Werner Enterprises is key in linking Chinese tile to Omaha kitchen - Omaha.com
Published Sunday, November 25, 2012 at 12:01 am / Updated at 12:52 pm
Werner Enterprises is key in linking Chinese tile to Omaha kitchen

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SHANGHAI — Andy and Shellie Nelson's tile floor was born here in a sweltering, dusty factory, fashioned out of Chinese clay and fired in a furnace as long as a football field.

Before it reached the Nelsons' suburban Omaha home, the tile traveled thousands of miles across ocean, mountains and plains.

In fact, it took an international bucket brigade of trucks, ships and trains more than a month to bring the tile to an Omaha factory, where it was assembled into a unique, interlocking flooring product and eventually sold at Nebraska Furniture Mart.

The Nelsons' tile floor is an example of the interconnected world economy — the result of Nebraska innovators who joined forces with a Taiwanese tile vendor, a Malaysian-owned tile maker outside Shanghai, Canadian machine toolers and American factory workers in Michigan, Wahoo, Neb., and Omaha.

But the tiles' journey from China to Omaha itself is a story of global connections with a local twist: the worldwide logistics company run by Sarpy County's Werner Enterprises.

With its headquarters near the Sapp Brothers coffeepot at Interstate 80 and 144th Street, Werner is best known for its trademark blue trucks that help the company pull in about $2 billion in annual revenues. That's enough business to rank Werner third-highest in the nation among publicly traded trucking companies.

Increasingly, however, Werner's revenues come not from hauling goods in blue trucks but from the company's logistics services — helping customers manage shipments of goods through their supply chains.

“It's been very successful for them,” said Donald Broughton, a senior transportation analyst and managing director for Avondale Partners in St. Louis. “It's been an engine of growth.”

Werner Global Logistics employs 75 people at the company's Omaha headquarters, a workforce that has more than tripled in four years.

China is a key part of Werner's $500 million logistics business. The company entered the China market in early 2006 and now has 50 employees in its Shanghai and Shenzhen offices.

“We went into China with a very clear understanding of our customers' needs for transparency, efficiency, a fact-based supply chain,” said Craig Stoffel, global logistics vice president.

Basically, Werner helps companies like Omaha's SnapStone Tile arrange efficient shipments and track them through the transportation process. If there are problems, Werner can help resolve them.

Without logistics coordination, shipments from, say, a Chinese vendor to a U.S. company can fall into a “blind spot” for weeks — leaving the customer unsure whether the product actually left the overseas factory, if it has made it onto a freighter at the Chinese port, and when it might reach a U.S. port.

Juan Bautista

“We're not a trucking company here,” said Juan Bautista, general manager of Werner's Asia Pacific operation, based in the riverfront Harbour Building in Shanghai's high-rise Pudong district.

It's from this office that Bautista — a Mexican native who is the sole foreigner among Werner's China workforce — and his employees coordinate SnapStone's tile shipments.

SnapStone imports the porcelain tiles so they can be glued into plastic trays with interlocking tabs. The trays, which have a rubberized base, are clicked together to form a floating tile floor that does not require mortar or a special underlaying board, unlike regular tile floors. A flexible grout is used to fill the gaps between the tiles.

SnapStone tiles are sold at Menards and other home improvement stores as a do-it-yourself product. A similar product, Avaire, is carried by Nebraska Furniture Mart and other retailers, and there's a commercial line called Eclipse.

The plastic trays are injection-molded in Wahoo, the glue comes from a Michigan supplier, and the assembly is done in Omaha.

But company President Jonathan McIntosh had to turn to China for the tiles after he started the company because he couldn't find a U.S. tile manufacturer interested in producing small quantities for his fledgling company.

He also needed a tile maker able to meet his specifications for precise “rectification” — cutting the tile to the exact measurements needed to fit snugly into the plastic trays.

So McIntosh, a former executive at the West Corp. in Omaha, contracted with Gearex, a Taiwanese company that makes ceramic glazes, creates tile designs and handles the day-to-day contact with the Shanghai tile factory.

“They're our eyes and ears,” McIntosh said.

On a steamy afternoon in August, Gearex's Calvin Sun led visitors on a tour of the Kim Hin Ceramics factory in Shanghai's Zhujing industrial development area.

The factory is owned by a company based in Malaysia and employs about 300 workers toiling in three shifts. About 80 percent of the factory's output is exported; SnapStone is just one of its customers.

Boats bring clay from central China to the factory, where it is mixed with feldspar and ground into powder in a noisy, dusty process. The powder goes into dryers that reduce its humidity before it is used to make tiles.

Porcelain tile isn't made from a goopy batter and poured into molds for baking. Instead, the dry powder is pressed by a powerful machine into hard-packed tile shapes, then run through a kiln for 30 minutes at about 570 degrees.

The tiles are decorated while they are still hot, with machines spraying on the colored glaze and workers using sponges to wipe the colors into a wash pattern. In some cases, more detailed patterns are added using a computer-controlled machine that works like an ink-jet printer.

Once the color is on, the tile is taken to a continuous kiln that stretches 100 yards long and bakes the tiles for an hour at temperatures as high as 2,200 degrees.

After being precision-cut to shape, the SnapStone tile is packaged and loaded onto pallets. When a shipment is ready to head to Omaha, Werner sends a truck to pick up the 20-foot shipping containers.

Tile is so heavy that the containers can't be filled to the brim or they would exceed the 20-ton weight limits.

The shipments are driven directly to one of China's most ambitious infrastructure projects, the Yangshan Deep-Water Port.

Until recently, Shanghai lacked a deepwater port that could handle the world's largest container ships, which need as much as 50 feet of depth. Existing ports on Shanghai's rivers were about 23 feet deep, at most, and faced problems with silt, river traffic and obstructions like bridges.

So China came up with a bold solution: build an entirely new port amid a cluster of islands nearly 20 miles offshore in the East China Sea.

Thousands of Chinese workers built a six-lane bridge stretching from the mainland to the port. Other crews filled the space between the rocky islands with dredged mud to create an artificial island for the docks and vast yards of stacked shipping containers.

The new port opened in late 2005, with several expansions since then. When the project is completed later this decade, it is expected to have nearly 30 berths.

The island bustles with cranes, 160 feet high, that load and unload ships holding as many as 14,000 of the 20-foot containers.

One recent SnapStone tile shipment went on the German-flagged Hanover Express, a ship built in 2007 that is 1,099 feet long and 138 feet wide.

The ship sailed to Tacoma, Wash., where the SnapStone tile container was unloaded, placed on a train belonging to Omaha-based Union Pacific and taken to Council Bluffs. A Werner truck took it the rest of the way to SnapStone's building near 132nd and L Streets.

McIntosh said he has been pleased with Werner's logistics service. Initially, he said, he considered using a different shipper to get the tile to Omaha, but Werner was aggressive in its bid.

“We take a lot of pride in being an Omaha-based company,” Stoffel said. “We want to work with as many Omaha-based companies as we can. It came down to us being hungry and wanting to do business.”

McIntosh said Werner offered a fair price as well as good service, including spending time helping SnapStone figure out the best way to ship.

Logistics isn't an easy business, and China can be a tricky place to work. Each province has its own trucking regulations and tariffs, newly built highways charge tolls that can raise the cost of shipping within China by 7 or 8 percent, and Chinese business dealings are less straightforward than in the U.S.

Even staying in touch with the home office in Omaha is challenging because of the time difference.

Meanwhile, Werner faces numerous competitors, both large and small, who are willing to arrange shipping for U.S. customers.

Stoffel said Werner emphasizes its size, financial strength and expertise. The company spent years fine-tuning its logistics operations in Mexico and Canada before making the leap to China — a move that came at the request of customers who were starting to obtain more products from Chinese sources.

Werner owns some trucks of its own in China but also uses Chinese trucking companies to haul goods. The Omaha company has built solid relationships with those firms, offering advice on truck technology and maintenance issues. Such ties can ensure that Werner's customers will get priority consideration if problems arise.

In the U.S., Werner has 7,200 trucks and other assets to meet customers' special needs.

Earlier this year, SnapStone ran into a problem when one customer sold a surprisingly large amount of tile, leaving inventory levels for one color perilously short. A new batch of that tile was coming across the Pacific, but the scheduled arrival via the normal rail route was going to be too late.

So Werner had a truck with a team of drivers waiting at the docks to pick up the needed tile as soon as the ship arrived. The truck got the tile to SnapStone at least three days earlier than it would have arrived, and the company didn't run out of product to supply its vendors.

“We have the capability to offer them options,” Stoffel said. “It's not just bringing it to the same destination faster. It could be taking part of the order and delivering it to California. There's flexibility and options to reply to changes in the need or urgency.”

Not all freight-forwarding services can offer that kind of service, either because they don't track the shipments as well or because they don't have the trucks, warehousing facilities, customs brokerage expertise or other assets that Werner has.

Bautista, Werner's Shanghai manager, said U.S. customers appreciate that Werner is able to tell them the truth about where a shipment is in the supply chain. In addition, he said, his company develops good ties with the Chinese factories and can work with them to solve problems.

For example, he said, a factory may be late in sending its product and miss the deadline for a container ship, resulting in a delay. If the U.S. company complained directly, he said, the factory might start blaming others to save face and nothing would be solved.

But Bautista said Werner can shift the focus from casting blame to enlisting the factory's help in fixing the problem — perhaps by shipping some of the product by air freight so it arrives in time.

“We take a lot of the fingerpointing out of it,” Stoffel said.

McIntosh wouldn't mind a shorter supply chain for his tile that doesn't require shipments to cross the Pacific Ocean and half of the U.S. continent. Now that his business is established, SnapStone has been able to work with Tennessee tile manufacturers to supply some product lines and intends to use more domestic tiles in the future — partly because Chinese wages continue to rise and transportation costs are increasing.

Wherever it comes from, once the tile is in Omaha, SnapStone workers run it through a robotic machine that applies adhesive and fits the tile into the plastic trays. The finished product is packed in boxes and shipped to stores.

And that's how Chinese tile eventually wound up in Andy and Shellie Nelson's kitchen, front entry and adjacent bathroom in the Pacific Hollow subdivision near St. Wenceslas Catholic Church at 154th and Pacific Streets.

A flood from a leaky icemaker had ruined their hardwood floors, Andy Nelson said. When they went to Nebraska Furniture Mart last year to look for replacement flooring, he said, they were intrigued by the 18-inch-square Avaire tile that could be installed with less mess and effort than regular tile.

“We love how it looks,” Nelson said of the brown and black Manhattan finish. And he said the tiles and grout show no evidence of the punishment that three active children can deliver.

“The boys drop their football helmets on it,” he said. “But it's held up.”

Nelson bought his new tile floor because of how the product worked, what it looked like and how much it cost. He knew SnapStone had a local connection, and learned more after his purchase once he discovered that a neighbor works for the company.

Still, Nelson said, the full story of how his tile was made overseas and eventually reached Omaha is the kind of thing that few people think about unless they are directly involved.

“It didn't really cross my mind at the time,” he said.

Transportation firm counting heavily on logistics operation


Werner Enterprises officials say their logistics operation makes the company stronger and more stable than if it depended solely on the demand for trucking services.

The company's goal is to have one-third of its revenue come from logistics — helping customers coordinate their transportation needs, track their shipments and improve efficiency. Ideally, Werner wants another third of its revenue to come from one-way hauling, with a final third generated by its trucks that are dedicated to specific customers.

Currently, logistics accounts for 26 percent of Werner revenues, said Craig Stoffel, global logistics vice president. That's still less than the goal, but the logistics percentage has been rising.

For Werner, logistics offers a way for the company to diversify and grow without making a large investment in assets such as trucks and shipping facilities.

Donald Broughton, who analyzes transportation companies for Avondale Partners in St. Louis, said logistics also gives Werner more information about the transportation market, such as customers' needs and what competitors are doing.

“It deepens their understanding of what's going on,” he said. “If you're only moving truck freight around, you only see the rates and volumes of the truck freight you're moving.”

Not all trucking companies have succeeded in establishing their own logistics operations as Werner has, Broughton said. In fact, Werner initially joined with five other companies in 2000 to establish a shared logistics company called Transplace before later choosing to focus on its own operation.

“It does take a lot of effort and time and talent and money,” Broughton said. “But it's been an important growth area for them.”

Werner and other logistics companies offer “visibility” to their U.S. customers, telling them when overseas shipments will arrive and intervening if the process needs to speed up.

“When you don't have visibility, you don't have control,” Stoffel said, noting that Werner has sophisticated software systems to assist with tracking shipments.

Having information and an ability to adjust the transportation plan allows companies to manage their inventories better. That keeps them from running out of parts or products, or tying up too much money keeping surplus goods in their warehouses.

“If you don't know where your product is, you have to carry a safety stock of inventory,” Stoffel said.

Werner can analyze a company's shipping strategy and propose more efficient methods, such as consolidating shipments from several overseas factories into a single container, or changing delivery routes.

Besides Werner's China offices, the company has international offices in Mexico, Canada, Australia and a small operation in the Netherlands. Werner plans to open a new branch of the China operation next year in Tianjin, an industrial area southeast of Beijing.

Having a global logistics company in Omaha helps Nebraska compete for new businesses, including overseas companies, said Joe Chapuran, international development manager for the Nebraska Department of Economic Development.

State officials often tap Werner to tell a potential newcomer about the state's transportation advantages — central U.S. location, access to major highways — and the services that Werner can provide.

And Chapuran said Werner can tell its own history of a small local firm that has become a large international company. That helps state recruiters contend that Nebraska is a good place to start and grow a business.

“Especially for China,” Chapuran said, “they're probably one of our best private-sector partners.”

How tile gets from China to Omaha


Day 1 (Aug. 9): Three 20-foot containers are picked up at the Kim Hin Ceramics factory in Shanghai and taken by truck to the Yangshan Deep-Water Port. Each container holds 17.9 tons of tile.

Day 8 (Aug. 16): Hanover Express container ship leaves Yangshan port. The ship originally was supposed to sail Aug. 11, but the port schedule was delayed when Typhoon Haikui hit Shanghai a few days earlier.

Day 25 (Sept. 2): Containers are unloaded from Hanover Express after it arrives in Tacoma, Wash. Containers are placed on railcars, but too late to catch the weekly train. If not for the Shanghai typhoon, the shipment might have reached Tacoma in time for the Aug. 31 train.

Day 30 (Sept. 7): Union Pacific train departs from Tacoma.

Day 35 (Sept. 12): U.P. train arrives in Council Bluffs. Containers are unloaded.

Day 36 (Sept. 13): Werner trucks pick up containers at Bluffs rail yard and haul to SnapStone Tile, 13423 F St. Tile will be used to make interlocking tile product assembled in Omaha and sold in stores.

Contact the writer: 402-444-1114, paul.goodsell@owh.com

Contact the writer: Paul Goodsell

paul.goodsell@owh.com    |   402-444-1114

Paul covers stories related to education, government and public policy, including taxes and budgets. He works a lot with numbers and data.

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