Excel Dryer sells about $40 million worth of electric hand dryers each year. Excel’s products can be found in airports, restaurants and public restrooms across the United States.
Most of the parts the company uses come from U.S. suppliers. But the motors and controllers have long come from China. No other manufacturer could beat China’s low prices. But this is changing partly because of import taxes that the Trump administration requires on purchases of many Chinese-made products.
Excel Dryer vice president of marketing and key accounts, Bill Gagnon, works at the factory in East Longmeadow, Massachusetts, U.S., October 25, 2019. Picture taken October 25, 2019. (REUTERS/Tim Aeppel)
Excel plans to release its first completely American-made dryer in a few months. William Gagnon and his family own the company. He spoke with the Reuters news agency about the business and negotiating with suppliers of parts.
“We’d actually be willing to pay a little more for U.S.-made,” Gagnon said. Now, he actually saves money buying American-made parts.
One reason is that the 25 percent tariffs required on many Chinese-made parts make them more costly. Gagnon notes that, by not buying Chinese parts, his company can save money with lower shipping costs.
When faced with a possible price increase because of the tariffs, Excel believed it lacked the resources to get an exemption from the U.S. government to import motors from China. Instead, the company considered the taxes a business opportunity. Excel was already considering improvements to its motor designs. So, the company decided to change the design to increase the life of the machines.
Excel will soon get its motors and controllers from a factory in the state of Tennessee. Adam Finch is director of engineering at the factory, which belongs to investment company Berkshire Hathaway. He told Reuters, “We hope that more customers will be like this – once they see the total costs involved.”
Finch told Reuters that companies can save money by buying smaller orders close to home. The Tennessee factory is in the process of moving some of its operations from China back to the United States.
There also is an ironic turn to the story of Excel’s new all-American hand dryers. The company’s first shipments will be to overseas markets. The new design has a 220-volt motor, meaning it cannot be used in the United States. Most of the new dryers will go to Britain. Gagnon said the next step is to develop a 110-volt version for the U.S. market.
Suppliers change over time
American businesses face a number of difficulties if they want to manufacture products domestically. Suppliers of many parts like electronics and motors have moved overseas in search of lower production costs.
Bringing these suppliers back to the United States is not simple. Many U.S. companies, like Apple, instead try to get tariff exemptions for importing some parts from China. Other manufacturers have switched to low-cost suppliers in other Asian countries.
Gagnon’s father was a former official with the American toy company Hasbro. He bought Excel Dryer in 1997. In 2001, sales increased sharply when the company starting manufacturing a new model that could dry hands in just 10 to 15 seconds. The devices can cost from $400 to $700.
Based in East Longmeadow, Massachusetts, the company employs 50 people in its factory.
Worldwide the hand dryer market remains very competitive, with manufacturers in countries including China, Spain and Japan.
In the United States, paper towels are still the most popular way to dry hands in public spaces. Excel would like more businesses to use electric hand dryers. That is one reason why a sign above the company’s office door reads: “Time to Throw in the Towel.”
I’m Mario Ritter, Jr.
The Reuters news agency reported this story. Mario Ritter Jr. adapted it for VOA Learning English. George Grow was the editor.
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Words in This Story
exemption –n. permission to not be required to do something others are required to do
opportunity –n. a situation in which something can be done
customer –n. a person who buys goods or services from a business
ironic –adj. something that is strange or funny because it is unexpected
domestically –adv. relating to or made in your own country
towel –n. a piece of cloth or paper used to dry things