AI
Wednesday, August 27, 2008 4:53:48 PM
A Review. I will post a part of the 10/4/07 8k that outlines our China connection. Simply another example of AERO transparency. I assume the details remain essentially the same today.
Manufacturing
Since its inception Aero has focused on providing its technology to the market at a price point consistent with its competitors but with a higher built-in margin for retailers. As such, the Company proactively sought to establish contract manufacturing relationship with an established Chinese supplier. In early 2003, Aero began work with a well know producer of engineered stainless products located in Ningbo City, south of Shanghai, China. Currently, all of Aero’s products, with the exception of the tubing for diesel exhaust kits, are produced in China and arrive generally four to six weeks after completion.
To commence production, Aero faxes a detailed purchase order to the manufacturer who in turn sends back a statement acknowledging quantity levels and pricing. After confirmation, the Company then sends via wire an up-front payment of 30% of the total purchase order. On average, fulfillment of each order takes three to four weeks; however the manufacturer holds product in inventory until it has enough to fill a 40’ standard shipping crate. Coordination of the shipping company, necessary export and import documentation and product insurance during shipment are all handled by the manufacturer. When the goods arrive in the U.S., crates are inspected, import documentation is processed and upon release from the customs service, Aero sends the remaining 70% of the purchase order via wire transfer. While overseas production can involve more scrutiny and back-office functions versus the use of stateside suppliers, Aero has had minimal quality issues.
While there is no formal component supply agreement executed between the two companies, shipments to Aero represent 30% of the manufacturer’s annual revenues and the supplier is currently operating at 20% utilization. With this extra capacity, the manufacturer can handle any forthcoming increases to Aero production orders in the short term. Additionally, this area of China is one of the world’s largest producers of stainless steel which enables the company to obtain material from a number of potential sources. This availability helps to mitigate material price fluctuations and thereby keep Aero’s production costs stable.
http://www.secinfo.com/d16gRg.u3y.htm#1stPage
Manufacturing
Since its inception Aero has focused on providing its technology to the market at a price point consistent with its competitors but with a higher built-in margin for retailers. As such, the Company proactively sought to establish contract manufacturing relationship with an established Chinese supplier. In early 2003, Aero began work with a well know producer of engineered stainless products located in Ningbo City, south of Shanghai, China. Currently, all of Aero’s products, with the exception of the tubing for diesel exhaust kits, are produced in China and arrive generally four to six weeks after completion.
To commence production, Aero faxes a detailed purchase order to the manufacturer who in turn sends back a statement acknowledging quantity levels and pricing. After confirmation, the Company then sends via wire an up-front payment of 30% of the total purchase order. On average, fulfillment of each order takes three to four weeks; however the manufacturer holds product in inventory until it has enough to fill a 40’ standard shipping crate. Coordination of the shipping company, necessary export and import documentation and product insurance during shipment are all handled by the manufacturer. When the goods arrive in the U.S., crates are inspected, import documentation is processed and upon release from the customs service, Aero sends the remaining 70% of the purchase order via wire transfer. While overseas production can involve more scrutiny and back-office functions versus the use of stateside suppliers, Aero has had minimal quality issues.
While there is no formal component supply agreement executed between the two companies, shipments to Aero represent 30% of the manufacturer’s annual revenues and the supplier is currently operating at 20% utilization. With this extra capacity, the manufacturer can handle any forthcoming increases to Aero production orders in the short term. Additionally, this area of China is one of the world’s largest producers of stainless steel which enables the company to obtain material from a number of potential sources. This availability helps to mitigate material price fluctuations and thereby keep Aero’s production costs stable.
http://www.secinfo.com/d16gRg.u3y.htm#1stPage
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