Coming Home: Appliance Maker Drops China to Produce in Texas
HOUSTON -- Farouk Shami, a Palestinian-born hairdresser who built a $1 billion manufacturing
company around a popular line of hair irons, is moving all of his production of hand-held
appliances from China to a sprawling new factory here.
The move flies in the face of conventional wisdom, which says gadgets like this are best made in
a low-cost country. But, he says, outsourcing has led to a loss of control over manufacturing and
"We'll make more money this way -- because we'll have better quality and a better image," says
the 66-year-old, who says his company, Farouk Systems Inc., spends about $500,000 a month
fighting counterfeits, most of which he says originate in China. The company collects the fake
products and tracks the source, and then brings action in China to shut down illegal producers.
Against the Outsourcing Flow
Farouk Shami talked with workers in early August on the floor of his new manufacturing facility
Mr. Shami figures having production under his nose will help him control quality and inventory,
and also fight the fakes, since imported irons will automatically be suspect. He sells in 104
countries, but the U.S. represents over 60% of the company's sales.
"I think you're starting to see more manufacturers rethinking outsourcing," says Daniel
Meckstroth, an economist at the Manufacturers Alliance/MAPI, a public policy and research
group based in Arlington, Va., calling a June speech by General Electric Co. CEO Jeffrey
Immelt, where he said that overseas outsourcing had gone too far and that U.S. companies
needed to expand domestic production, a "bellwether of what's happening in manufacturing."
Besides GE's efforts to manufacture more within the U.S., other companies such as St. Louis-
based electrical-equipment maker Emerson has shifted some production of items such as
appliance motors from Asia to Mexico and the U.S., in part to be closer to customers in North