Newsletter

SEPTEMBER 2023

A letter from our President

RK has a long history – over 30 years – developing unique capabilities and providing logistics services for the semiconductor industry. Over the past 10 years we also have built up our expertise supporting electric vehicles and the special needs of lithium-ion battery storage. This proven expertise aligns perfectly with emerging opportunities in these two sectors.

With the passage of the Inflation Reduction Act spurring development of electric vehicles and more non-fossil fuel-generated power, and the CHIPS Act incentivizing once-in-a-generation massive investments in U.S. semiconductor manufacturing, Silicon Valley is on the cusp of a new wave of growth and innovation.

This spring, RK Logistics marked one year under our new ownership, filled with strategic growth and positioning to compete and succeed in the innovation economy.

Part of our mandate and vision for the company is geographic growth in key markets. We’ve opened new facilities in Michigan, Texas and Arizona, as well as two in Northern California—expanding our overall footprint to 1.6 million square feet over 16 warehouses. We are continuing to look for strategic expansion opportunities in other growth markets this year and beyond.

As the innovation economy presents new opportunities, we are positioning to help our customers take full advantage of these evolving manufacturing and industrial sectors.

Our focus remains on building a company with a core culture of investing in and retaining the best people, listening to our customers, providing speed to market and value-based pricing, and delivering engineered solutions that meet the requirements of the most demanding customers in the world. We look forward to continuing this journey into the innovation economy with you, and as always, we very much appreciate the opportunity to earn your business through quality service and support.

Regards,
Rock Magnan, President and Chief Operating Officer

RK is expanding to 4 new locations

With our 4 latest warehouse openings, we’ve increased our footprint to 16 facilities with over 1.6 million square feet of warehouse space.

Hayward,
California

Greater Phoenix & Southern AZ

Austin,
Texas

Ann Arbor,
Michigan

Geopolitics, China and Reshoring

By Rosemary Coates, Executive Director of the Reshoring Institute

Reshoring is no longer just an idea. Real job growth in the U.S. indicates the trend is upward and sustainable, adding about 200,000 jobs per year. A recent survey by Kearney Consulting reported that 96% of responding CEOs are considering reshoring their operations, or have already done so.

Before the pandemic, most companies made global manufacturing and sourcing decisions based solely on costs. If savings were available by shifting operations offshore or sourcing products from foreign suppliers, then that was enough evidence to decide to go to a foreign country. But the pandemic introduced supply chain risk in a way that affected executives’ thinking. Now, costs plus risk enter into the decision to rethink where in the world to manufacture.

Most companies doing business in China are also concerned about geopolitics and the deteriorating relationship between the U.S. and China. The unpredictability of the future of China is another reason that companies are considering moving to another low-cost country or bringing manufacturing back to America.

Attitudes in China have changed

Companies doing business with Chinese manufacturers have noticed some changes over the past couple of years. During the “golden years” of manufacturing in China, (approximately 2000-2015) Americans were welcomed and encouraged to do business in the country. Despite communications barriers and sometimes difficult contract negotiations, it was relatively easy and a sound cost-cutting decision to move operations or sourcing to China. But the more recent deteriorating U.S. government relationships with China have ignited a parallel change in Chinese attitudes toward Americans.

As U.S. politicians have been China-bashing, so too are Chinese politicians outwardly American-bashing – a significant cultural change from the typical Chinese indirect way of communicating. Once the penalty tariffs escalated into a trade war, anti-American sentiment began to take root and grow in China. The Chinese government and the Chinese Communist Party (CCP) began to instruct Chinese manufacturers to focus on other customers and markets besides America. Behind the scenes, it has been reported that some Chinese manufacturers were instructed to stop doing business with American customers, particularly in high-tech industries.

China +1 or China +2

With nearly 350 million people in China’s middle class and growing, China is likely to be your company’s biggest target market over the next 20 years. The growth rates across all of Asia are expected to be as high as 10-12% over the next few years. As the Asian middle class grows, so does its disposable income and the desire for all kinds of products, particularly those with Western brand names. Even though China’s growth has slowed to 6-7%, it is still astounding compared to most developed nations including the U.S. To serve this market, many manufacturers are deciding to leave at least some of their production in China.

At the same time, American boards and executives are pushing to increase manufacturing in the U.S. and bring some of the outsourced production home. The use of Foreign Trade Zones, bonded warehouses, and creative supply chain strategies may help to reintroduce manufacturing in America.

Two factors – Asian growth rates and mitigating risk – are driving the decision to leave some manufacturing in China to serve the Asian markets, and move some manufacturing to another country to mitigate risk. This is a strategy called “China +1.” Some companies are keeping some manufacturing in China, moving some manufacturing to another low-cost country such as Vietnam or Mexico, and bringing some manufacturing back to the U.S., ”China +2.”

Updating Global Manufacturing Strategies

There is a lot to consider when developing a new global manufacturing strategy including costs, supply chain risk, geopolitics, target markets, and logistics.

Moving to another low-cost country, nearshoring, or reshoring are real possibilities under consideration by American companies. Manufacturing in multiple countries is the newest, most popular strategy of global companies. The microeconomics of each individual company will drive the final decision to reshore or not.

Rosemary Coates is the Executive Director of the Reshoring Institute and the President of Blue Silk Consulting, a global supply chain consulting firm. She is an expert on Chinese manufacturing and a best-selling author of five books on global supply chain management including 42 Rules for Sourcing and Manufacturing in China and Legal Blacksmith- How To Avoid and Defend Supply Chain Disputes. She is also an Expert Witness for legal cases involving global supply chain matters, and the host of The Frictionless Supply Chain podcast. Ms. Coates lives in Silicon Valley, California, and has worked with over 80 clients worldwide.

RK Logistics Taps Industry Veteran Antonio Tejeda to Lead Expansion of EV Supply Chain Services

Proven logistics operator promoted to Director of Account Management – EV Services.
Brings nearly 10 years of supply chain experience in solar energy and electric vehicle logistics to new role.
Will build upon RK’s more than 10 years providing dedicated warehousing, inventory control, supply chain support services for EV automotive manufacturing.

Mr. Tejeda has nearly 10 years of experience in logistics and supply chain management operations for solar and automotive industries. He joined RK Logistics last year from Tesla, where most recently he was operations manager responsible for Tesla Energy’s fulfillment centers. Prior to that he was site manager for Tesla Automotive’s largest fulfillment warehouses in California that support inventory management and production line material delivery for all of Tesla’s automotive products.

“We congratulate Antonio on his promotion, and we look forward to his leadership providing client-specific solutions and superior service for the EV market, where we have operated successfully for over 10 years,” noted Rock Magnan, president of RK Logistics. “Production and application of electric batteries is rapidly expanding in automotive and other markets. We are bringing proven, sector-specific EV logistics expertise and experience that our clients need to support their growth.”

In his new role as director of account management, EV Services, Mr. Tejeda will be responsible for sales and solutions planning, strategy, sales operations, and account service for RK clients and offerings in the EV market. RK’s range of services for EV products includes permitted and secured warehousing, operating process design and workforce safety training, product storage, order fulfillment, closed-loop transportation and just-in-time delivery of lithium-ion batteries and other components to manufacturing lines. Mr. Tejada also holds Lean green belt and Six Sigma
certifications.

About RK

With a focus on technology and innovation, we’re dedicated to providing customers with customized solutions that optimize supply chain velocity and reduce costs. Our expertise is in complex, high-value density, zero-fault tolerance, regulatorily intensive products that often require comprehensive services.

We offer warehousing, specialty transportation, reverse logistics, manufacturing support, engineering support, hazardous materials storage, handling and transportation and order fulfillment.

RK’s services feature enabling technologies, skilled, experienced teams, lean practices, ISO-9001 and CA Board of Pharmacy 3PL certifications, delivering flexible, sustainable, and efficient logistics solutions.

Manufacturing Support

Warehousing

Foreign-Trade Zones

Battery Storage

Order Fulfillment

Global Spares/Field Service Support

Dedicated & Specialty Transportation

Reverse Logistics

SEPTEMBER 2023