The decision to seek outside assistance came toward the end of Labelexpo Americas 2010, Bates says. He and his team discussed the proposal with the other company, and the agreement was forged soon thereafter. The manufacturing agreement will affect a small percentage of the company’s overall die output, he adds.
The change in production will mean the loss of nine employees.
The reason for the partnership has its origin in the November 2009 fire that destroyed Gerhardt’s plant in Dallastown, PA. The company has been in the process of retooling an existing building in nearby Emigsville for die production and offices, but recently learned that tough environmental rules by local officials would dampen profitability. The flexible die manufacturing process utilizes chemical etching and the production of waste water that has to be treated.
In a letter to customers, Bates wrote, “As we were in the process of building up production in the US after the fire, the local authorities were putting us under stricter environmental restrictions, causing severe additional setup cost. It has became apparent that the production unit costs alone would be too high for us to sustain a profitable business. Therefore the decision has been made to outsource our same-day flexible dies, which will boost our US profitability.”
Dies that do not require same-day turnaround will be manufactured in the company’s plant in the UK, as they have been since the fire.
“We regret, of course, that this decision has a negative side to it, because we have to say goodbye to a dedicated and skilled production staff in Dallastown,” Bates says. “We would like to thank them all for standing by us during the labor dispute, doing the damage control after the fire and working so hard to clean the factory up. We wish every single one of them the best of luck in their future endeavors.”
Bates says that Gerhardt USA will have full control over the production of its products at the other company, and is installing two or three of its people at that plant “to manufacture and test the finished products that will be shippedto our ever supportive US customer base, to assure that they continue to be made at the same high level of quality that you expect from Gerhardt products.”
In his letter to customers, Bates asked that they ignore rumors that had been swirling through the industry shortly after the agreement was made. One story had Gerhardt acquired by another die manufacturer. Both that die maker and Gerhardt say it is not true.
“The brand is still here, the sales team is still in place,” Bates says. “Gerhardt is still going strong and we feel that we have strengthened our market position by once again offering a source of high quality flexible die solutions in the United States.”