CEO Letter
 

Anyone who has driven across America recently will have been struck by the sheer number of factories and businesses that are closed now. Upon picking up any American newspaper, you will be presented with articles about budget crunches, jobless rates and trade deficits. The simple truth is that America is walking down a shrinking path by halting the production of products that the world can use.

At Allied Titanium, we believe people should have access to affordable titanium products. While we do manufacture some of our products in America, the majority of them are made in China in order to keep the cost down. In talking with our customers, a lot of them would prefer to buy made in America, but when presented with an American made price that is more than a China made price, most customers opt for the lower price.

This begs the question as to why it is cheaper to manufacture in China? In 2007, the majority of our parts were produced on ratchet and lever operated production lathes and milling machines. Cheap labor was absolutely key in the production of affordable titanium products. Today, in 2013, high speed CNC milling machines and lathes make almost all of our products and the use of manual labor is disappearing.

As an American and the CEO of Allied Titanium, I have worked hard to find a way to manufacture titanium products affordably on American soil. As usual, the solution lies in both American ingenuity and technology. The list below shows the relative manufacturing costs in each country:

Facilities (land and buildings) Cheaper in America
   
Titanium mill products Cheaper in China
   
Taxes and licensing Pretty much the same
   
Labor Cheaper in China (inflation is closing the gap)
   
Equipment Pretty much the same
   
Fuel, water and electricity Pretty much the same
   
Capital Much cheaper in China
   
High technology Cheaper in America
(Software, computers and robotics)  

As you can see, China only has America beat in labor, capital and raw material. We can eliminate the labor cost problem using robotics, while at the same time providing higher quality American jobs programming, building and running robots.

The mill products problem can be solved by specializing in American made titanium products where the cost of the raw material is less than 50% of the cost of the part. We can also solve this by using Chinese or Russian titanium or negotiating with the American titanium mills for preferred volume pricing.

The cost of capital in America is a bit more difficult to crack. American venture capitalists and banks are reluctant to invest in American manufacturing due to the decimation of America’s manufacturing industry over the last forty years. China has all kinds of money available for manufacturing, and in the past we have been approached by Chinese investors, but preferred to remain an American company.

Fortunately, with the passing of the JOBS act, classic American ingenuity in the form of crowdfunding has opened a new avenue for funding projects. One of the most beautiful aspects of crowdfunding is that the crowd, which is also the market, determines whether or not a particular project should be funded.

Our customers want affordable titanium products and many of them also want Made in America affordable titanium products. Using robotics and the same intelligent technologies we currently use throughout our entire company, we can manufacture affordably here in America if we can get affordable capital.

So the question is, does the “Crowd” want affordable titanium products Made in America bad enough to step up and help fund them?

Thanks for your time,

Chris Greimes

Christopher Greimes
CEO
Allied Titanium, Inc.

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Past CEO Letters:

CEO Letter #1

 

 
  
 
 
 
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