With the nation’s airplanes grounded last week, so was business at Santa Ana contract electronics maker Express Manufacturing Inc.
With 70% of the goods the company uses to make products coming in on airplanes, and 95% of its finished goods going out on them, Express Manufacturing came to a virtual standstill for a time last week. The crippling effect of a ban on air transportation could have been disastrous.
Express Manufacturing executives hunkered down in a meeting to find a way out of the situation. All the while, orders kept coming in.
“Obviously, that put some burden on us,” said Luke Kensen, director of business development at Express Manufacturing, which counts about $50 million in yearly revenue.
In the end, Express Manufacturing opted to ship products on the ground. The shift added days to scheduled delivery times. But it was better than waiting.
“To be frank, manufacturing of hardware and orders were not cancelled in any way,” Kensen said.
Express Manufacturing wasn’t the only one facing a quandary last week. For contract manufacturers, many of which call Orange County home, the lifeline of business is the ability to fly goods via Federal Express Corp. and United Parcel Service Inc.
The situation played out across OC last week, with the county’s large number of electronics, computer and distribution companies. While transportation woes seemed small compared with the wrenching effects of last week’s terrorist attacks, local companies likely will be dealing with shipping wrinkles for some time.
Santa Ana-based computer products distributor Ingram Micro Inc., OC’s largest publicly traded company and UPS’ largest local customer, was among those that had to scramble last week.
Ingram Micro executives held a series of meetings to thrash out shipping options. Chief Executive Kent Foster, who runs the company from his hometown of Dallas, happened to be in town, which helped the firm deal with the situation, a spokeswoman said.
After ensuring that a sales team scheduled to meet in the World Trade Center the morning of the attacks was safe, Foster met with Ingram’s logistics team. Sifting through several options, Foster decided the company would ship goods to customers through ground transportation.
Ingram Micro, which has special contracts with the major shipping companies, was told it would be given priority service.
“We were on the phone with all the major carriers immediately,” said Ingram spokeswoman Jennifer Marchetta.
Then Foster met with the company’s project management team to be sure enough people were available to complete projects the company already was working on.
Following these two key meetings, Ingram’s sales and finance teams met to make sure everything was in order.
“There were meetings at all levels,” Marchetta said.
At the end of the day, Ingram Micro, like Express Manufacturing, was able to ship products to customers on the ground, albeit with a two- to five-day delay.
“They were getting products,” Express Manufacturing’s Kensen said of the company’s customers.
Another distribution company that mainly ships products on the ground said last week’s aircraft grounding put only a slight kink in the works.
AmerisourceBergen Corp., the Valley Forge, Penn.-based distributor of drugs and supplies that recently acquired Orange-based Bergen Brunswig Corp., said a small fraction of its products goes by air.
“People are still getting vaccines and supplies,” said spokesman Mike Kilpatrick.
AmeriSourceBergen has 51 distribution centers throughout the U.S., each serving customers in a 400-mile radius. The company was able to ship products in and out solely via trucks, he said.
“These centers are strategically located. Our customers were able to get all the supplies they needed,” Kilpatrick said.
For many companies,especially brokers and manufacturers,shipping products was only part of the concern.
After giving employees the day off to be with their families, Andrea Klein, chief executive of Irvine-based electronic components broker Rand Technology Inc., said she advised her sales teams to contact every customer to get a handle on their situation.
“Typically, 95% to 98% of our products go through the air,” Klein said. “It was very difficult on Tuesday to get a handle on things, so I just sent everybody home. On Wednesday, we were still booking business.”
While a financial hit is certain, many of OC’s distributors and contract manufacturers said a few days without air shipping wouldn’t hurt too much.
Fountain Valley-based Kingston Technology Co. said the company kept operating even though many of its goods couldn’t be shipped out. Kingston, which assembles memory boards and other computer components, has to make and send out products quickly,often on the same day,in order to stay competitive.
“Everything was still in production and is running,” said Kingston spokeswoman Heather Jardim. “One or two days of delay isn’t bad.”
Since some components used to make Kingston’s products didn’t come in, the company moved some workers to other projects. Kingston also shifted some production to facilities in Malaysia and Ireland. n
