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R.E.S.­ilience in Value Creation 《竹经:经商经世离不得立根创新》

America’s Toilet Turnaround Is a Microcosm of US Manufacturing 

Trends; After Years of Moving Work Overseas, Remaining 

Factories Ramp Up U.S. Output

SEPTEMBER 25, 2013 LEAVE A COMMENT (HTTP://BAMBOOINNOVATOR.COM/2013/09/25/AMERICAS­TOILETTURNAROUND­IS­A­MICROCOSM­OF­US­MANUFACTURING­TRENDS­AFTER­YEARS­OF­MOVING­WORK­OVERSEASREMAINING­FACTORIES­RAMP­UP­U­S­OUTPUT/#RESPOND)

Updated September 24, 2013, 7:30 p.m. ET

America’s Toilet Turnaround

After Years of Moving Work Overseas, Remaining Factories Ramp Up U.S. Output

JAMES R. HAGERTY (http://topics.wsj.com/person/A/biography/1361)

PERRYSVILLE, Ohio—In previous management jobs, Jim Morando watched Chinese imports engulf the U.S. market for vinyl tiles,

wood flooring and window blinds. Now, as president of Mansfield Plumbing Products, a toilet manufacturer here, Mr. Morando 

says he has decided to “stand and fight.” After decades of losing out to foreign rivals, U.S. manufacturing of toilets is making a 

surprising, if modest, comeback—mostly under foreign ownership. Mansfield Plumbing, owned since 2004 by Organizacion Corona 

of Colombia, is spending $9 million to expand the capacity of its Perrysville plant by nearly 50%. Another toilet maker, Toto

(http://online.wsj.com/public/quotes/main.html?type=djn&symbol=5332.TO) Ltd. 5332.TO ­0.51%

(http://online.wsj.com/public/quotes/main.html?type=djn&symbol=5332.TO?mod=inlineTicker) of Japan, is installing new casting 

machinery to raise capacity at its Morrow, Ga., plant about 5%. American Standard Brands, bought earlier this year by Lixil

(http://online.wsj.com/public/quotes/main.html?type=djn&symbol=5938.TO) Corp.5938.TO ­1.62%

(http://online.wsj.com/public/quotes/main.html?type=djn&symbol=5938.TO?mod=inlineTicker) of Japan, is installing a new kiln and

refurbishing other parts of its Nevada, Mo., plant, boosting capacity 5% to 10%. The toilet turnaround is a microcosm of U.S. 

manufacturing trends.“The days of chasing cheap labor around the world are coming to an end,” said William Strang, who heads 

the operations division for Toto in the Americas. Toto is reducing trans­Pacific shipments and relying more on U.S. and Mexican 

plants for its sales in North America.

Making toilets requires lots of manual labor—”very much like making pottery,” as one industry executive puts it. That is why most 

production moved over the past two decades to lower­cost countries, mostly China and Mexico.

The work is demanding, requiring muscles to lift bowls and tanks, as well as a delicate touch to smooth surfaces.

“You need the strength of a football player and the hands of a sculptor,” Manfield’s Mr. Morando said as workers in muscle shirts

hoisted newly baked porcelain on a recent afternoon.

Three­quarters of the 10.6 million residential and commercial toilets sold in the U.S. last year were imports, estimates Victor Post,

vice president of GMP Research Inc., a research firm based in Mount Pleasant, S.C.

There are just seven toilet plants in the U.S. today, down from 48 in the late 1970s, Mr. Morando said.

Much of that capacity may never return, but industry executives now see U.S. production as a viable alternative. Even if they don’t 

build new plants in the U.S., they are more inclined to add capacity in nearby Mexico rather than in China so they can reduce 

shipping times. In addition, ocean­shipping costs and Chinese wages have risen, making production there less attractive.

The biggest U.S. toilet suppliers are Kohler Co., with an estimated 24% of the U.S. market, followed by American Standard, 18%;

Toto, 9%, and Mansfield, 8%, according to GMP.

http://bambooinnovator.com/2013/09/25/americas-toilet-turnaround-is-a-microcosm-of-us-manufacturing-trends-afteryears-of-moving-work-overseas-remaining-factories-ramp-up-u-s-output/
Kohler has kept three U.S. toilet plants—in Kohler, Wis.; Brownsville, Texas, and Spartanburg, S.C.—and runs a large plant in 

Monterrey, Mexico. Many smaller U.S. suppliers moved all their production outside the U.S.

When he arrived at Mansfield in early 2006, Mr. Morando said, the factory in Perrysville was “on the ropes,” with production costs 

about 20% above Chinese imports.

But Mr. Morando wanted to keep production in the U.S. That would allow the company to differentiate itself by stressing its ability

to get products to customers faster, respond quickly to changes in consumer preferences, and offer a “Made in U.S.A” label, which 

Mr. Morando believes is increasingly appealing.

To cut costs, Mansfield automated administrative processes such as order­taking and reduced inventories, among other things.

Workers, represented by the International Brotherhood of Teamsters, accepted a wage freeze that lasted until 2012 and shouldered a 

larger share of health­care costs.

“We’ve worked together to get them through a rough time,” said Mike Markham, secretary­treasurer of the Teamsters local that 

represents workers.

Mansfield employs about 480 people in Perrysville, up from 370 four years ago, and expects to raise that head count to about 550

within six months, Mr. Morando said.

In Georgia, Toto has increased automation. New Motoman robots, from Japan’sYaskawa Electric

(http://online.wsj.com/public/quotes/main.html?type=djn&symbol=6506.TO) Corp., 6506.TO ­1.90%

(http://online.wsj.com/public/quotes/main.html?type=djn&symbol=6506.TO?mod=inlineTicker) spray glaze on the toilets, a job done

by people in many factories. Those new robots are about twice as fast as the previous ones used by Toto.

Still, much of the work needs to be done by hand, partly because the clay used to make toilets is fragile during the production

process and could easily be damaged by machinery. People don’t need to be reprogrammed every time a style changes slightly.

Clay arrives at the plant as powder. Giant blades stir the powder with water into a gray soup, pumped via pipes and hoses into

molds. After the clay bowls emerge from the molds, workers use sponges to smooth the surfaces.

“The human hand is much more sensitive and capable” than a robot for such tasks, Toto’s Mr. Strang said.

The workers bond the rim of the toilet to the bowl by hand. A custom­made machine gingerly grasps the clay bowl and turns it

upside down so workers can inspect the underside.

Then a conveyor belt moves the toilets into a drying room, where they sweat out excess liquid. After drying, the robots spray on

glaze, a liquid that provides the hard, shiny surface.

Then the toilets spend roughly 18 hours baking in a kiln at a temperature of 1,800 degrees Fahrenheit. Next come final assembly and

testing.

Annie Shannon whacks each newly baked toilet with a wooden mallet. “It should sound like a bell,” said Ms. Shannon, who has 

worked in the plant for 15 years. If the sound is flat, there might be a hairline crack in the porcelain.

One of her colleagues puts sponges in the new toilets and flushes. Mr. Strang explained: “We want to make sure if we put four 

sponges in, four come out.”

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About bambooinnovator

Bamboo Innovator Institute is set up to establish the thought leadership of resilient value creators around the world. KB Kee is the 

Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting 

undervalued wide­moat businesses in Asia. The Moat Report is developed together with our European partners The Manual of 

Ideas (www.manualofideas.com), the idea­oriented acclaimed monthly research publication for institutional and private investors. 

The MRA’s paid­subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 

billion in asset under management in equities and savvy private individual investors. KB has presented his thought leadership as a 

keynote speaker in global investing conferences with speakers including famed serious investors Donald Yacktman, Howard Marks, 

Jean­Marie Eveillard etc. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, macroeconomic 

and industry trends in Singapore, HK and China. KB has been rooted in the principles of value investing for over a decade as a fund 

manager and analyst in the Asian capital markets. He was head of research and fund manager at a Singapore­based value 

investment firm since 2002. As a member of the investment committee, he helped the firm’s Asia­focused equity funds significantly 

http://bambooinnovator.com/2013/09/25/americas-toilet-turnaround-is-a-microcosm-of-us-manufacturing-trends-afteryears-of-moving-work-overseas-remaining-factories-ramp-up-u-s-output/
outperform the benchmark index. He was previously the portfolio manager for Asia­Pacific equities at Mirae Asset Global 

Investments, Korea’s largest mutual fund company. He holds a Masters in Finance and degrees in Accountancy and Business 

Management, summa cum laude, from the Singapore Management University (SMU). He had also taught accounting at the SMU. 

He had published cutting­edge empirical research in the Special Issue of Istanbul Stock Exchange 25th Year Anniversary of the 

Boğaziçi Journal, Review of Social and Economic Studies, as well as wrote articles about value investing and corporate governance 

in the media.

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