Cost is usually identified as the single factor driving manufacturing jobs overseas. American laborers can’t make it for less, so those jobs end up in China, Mexico, Vietnam or some other place.

VR Industries manufactures circuit boards for high tech industries, the military and medical industry and it has lost customers to companies that send the work out. The Warwick-based company was started with three employees and Fred Pestana and Joseph Oakes in 1985. In the last year, VR says it can identify $1.5 million in orders that went to companies in China.

Now, with the help of a $75,000 grant from the New England Trade Adjustment Assistance Center (NETAAC), VR Industries is changing that dynamic. More than that, says Fred’s son Brian, who is president and CEO, they have learned that cost is a factor to losing orders, but not the only reason.

“We need to ‘re-shore,’ find ways to build it in America,” Pestana said Friday as NETAAC Director Lisa McHatton and executives from other manufacturers awaited the arrival of U.S. Senator Sheldon Whitehouse. Pestana wanted to show the senator how the company had changed, how it is regaining orders previously lost to overseas and what might be done on a larger scale to create jobs here.

*Please note, CEO of VR Industries Brian Pestana's name was spelled incorrectly in the above video. We regret the error8

That had Whitehouse’s attention.

Pestana said VR Industries has gone through a change in culture. With the help of consultants, Excedda of Seekonk, the company identified areas for opportunity and brought employees together to share the vision. It took examining systems and applying the practices of “lean manufacturing.”

As an example, Pestana cited how the company reduced the route and time taken to produce a circuit board from 1,600 to 800 feet. Employees were trained to produce the same product more efficiently.

“Customers don’t pay for waste,” said Pestana.

A major commitment, which Pestana sees as opening new markets to VR, is ISO 13485 Medical Device Quality Management System certification that will enable VR to compete for orders from medical equipment manufacturers. ISO certification, with its extensive documentation, ensures manufacturing where the customer knows exactly what they are getting.

“We're committed in delivering the strategy to drive and manage a successful partnership [that is] built around you,” reads the company’s website.

”We're relationship people. That's why our first client is still active today. We build partnerships that work. It's a bold claim – and it's our promise to our clients.

Our dedication, focused attention, and proven approach mean projects are on time and on budget.”

It’s a mission Karl Wadensten, president of Vibco in Wyoming, R.I., can relate to.

“The last three years has been an economic tsunami in the U.S. as well as the globe,” Wadensten told Whitehouse. He said his company has been able to hold its prices through efficiency and grew its customer base by 16 percent, while improving the bottom line by 21 percent.

“We’re reinventing what we’re doing,” he said. He said “lean manufacturing” is about predictability, accountability and partnership with employees as well as customers.

Wadensten said the emphasis has usually been directed at producing product offshore and “cheap, cheap,” but markets are unpredictable and just as important is accountability. He recommends developing business relationships locally, address the matter of price and “let’s see if we can close that gap and we both grow our business.”

In order to qualify for the NETAAC grant, VR had to show it had lost 5 percent of its sales to orders going to overseas.

McHatton said the New England Center, one of 11 in the country, is budgeted to award $1.5 million in grants annually and presently has a $4 million backlog. As companies must match awards, she said, this is not a give away. She said changing mindsets and applying the principles of lean manufacturing works.

Of the 1,200 companies awarded grants in the last year, 25 percent have seen increased profits and 30 percent have experienced growth in productivity.

The New England Center, run by a staff of three and one part-timer, has 135 companies enrolled in the program, of which 22 are in Rhode Island.
McHatton said that manufacturers are surprised.

“They are overwhelmed that the federal government is actually concerned about the little guy,” she said.Tom Pesaturo, principal with Exceeda, told Whitehouse that sustaining a business and moving forward is a matter of understanding how work gets done. He said, if the corporate leadership embraces change and supports its employees, a company can compete.

“It’s all about changing how you work,” he said.

On his tour of VR Industries, Whitehouse saw just that. Document engineer Mark Sanita stepped the senator through his job.

And while manufacturing may appear as a repetitive process, Whitehouse learned that to compete globally, VR Industries is working with its customers and looking to its employees to help address their needs.