Successful entrepreneurs wonder whether ‘Made in America’ is still possible
02/01/2014 6:17 PM
08/06/2014 10:54 AM
The success story of Choon and Yeow Ng began when they left Malaysia for Wichita in 1991.
The brothers worked as janitors, got frostbite carrying home groceries in the winter and later paid $75 for a 1980 Delta 88 Oldsmobile that rocked like a boat. They studied relentlessly at Wichita State University.
Three years ago, Choon Ng, with help from his brother’s aerospace colleagues in Wichita, invented a children’s toy: the Rainbow Loom. Choon says his toy has made $55 million in retail sales in the past year, with sales all over the world.
Their story, WSU aerospace scientist John Tomblin says, is one of those classic tales about bright people harnessing American know-how, American ingenuity and American business principles.
Except for one twist. And that twist, the brothers say, raises questions about how America does business and creates jobs now.
They say America no longer knows how to do some things. Like create jobs.
The Ng brothers love America. They said they wanted to manufacture Rainbow Loom in America. But they make Rainbow Loom in China.
‘Billions of rubber bands’
The Ng brothers have sold “billions and billions of rubber bands” and 5 million Rainbow Looms in the past three years, Yeow Ng said.
A Rainbow Loom costs $15. Choon Ng invented it as a simple weaving loom for children to create bracelets from rubber bands. The parts of the loom are easily adjustable, like Lego parts. Adjusting it allows the user to make a wide array of colorful bracelets, necklaces and toys.
The Ng brothers are workaholics who don’t take vacations. But friends have told them of seeing hundreds of teen girls at Disneyland and Disney World, their wrists covered with Rainbow Loom bracelets.
The bracelets also are popular at Riverside Leadership Magnet school in Wichita, where 10-year-old Hannah Molen attends fifth grade, and at Journey the Way, where she goes to church.
“I wake up now every day and start thinking about what kind of new bracelet I can make,” she said.
While studying at WSU, the brothers worked as janitors there; Yeow used to clean up at the National Institute for Aviation Research, where Tomblin now runs things as executive director.
He has known them for years and has hired Yeow more than once as his advanced materials lab chief.
“They are serial entrepreneurs,” Tomblin said. “They were always inventing things.
“When they worked here at NIAR, they couldn’t help themselves – a wheel might come off an office chair, and they’d talk about how to make a better wheel.”
Tomblin and his institute work with inventors and manufacturers at the highest level of aerospace worldwide.
“Their story needs to be told,” Tomblin said. “It shows what you can do with good ideas.”
But their story also raises challenging questions, he said.
Coming to WSU
Ng is pronounced “Ung.” The brothers are ethnic Chinese who grew up in Malaysia, sons of a family that owns a rubber and palm oil tree plantation. When the plantation struggled and poverty loomed, the boys packed curry seasoning into plastic bags their mother sold to make ends meet.
In 1991, Yeow said, their parents sent them to WSU. Choon remembers arriving.
“You see American movies, and you think America has beaches and high-rise buildings,” he said. “But all I saw from the plane window for hundreds of miles were green squares. I had to ask what they were. Wheat fields.”
He felt homesick for years.
At WSU, Yeow said, they kept to themselves and spoke to each other mostly in their Hokkien Chinese dialect. They earned master’s degrees in mechanical engineering. Yeow got a second master’s in aerospace engineering. Both fell in love with America.
Tomblin hired Yeow as a composite materials scientist after Tomblin took over as NIAR director. Choon left Wichita and worked for the automotive industry in Michigan as a crash test safety scientist.
As boys in Malaysia, Yeow said, they invented their own toys and sometimes made jump ropes out of thousands of rubber bands their mother used for the curry bags.
In suburban Detroit three years ago, Choon came home to find daughters Teresa, 12, and Michelle, 9, making bracelets by interweaving rubber bands.
“Everybody wants to impress their own children,” he said.
He showed them how they could make a crude weaving loom that used push-pins or nails stuck into a piece of wood. He used dental plaque hooks from their dentist as a crochet-like hook to fit the rubber bands around the pins.
“Dad!” Teresa told her scientist father. “This is the coolest thing you ever made.”
“I was no longer the strange Chinese man on our block; I became like a hero, the Rubber Band Man,” Choon said. “The neighbor kids, black and white, began showing up asking if I could make bracelets for them.
“I realized I had something.”
Choon began drawing loom designs into computer programs. He e-mailed the designs to Yeow, who contracted with NIAR to run them through NIAR’s 3-D printers, machines that can turn a 3D design into a prototype.
Yeow one day took his daughters to a McDonald’s in Wichita. In the drive-through, he told them Uncle Choon needed a name for his toy that evoked colors and happiness.
“Call it Rainbow,” said Angelynn, Yeow’s 12-year-old daughter. “Children love rainbows.”
Made in China
Years before, Yeow had invented two different lawn aerators, tools that punch holes in lawns to refresh the soil. The aerators never sold big, but he got them manufactured and learned about international business.
He passed that knowledge to Choon. And what he told Choon about American business was disappointing.
For the aerators, Yeow had tried to set up manufacturing in the United States. It cost too much. So he set up manufacturing in China.
In China, Yeow toured the factory where his aerators would be made and saw workers sleeping on concrete factory floors.
“They rolled up the blankets in the morning, and that floor became their assembly area,” he said.
They cleaned up with sponge baths using buckets of cold water. They were paid 40 cents an hour, he said And yet they seemed happy – in their rural villages, 40 cents was real money.
“They not only wanted the work but wanted as much overtime as possible,” Yeow said. “They’d gladly work 80 to 90 hours a week if they could.”
But labor cost wasn’t the only barrier to making things in America.
As Yeow put it: “We realized that we are not a manufacturing country anymore.”
American manufacturers don’t know how to build cost-effective supply chains for factories, he said.
Supply chains, Tomblin said, are key to any factory, including factories where Wichita aviation companies assemble airplanes. The factories make some parts of an airplane, but an extensive supply chain of smaller companies make many of the smaller parts or specialized components and sell those to the factories.
In America, Yeow said, supply chains have disappeared as factories and businesses outsourced elsewhere in recent years. So when Choon got serious about producing his toy, Yeow advised Choon about how to set up manufacturing.
It would not be in the country they now loved.
It would have cost Choon $100,000 to set up his manufacturing in America, Yeow said. Setting it up in China cost $5,000.
All great inventors become relentless in the face of failure, Tomblin said. He has worked with many inventors and says relentlessness succeeds more than brilliance.
Choon got his toy patented, trademarked and perfected. And then he tried marketing it personally.
“My brother took his Rainbow Loom to many stores to try to sell it,” Yeow said. “Some of them would take him outside and point to the ‘No Soliciting’ sign. It was humiliating.
“Everyone told him it would not work, but I told him: ‘Believe. Believe in yourself, in your work, believe in what Teresa told you.’ ”
For two years, nothing big happened. But finally, a store in Georgia, Learning Express Toys, bought a few copies of Rainbow Loom. Then a few more. Word of mouth began building.
And then one day, Learning Express e-mailed Choon and his wife, Tyng Fen, an order for 10,000 Rainbow Looms.
“My wife and I just stared at the screen,” Choon said. “We wondered if we were seeing it right.”
“My brother created something that had not existed before, and people liked it,” Yeow said. “There is no other feeling like that in the world.”
More stores began sending orders. Michaels – which calls itself the largest specialty retailer of arts and crafts – began selling Rainbow Loom.
Yeow reduced his hours at NIAR from more than 40 to about 20 a week. He now works 60 hours a week helping his wife and six workers in the Wichita online store he established on North Rock Road, rainbowloom.com.
Obsessed about making the business work, he moved a mattress into a factory office and has slept there.
The success of the business worries Yeow, who says wealth distracts people. He wants none of that for his children.
“I still drive my old flatbed truck,” he said. “Choon still drives his old SUV, 13 or 14 years old.
“I want my children to grow up poor, like I did,” Yeow said. “So they will learn.”
When Choon developed two follow-up items to Rainbow Loom, the brothers made sure both were made in America.
A plastic carrying case for Rainbow Loom accessories is made in Ohio. A one-piece Wonder Loom, marketed through Wal-Mart, is made in New York. Choon got them made in the U.S. because they didn’t require a supply chain.
It bothers them that Rainbow Loom is made in China, Choon said.
“We love America,” he said.
Rainbow Loom teaches inspiring and sobering lessons for all of us, Tomblin said.
Business and political leaders in Kansas and Wichita have worried for years about how to keep Wichita economically healthy in the face of aircraft company layoffs and the departure of Boeing.
Tomblin, in addition to his work at NIAR, is WSU’s interim vice president for research and technology transfer. That puts him at the top of the effort to create jobs and ideas for Wichita.
So he studied Rainbow Loom with the admiration of a Ng family friend and the eye of a job creator.
It was no surprise to him, he said, that the brothers sent their manufacturing work to China because of labor costs and the lack of American supply chains.
Wichita still has a supply chain for aviation manufacturing, he said. It’s one of the few classic supply chains still in America.
Some supply-chain businesses already have left Wichita, he said, as aviation companies ship more work to Mexico and elsewhere. If the supply chains leave, so might the aircraft factories, he said. This is a concern everyone in Wichita should take seriously, he said.
In the past year, he said, WSU has stepped up plans to counter that trend. In November, WSU president John Bardo announced plans to build an engineering building that would be the first in a new technology park on campus.
Before that, Bardo had also campaigned hard, on and off campus, asking everyone in the community to help create tech inventions and public-private tech partnerships to make and market them.
Much of the manufacturing America once had has gone away, Tomblin said. But America still owns creativity, including from bright immigrants from Malaysia.
At least 5,000 square feet in the basement of the new engineering building will be devoted to 3-D printers, Tomblin said. He said WSU hopes to use it to attract business from inventors like the brothers and churn out prototypes and new ideas.
“Think of a Kinko’s, only with 3-D printers,” Tomblin said. “That’s what we’re talking about there.
“The way you fight what’s happened is to innovate,” Tomblin said. “And we still know how to do that here.”
Or, as Yeow said: “The Chinese know America is where ideas come from.”
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