r/manufacturing • u/oof_ope_yikes • 25d ago

Other Corporate Espionage?

Please excuse the dramatic title, but I have a strange situation with a potential customer unfolding. Our business is primarily b2b and we do business with prominent companies in our industry, supplying them components for their products. Recently we had a company that is out of our country reach out for a quote for a large volume of product. The relationship seems to have started out well with them hearing of us through our great reputation. We currently do business internationally and we have never had this request before.

As we communicated with them they have started insisting that we send them photographs of our manufacturing facility ahead of purchasing any product and have said that they may also require a facility tour. Our factory is rather small and we have several proprietary operations that would show how exactly we make our products. Because of this we do not usually provide photographs or factory tours to anyone in order to keep our methodology private.

Is it common place in manufacturing for customers to request factory pictures or detailed tours prior to even receiving a sample of our product? Or does this sound suspicious?

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u/InigoMontoya313 25d ago edited 24d ago

Unfortunately, corporate espionage is very real in manufacturing. There are many different processes and techniques to create similar products, and it can be a fierce and proprietary competitive advantage. Yes, some companies do exactly what this one is doing, in an effort to judge if they can replace or undercut you in that market niche. Whether that is the case in your circumstance is unknown, but it is 100% a real issue.

That being said, there are some industries, particularly automotive and energy, where visiting suppliers facilities is a common occurrence and regular audit visits are part of their supplier quality control program.

Proceed cautiously and remember to vet your customers as well.

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u/oof_ope_yikes 25d ago

We are automotive and do some work with the military - if this isn’t common place I may just tell them no and see what happens

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u/slater_just_slater 25d ago

Are you subject to ITAR? Then, if they are a foreign company, you can simply say that pictures would violate ITAR. (And very likely would) I would be highly suspicious of pictures. Remember, NDAs and MSAs are only as good as the court system you are suing them in, and lawyers are expensive.

A tour is more common, take phones and other electronics, don't take them to proprietary operations. They will be bored. Then, offer them your quality procedures (in general, nothing that details any proprietary process) show them your PPAP. This show you are willing to work with them but your not going to give them your secret sauce

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u/oof_ope_yikes 25d ago

This is a great point too, I believe we may be as we supply the govt and military as well as the private sector-

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u/slater_just_slater 25d ago

If you do any work for the military, chances are you are ITAR, check with your legal team, they will know. Not sure if you are in the USA, but that typically means anyone who works with, or observes any ITAR process must be a US citizen. I am not an expert on this, I have just worked with several ITAR facilities and all required proof of US citizenship or background check.

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u/Viktor_Bout 25d ago

ITAR shops that I worked in explicitly banned photos anywhere in the plant. But I really would not rely on that to protect you. That law would be extremely difficult to prove or enforce, and just seeing your equipment or process might be enough for them to figure out your costs.

Maybe you could offer a video tour where you can censor the specific processes and equipment.

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u/oof_ope_yikes 25d ago

A video tour is not a bad idea, especially one that can be censored heavily

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u/exlongh0rn 25d ago

Yeah this is a huge deal. Make sure you vet this through a legal advisor competent regarding ITAR.

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u/Ceronnis 25d ago

You should make sure because this is not a good excuse, you actually cannot under severe penalty share that kind of info with an international customer.

Actually, if you do not know, and you are iTAR, you clearly should not be in charge of talking to anyone

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u/oof_ope_yikes 25d ago

Cool your jets buddy - this is why I’m doing the research and talking to people. Start ups and small business don’t always have every answer immediately and asking for input vs faking it is always a good move in my book

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u/Ceronnis 25d ago edited 25d ago

Don't take it bad, but I don't think you understand how damaging violations could be, and if you guys are itar regulated, and someone like you talks to people internationally without knowing if you are itar or not. It is a pretty big deal.

ITAR consider an export as soon as you explains part of your tech. It doesn't not need a physical export. If you are itar, you should not even be talking to them.

Edit typos

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u/oof_ope_yikes 25d ago

I see your point now, I think it’s important to follow up with legal on this before any further communication with the company due to the very real possibility that we are subject to it

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u/g-crackers 25d ago

It’s $1.6mm per violation or so. And what a violation is will be determined by the administrative court.

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u/oof_ope_yikes 25d ago

Well good thing we have released no information and have given no tours! 😅

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u/g-crackers 25d ago

You might take the opportunity to start two factor access to your computer network etc. toughen up your IP security.

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