You’ll never see a QTI label while browsing a store aisle or consumer catalog, but chances are good you’ve sampled the company’s handiwork by pulling a cold beverage from a commercial refrigeration unit, using a fish-finder in your boat or taking medical tests.
“From a satellite to a smoke detector, we make stuff for that,” says president and CEO, Todd Ketlinski.
QTI derives from the 36-year-old firm’s original name, Quality Thermistor Inc., which reflects the company’s aim and products, temperature sensors called thermistors that are used in a dizzying array of devices, from deep fryers to military tanks.
For about a year and a half, the locally owned company followed the path of many U.S. manufacturers and moved much of its production to plants in Poland and China. QTI leaders planned to further expand offshore operations to Vietnam, then had a change of heart that prompted them to “reshore,” shifting the work to a new plant in Nampa in 2011.
The perceived benefits of offshore production were outweighed by drawbacks, QTI leaders say.
“Labor costs were lower, but not the overall costs of doing business,” says Director of Operations Gene Lampe, citing shipping costs and the expense of correcting problems.
Lead times were longer, and quality control suffered with offshore production, adds John Staley, director of business development.
“We became dull normal,” Staley says. “And how you differentiate in this market is quality and speed.”
In a business where precision and responsiveness to customers are key, Ketlinski found dull normal intolerable.
“We could feel our reputation suffering,” he says. “We lost two large potential customers because of outsourcing.”
Since reshoring in 2011, Staley says, QTI has secured one of those customers, “and we’re working on the other one.”
‘FLAG ON THE BOX’
QTI’s experience echoes the arguments of the Reshoring Initiative, a national movement launched in 2010 to encourage more manufacturers to bring jobs back to the United States. According to its mission statement, the group aims to help companies “more accurately assess their total cost of offshoring, and shift collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership.'”
Moving overseas operations to Idaho strengthened QTI’s existing business relationships and made it easier to court new ones, Ketlinski says.
“We bring customers here all the time. We had a customer here yesterday,” Lampe said as he showed a reporter around the Nampa plant March 6.
“We put that flag on the box, and it’s starting to hold more importance than ever,” Ketlinski says. “Existing customers like it and prospective customers like it.”
The CEO also is proud of boosting the Treasure Valley economy. When QTI launched its north Nampa plant in March 2011, it made use of a long-vacant industrial building and created about 40 jobs, he says.
The company anticipates adding at least 10 or 20 jobs this year, Lampe says.
It’s unclear how many other Idaho jobs may be linked to reshoring. The Idaho Department of Labor doesn’t track that trend, and the Department of Commerce’s involvement is limited to companies that approach the state for information or assistance, says Chief Communications Officer Megan Ronk.
“There’s certainly a trend” of manufacturers showing interest in reshoring, she says, noting that some such companies aren’t currently in Idaho but see it as a potential place to reroute overseas jobs.
An Oct. 23, 2011, article in Business Insider featured two Idaho companies that had just reshored work from China: Buck Knives in Post Falls, and Ende Machinery and Foundry in Lewiston.
Labor, material and freight costs have been rising in Asia, making the idea of offshore operations less alluring, Staley says.
FAST-GROWING FIRM
Ketlinski and his executives say QTI’s revenues have doubled in the past five years. They won’t disclose figures.
“Last year we had 22 percent growth, and we figure this year will be about on par with that,” Staley says. “We project another best year ever.”
About 1.2 million assemblies – thermistors in housings customized for the client and the application – were shipped from QTI’s Nampa plant in 2012, Lampe says.
With 120 workers at four plants – Boise, Nampa, San Diego and Tecate, Mexico – the company makes products for 600 to 800 private companies, plus various U.S. government agencies.
“We have four Idaho customers,” Ketlinski says. “The majority of our business comes from both coasts. About 20 percent of our sales are international.”
Founded in 1977, the company built its early reputation on military and aerospace applications, and although QTI has branched out considerably, it still dominates that market for temperature sensors, he says.
“We’re on the Abrams (tank); we’re on the Patriot missile; we just landed on Mars,” Ketlinski says, noting that “the biggest feather in our caps is definitely the Mars Rover.”
QTI sensors detect the temperature of the motors driving the Rover’s wheels to “make sure they’re driving at the optimum temperature,” he says. The company worked on the project for 10 years; the Rover landed on Mars in 2011, and the QTI equipment did its job.
Military and space contracts come in third among QTI markets, Ketlinski says.
“Our biggest market would be medical applications,” he says, from sleep apnea machines to incubators and controls for organ-transplant equipment.
After that are products for heating, ventilation, air conditioning and refrigeration, he says. One of QTI’s innovations was to develop waterproof sensors. Ketlinski says that solved a significant problem for the refrigeration industry, where “moisture is the No. 1 source of failure.”
FINDING NICHES
QTI specializes in serving markets where there’s a “high cost of failure” and highly reliable, precise thermistors are essential, he says.
“That’s why the medical market is so important to us, and automotive isn’t,” he says.
One exception is Tesla, maker of high-end electric roadsters. QTI makes a temperature sensor for the electric motor.
Increasing emphasis on energy efficiency in recent years has been a boon for thermistor makers, Ketlinski says, since monitoring temperature helps increase efficiency.
The company makes sensors for Energy Star-rated appliances and has delved into alternative energy with several contracts with large solar-energy companies, Staley says. QTI also is working on geothermal applications, he says.
One factor that made reshoring a good move for QTI was the ability to automate many functions that were handled by line workers overseas, Ketlinski says.
“The cost of automation equipment has dropped, so much smaller companies like us can afford it,” he says.
With automation, the 40 employees at the 16,000-square-foot Nampa plant can carry out the work of a much larger labor force overseas, he says.
The employees available in Nampa were accustomed to tech-sector work and adapted quickly to the thermistor business, he says.
The company also has had good luck with engineering interns from Boise State University, Ketlinski says, noting that QTI’s director of engineering started out as an intern.
Future applications for the technology include disposable medical sensors and devices used in DNA sequencing and plastic surgery, Staley says.
‘NEARSHORING’
QTI is unlikely to ever completely abandon operations beyond U.S. boundaries, Ketlinski says.
Its 20-year-old plant in Baja California, Mexico, hasn’t posed the problems created by doing business in Asia and Eastern Europe, he says.
Companies interested in doing less business overseas have increasingly focusing their attention closer to the United States, if not within U.S. borders, the Reshoring Initiative found, calling it “nearshoring.”
A 2013 Group Outlook Survey by the buying consortium Prime Advantage showed that about 1 in 5 survey respondents indicated they had brought international sourcing closer to the U.S. in the past year, with about 28 percent saying they had moved sourcing to Mexico.
Independent and relatively small, QTI competes against corporations such G.E. and Honeywell.
Asked if big companies ever come sniffing around, interested in absorbing his company, Ketlinski replies, “daily.”
But, he adds, “I’m not for sale.”
Kristin Rodine: 377-6447
Source Article from http://www.idahostatesman.com/2013/03/19/2497327/reshoringhelps-boises-qti-thrive.html
