What is HermitCrab

Introduction: The Basics of HermitCrab

HermitCrab is dedicated to revitalizing American manufacturing by assisting businesses in reshoring production. Our vision emphasizes sustainable economic growth, community revitalization, and enhanced manufacturing competitiveness for U.S. companies. HermitCrab aims to create a more self-reliant and robust national manufacturing sector.

HermitCrab exists to solve the challenges manufacturers, entrepreneurs, retailers, and distributors face with overseas production, from quality control issues to lengthy supply chains to geopolitical instability. We provide a seamless transition to U.S.-based manufacturing, ensuring higher quality products, faster turnaround times, lower carrying costs, and greater adaptability to market demands.

Let’s start with the basics: Why name a company HermitCrab? For the non-zoologists out there, a hermit crab is a nautical creature that is in the same family as crabs you are familiar with, with the notable exception that it lacks a shell. To survive, hermit crabs find empty shells of other sea creatures (snails, mollusks, etc.) and “move in” by backing into the shell and using its backside to hang onto the shell while it goes about its business. The challenge for hermit crabs is that they continue to grow, forcing the need to leave their shell for something larger – a formerly occupied vacant shell. That is the end of the science lesson. How does this apply to the HermitCrab Mission?

The Mission of HermitCrab is to reoccupy and revitalize the abandoned “shells” of shuttered manufacturing facilities closed during the offshoring wave of the late 20th Century, producing products, restoring communities, and providing jobs for Americans.

Next, the logo. One of the core pillars of HermitCrab is a geographical focus on the Southeastern United States, and that is reflected in the shell of our mascot. The red, white, and blue elements of the conical shell represent the states of Georgia, South Carolina, and North Carolina. The primary reason HermitCrab is focused on the Southeast, particularly these three states, is due to our team's residence in these states. This local presence allows us to provide excellent coverage and hands-on support. However, we are always willing to assist our customers in locating facilities outside this three-state region.

The HermitCrab Logo

It is important to highlight that these three states offer significant advantages for manufacturing. They boast better labor pools, lower regulations, and an abundance of available manufacturing locations. Many of these sites were vacated when the furniture, apparel, and textile industries shifted production offshore. These factors make the Southeast an attractive and practical choice for reshoring efforts.

While our current focus remains within these states due to the ready availability of excellent options, we are open to discussing opportunities beyond this region. Our goal is to support the re-shoring of manufacturing to the U.S., irrespective of the location.

How Did We Get Here?

Did you know that they used to make battleships in Brooklyn? And sugar! And apparel! And meatpacking! New York City was a manufacturing powerhouse, employing well over a million people in manufacturing fields in the 1950’s. This was a microcosm of the rest of the country – post World War 2, the US was the only country that came out of the war unscathed, and our manufacturing leadership in the world was unmatched.

Thirty years later, by the 1980’s, the vanquished members of the axis (Germany and Japan) were now at full parity with the US in terms of capability, tenacity, and quality of the manufacturing efforts; consider automobiles as a key example. We were caught flat-footed, with bloated layers of manufacturing management, cumbersome regulations, and a rising influence of labor unions and government bureaucracy making productivity and competitiveness hard to maintain.

Then came the offshoring. Our failure to stay competitive, while at the same time supporting worldwide globalization via our navy*, meant that any country to stand up a factory and produce goods far cheaper than we could make it in America. The next thirty years saw the wholesale elimination of swaths of industries, including appliances, textiles, apparel, footware, furniture, and ceramics. NAFTA was just another nail in the coffin.

Today, nearly all fast-moving durable consumer goods are made offshore. You cannot walk through any mass retailer and not pick up an item, check the tag, and see “Made in China” on most products (note: China has recently been in decline as a manufacturing hub, but other Asian rim countries are picking up the slack). Yes, Mexico has recently become our largest trading partner, but there is still over four TRILLION dollars of imported good every year. Books have been written about “How Did We Get Here,” but the Mission of HermitCrab is to chip away at that pile.

* - for some great reading on this topic, pick any book by Peter Zeihan. (https://zeihan.com )

Eat The Elephant – the HermitCrab Business Model

Four Trillion?!?  That makes you get out of your chair! Many great people are working on this problem, but the US is casting pebbles against a fortress of challenges to right this deficit. This is not intended to be a policy paper – the trade deficit speaks for itself. We only want to do our part, which is explained at a high level below.

HermitCrab will follow the axiom of “How to Eat an Elephant? One bite (product) at a time.”

The graphic below shows the eight key steps in the path to reshoring. Many of these steps will be discussed in more detail in future topics during the next 30 days, but the highlights of each step are described below.

Figure 1: The HermitCrab Business Model

1) Find Partner: Any retailer, wholesaler, start up, or corporate buying group is a potential partner for HermitCrab. An ideal partner is one that already imports a significant amount of ideal product types from offshore suppliers. This partner should also understand the benefits of reshoring, and be willing to invest the time, expertise, and marketing efforts to see a reshoring project through.

2) Identify Product: There are at least ten criteria that should be considered when identifying the best product to reshore. Some of the highlights of an ideal product include simplicity of design, availability of raw materials, and a modest level of regulatory compliance. Simplicity is the key to allow for rapid prototyping and scaling of capacity.

3) Select Site:  Once a product has been identified, the HermitCrab team will work with state economic development leaders to determine the ideal production location for that product. Proximity to raw materials and/or supply chain logistics lanes, in addition to access to a solid workforce, all factor into where the first site will be located.

4) Prove Concept: Since we already have the building and access to power, the HermitCrab team can move quickly to obtain the proper equipment, suppliers, workers, and processing techniques needed to create a minimum viable product to prove out assumptions regarding the cost of production and the ability to create the same quality as the imported product.

5) Scale Capacity: Now that the product has been proven to be made well in America, HermitCrab will collaborate with our partner to increase capacity, ideally to a level that fully replaces the imported line of products. It is understandable if a partner chooses to keep their offshore supplier and use the HermitCrab facility as an alternate source, but we believe the day will come when that insurance package will not be needed.

6) Operate & Improve: By the time we reached this step, it is likely that HermitCrab will have been producing the reshored product for at least 12 to 18 months, and we will apply world class manufacturing techniques and modern technology solutions to drive continuous improvement across the entire manufacturing, warehousing, and transportation processes.

7) Refund Partner:  This is the unique element of the HermitCrab business model. Once pricing and service level agreements are locked in and the partner is satisfied with the business model, HermitCrab will purchase back the assets and facilities from the partner, allowing the partner to remove the assets from their books. The partner becomes a customer!

8) Find Leverage: Depending on the product that is produced and the contractual agreements that are made, once HermitCrab owns the means of production, we will look to leverage unused capacity to produce similar types of products using the same access to raw materials and existing equipment already in place. This is where the HermitCrab model gains momentum and allows us to seek new partners and new products to reshore.

Thank you for Reading.

So that’s HermitCrab in a nutshell. We hope this was an informative read. Tomorrow’s topic, Introduction to Reshoring, will dig deeper into the broader topic of reshoring and why it is so vital to America’s future success.

Thanks for reading,

The HermitCrab Team