RSS Feeds:I set off again for Hong Kong where I would meet Lenny from Swift Tread and travel to South China to review the tool modifications, and then return later in the week to check on their progress. I found it more than a little odd that that impressive plastics factory I originally toured with Lenny was not on our itinerary. Instead, I ended up reviewing parts in a cramped, low-tech factory owned by the Ling Brothers. In the US we call this “bait and switch,” and when I questioned Lenny on the change, he explained that this alternate factory offered better pricing. Strange, of course—my price didn’t go down.
I also planned a side trip with Henry, unbeknownst to Swift Tread, to check out some new factories in northern China. Our host for one of these visits was a young woman in her early twenties, who spoke very little English. She, along with a young man and driver—neither of whom spoke any English—met Henry and me in Ningbo to begin the trip. I began to get suspicious of the relationship between our hosts and the factory when several phone calls were placed during the drive to the factory, requesting directions. I was led to believe that they owned the factory, but they were actually brokers paid by factory owners to lure American business people to their facilities. Having Henry with me was invaluable since he understood everything they said and could monitor their conversations. After three long hours crammed in a Volkswagen Passat with little to talk about, the five of us pulled up to what appeared to be a relatively impressive factory. Well, it was large, if not impressive.
Once inside, the stench of toxic fumes coming from the painting and staining rooms was difficult to stomach. Not a single person wore a protective mask. As we moved through the factory, I asked to see the shop where they formed the wood, which turned out to be a treacherous walk through construction rubble. Only a portion of the shop had a roof; it had no walls. The shop tools were ancient, the lighting was dim, and the work place was littered with scrap and garbage. I snapped a few photos because I could not believe my eyes. I told Henry to tell our hosts I’d seen enough. I wasn’t looking forward to a three-hour return trip with these people, and, to add insult to injury, was bullied into a two-hour dinner with them before we even hit the road.
The next day we were greeted by a friend of Henry’s. Jason worked for Gemmer Technology, the company that Henry had worked with for nearly 20 years. After touring Gemmer’s new, and very modern, factory we talked about my project in detail. Actually, I talked and Henry translated, since no one at Gemmer spoke English. Gemmer’s organizational structure very much appealed to me. Rather than the agent relationship, with the assortment of middle-men and “partnerships” I had experienced with Swift Tread, I would work directly with Gemmer, which houses the molder and toolmaker within their four walls. To me, this seemed less risky and meant a lower margin for error.
We traveled back to South China to review the modifications that Swift Tread had made on the current tools. My hope was they would finally achieve the desired functionality to get us through the next several months. This time, I was taking Henry back to the factory with me—two sets of eyes and ears would be better than one—especially when one set speaks the language. Mr. Ling*, one of the partners from the injection molding factory, picked up Henry and me at our hotel. Henry was quick to inform Mr. Ling that he did not speak Cantonese, the local language. This deception positioned Henry as a spy for me, pretending to not understand the conversations between my agent, Lenny, the molder, Mr. Ling, and the tool maker. After a short while, Henry pulled me aside and advised me to get my business out of Swift Tread as swiftly as possible. He overheard the toolmaker tell Mr. Ling that there was nothing else he could do to adjust the mold. Henry also learned that my agent, Vinnie—who was supposed to have my interests at heart—was really protecting the interests of the molder.
I took detailed photographs of the tools, gave Swift Tread the go-ahead to correct the tooling, and we left. In light of what Henry told me, it seemed doubtful Swift Tread would ever produce the parts correctly. Still, I hoped and prayed for a miracle as they went back to adjust the mold. The sad truth was that I was too far down this road with these guys, and any move to a new supplier would have to wait until 2005.
A heartbreak with Brio
Despite my clear specifications and a detailed evaluation of all molded samples along with detailed engineering analysis, Swift Tread never was able to achieve the standard with respect to functionality. After the disappointing trip to China in March 2004, I was forced to accept defeat; my manufacturing partners in Swift Tread weren't going to provide the quality I required.
By this time the expiration date was looming for BRIO’s Letter of Credit, and 10,000-piece order was quickly slipping away. Because of the production delays, BRIO missed out on the spring selling season, and by their own estimation would not even be able to sell 10,000 in 2004. They were now seeking a lower price because of lost sales, and were considering other changes to the distribution strategy. I couldn’t swing a lower margin, and concluded that I would be better off financially if I managed distribution in North America myself for the first year. As a consequence, I reluctantly cut ties with BRIO.
“Despite the fact that each product embodied my global patents and trademarks, Vinnie had no qualms about breaking international laws and selling them on the open market. In this scenario, it was likely that Automoblox would be on sale somewhere in the world and I would not get one thin dime of the revenue.”
I had a new problem though. I no longer had the 10,000-piece BRIO order, but Swift Tread had already begun production of 15,000 parts—of which only 5,000 were spoken for by my international customers. Ultimately, Swift Tread was able to assemble only 13,000 pieces. I ordered an inspection by an independent company to evaluate the quality; the shipment failed inspection. A second inspection requested by Swift Tread also failed. My options were limited, to say the least. I had 13,000 products sitting in China that failed to meet my quality standards...so much for a brand strategy and four years of blood, sweat and tears. To me, releasing products that did not measure up to my own standards made me feel like I was selling out on my dream—and that was not acceptable.
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