Luggage maker Samsonite International is exploring the possibility of establishing a production base in the United States, Chief Executive Officer Ramesh Tainwala said, but he is worried that a lack of skilled workers and poor infrastructure could not support the plan.
“When we ship goods, we literally ship air,” Tainwala said, as luggage is hollow. “For me, it just makes fundamentally good sense to do manufacturing closer to the market.” Samsonite now manufactures more than half of its products sold in Europe on the same continent; it was less than 10% a decade ago.
Samsonite, which was founded more than a century ago in Denver Colarado, started considering setting up factories in the US in 2016. The US still accounts for about 30% of global sales.
“One of the single biggest impediments,” he said, “we have concluded is getting enough skilled manpower.” In contrast, a plant in Belgium would be able to source skilled workers from eastern European countries like Hungary.
If Trump says America first, I’m all for it, because America will grow, and if Americans do well, we will do well. But we also want Chinese to do well, we want Indians to do well
In addition, more compliance requirements in the US have also made it difficult for manufacturers. “You need more people to manage compliance than manage the business,” Tainwala said. In comparison, he found that China had been a easier place to do business in the past 20 years.
The CEO of the Hong Kong-listed luggage maker said infrastructure was also a key factor in making a decision on where its factories are located. “Today if you really compare the infrastructure of China versus the US,” he said, “China looks like a first world country and the US looks like a third world country.”
US President Donald Trump has pledged an “America First” foreign policy and to increase spending on infrastructure. However, Tainwala takes a longer view on his business since another president could take the Oval Office in four years.
“I always feel what is good for America is good for our business,” Tainwala said. “If Trump says ‘America first,’ I’m all for it, because America will grow, and if Americans do well, we will do well.”
“But we also want Chinese to do well, we want Indians to do well. All of them to do well,” he added.
Makes me want to not buy Samsonite products. US has unskilled workers? You just don’t want to pay for it.