, Parkson has made a concerted effort to move away from manufacturing and focus instead on partnering with manufacturers who have much deeper manufacturing capacities and economies of scale,” explains Grant Brown, vice president of marketing and strategic partnerships. “We also began to look at where the products were being sold around the world and how to best optimize the manufacturing locations based on sales.” Today, Parkson has 200 to 300 different suppliers it works with around the world located in Asia, the United States and Europe.
“We primarily are working with vendors in Western Europe China, and Germany, and speaking with Italian manufacturers,” Brown reveals. “We have recently established relationships with Latin American manufacturers in Mexico and Honduras.
“What we see is a pretty interesting opportunity in somewhat of a hybrid,” Brown asserts, “where we can take our process knowledge, our water industry knowledge, and the information we’re gleaning from our customers, and impart that on the manufacturing process without having to own all the capital equipment, all the employees and all the capacity.
“We are increasingly moving towards a focused manufacturing structure or posture, where we would build deep relationships with fewer manufacturers, and allow them to manufacture more products for us and work together to value-engineer them,” Brown says.
“We’ve seen some examples of companies that have built deep partnerships with third-party manufacturers, where the OEM’s employees would go and live at a manufacturer’s site and spend time there on a short term and medium term basis to drive down costs and improve product capabilities. This is something that we’re trying to emulate.”
Back Home in Indiana
An example of this type of relationship is the one between Parkson and Jacobs Machine and Tool in Mooresville, Ind., for the manufacture of Parkson’s HiOx Ultraflex aeration panels. Parkson developed and patented the panels, but it works closely with Jacobs on the manufacturing and quality control techniques to produce them.
“One Parkson employee has spent at least six months at Jacobs working with them on manufacturing, quality control, packing and shipping procedures,” Brown relates. “It’s a product we used to make ourselves. We now are having a company that has much better radio frequency (RF) welding, that is centrally located in Indiana – a much better location with faster shipping around the country – and with greater volume capacity than we have. We’re partnering with them on transferring all of our manufacturing capability and knowledge, and working with them on best practices and best-in-class manufacturing quality control and shipping.”
Michael Jacobs, president of Jacobs Machine and Tool, agrees. “What’s been great about it is our business relationship with Parkson and working together with them in a very intense process to get the manufacturing done,” he stresses. “The whole product development process was a good six to eight months or so.
“Parkson already had prototypes from other people,” Jacobs remembers. “We were the third source that they’d been to trying to get to manufacture the panels. They were here all the time. We’ve had them here weekly. One time during the training process this past summer, we had one of their plant guys here for 45 days solid. He went home for the Fourth of July, and then he came back to train us. They’ve had one of their engineers spend about three or four days a week here for the last three months. That’s how serious they are here.”
Jacobs and Parkson worked together to devise the equipment needed to produce the HiOx panels reliably and cost-effectively. “We took existing equipment and completely modified it – that was what they contracted us to do originally, to give them the machine and tool to make this product,” Jacobs remembers. “That was our first commitment. So the manufacturing and assembly, testing and all the other things came afterwards.”
HiOx panels are used underwater in wastewater treatment plants to aerate the wastewater and encourage the growth of beneficial bacteria. Air is forced at high pressure through small holes in the material in the panels. The two pieces of that material in the panels have to be held together tightly and reliably by a machine used to produce air-inflatable products.
“What we use to actually weld the two pieces of material together is an RF welding machine,” Jacobs explains. “Prior to that, we have a CNC machine that cuts the patterns, and then we have to assemble the frame and test the products. We perform the entire procedure.
“We’ve worked hand-in-hand with their engineer,” he emphasizes. “This is a true partnership. They’ve given us all the resources, support and help we could ever ask for, and they’re a great bunch of people. Everybody there has been first-class to deal with from a business standpoint.”
Not Over With Outsourcing
Once Parkson finds a good source for a product, Brown is reluctant to gamble on another. “Recently, a United Kingdom partner of ours – a company we’re working with on a different product – reached out to ask if we’d be interested in having them make the HiOx panels for European markets,” Brown says. “We had a quick conversation and decided to keep that manufacturing in Indiana.
“We have a very good relationship with this company,” he asserts. “It’s a very differentiated product and very unique in the marketplace. Having that made by other companies around the world is a risk not worth taking. The panels can be rolled up and are very lightweight when shipped as parts. It is not that expensive for us to ship these panels around the world, which is what we’re doing.
“Typically, people consider outsourced manufacturing as purely a way to move labor off the books and drive down manufacturing cost,” Brown continues. “We’re looking at outsourcing much more around flexibility and improved quality. So it’s not merely a cost savings decision – it’s much more complicated and provides much more important opportunities for the company.”
Of course, quality control checks by Parkson and third-party companies are necessary to make such a system work. “So what we have is a set of quality control reviews that we do with all our manufacturers, [whether their location is] in Asia or Mexico,” Brown relates. “We’ll go and spend time with manufacturers and make sure they meet our quality control and put our procedures in place. We spot-check or have a third-party quality control manager working with manufacturers to make sure they are delivering high quality.
“If there’s a part of our equipment that is a commodity – a tank or feed assembly or some component that is relatively standard – then it’s quite easy to have numerous different people make those for us,” Brown notes. “We can shop around for the best price on these less proprietary components and build deeper relationships with those interested in working with us to come up with better ways to make improvements.”
Parkson considers a country’s intellectual property (IP) laws before outsourcing innovative products to companies there. “We’re very cautious of who we work with and what we have made in these different countries,” Brown concedes. “It is something we think about on a country-by-country and a product-by-product basis.
“On a single job, we may be importing from two, three or four different regions based on this equation of quality, IP protection, shipping expense and manufacturing expense,” Brown explains. “We’re not looking at making every job in one place. We’re going to be as flexible as we can to drive the best quality at the lowest overall cost.”