The controls are supposed to help the United States walk the tightrope between national security and business interests, but the exponential speed of technological progress and the inherent complexity of the manufacturing process make writing transparent and lasting regulations difficult, and the Obama administration has undertaken an effort for reform.
Big companies such as Northrop Grumman, Boeing and General Electric have sophisticated export compliance operations that help them navigate Washington’s labyrinth of regulations and avoid becoming ensnared in a foreign military’s hunt for sensitive technology.
Kincaid has nothing like that. In an economy struggling to shake off the doldrums of the global recession, just keeping the lights on takes up most of his time, he says. K&F, which he says registers about $3.5 million in annual sales, recently laid off four people and cut workweeks back to four days. “Things have been dropping off in the last six to eight months,” says Kincaid, who keeps a binder of business lost to China in his tiny windowless office. “We’re getting orders, but they’re less.”
At this rate, he says, “I think I’ll be out of business in 10 years.”
Small business in a small town
People who grew up in the Midwest would instantly recognize K&F’s small-town home of Frasier. It has a Kmart, auto body repair shops, a hobby shop and a delicatessen wholesaler not far from K&F’s plant. Kincaid will occasionally have “popcorn Fridays,” when he brings in a vintage-style popcorn maker for his employees, who are making do on fewer hours.
“We don’t pay much,” Kincaid says. “But what are we gonna do?”
Every circuit board put out by Kincaid’s 24,000 square feet of industrial space begins as an invoice and a computer file from a customer.
Once Kincaid’s staff processes the order to its specifications, the circuit board is carved out of large, flat sheets of copper that are stacked in the factory. Those sheets move through the production process, much of which has been automated through the years, and much of which requires messy chemicals that are strictly regulated by federal guidelines. At the end, each component undergoes rigorous testing.
This is, in short, exactly the type of manufacturing shop facing the fiercest competition from overseas, where cheap labor is a distinct advantage. Complying with strict export regulations comes at a cost, but in this regard government officials and industry experts see the circuit-board business as a bit of an outlier: Whereas many companies view export regulations as a burden, the circuit industry tends to take on the most stringent controls as a “made in the U.S.A.” badge of honor.