Delta Airlines – Question #79: Do you own 100% of your manufacturing facilities? If not, what is the % breakdown between owned vs co-manufacturing, etc.?

No.

We do not own the production facilities. First of all it is very difficult to actually “own” something in China. You can of course, but the amount of paperwork and regulations makes this complicated and not always wanted. We want to be flexible in everything we do. We want to produce the exact correct product in a location we want.

The percentage in breakdown varies per factory. In some period of times throughout the year this can be 100%, but it can also drop to 75%. One of the largest worries of a factory is continuity. And since we have several options available, we spread our production space. Plus not all factories are the same. Some are more focused on high-speed, mass volumes. These are ideal for large Economy Class low quality mass production. These are not suitable for First Class service equipment. Once large production batches are produced and the next is scheduled for some time further up in the month, the factory has the option to take work from 3rd parties. But Sola will always be the lead buyer. That is one of the things we agreed on when we started doing business.

It is also not realistic or desired to own factories. You are then bound to a certain level. We are less flexible, and if there is no production planned, we still have to manage the entire factory. It is best to have themselves keep busy till we come with a new PO or contract.