Is There a Name For This Type of Business?

I used to know a guy who owned a small factory -he made electronic components. HE ALSO WOULD LEASE THE FACTORY TO ANOTHER BUSINESS-MAKING THE SAME STUFF. Here is how it worked:
The day shift would run the plant from 8:00 AM to 5:00 PM
-At 6:00 PM, another crew would come in, and work till 12:00 PM
The "other crew " would make stuff that was sold through a distributor, under another name ; I have no idea who owned the operation.
Obviously, the second business was using idle machinery, and except for the power and raw materials, they had lower costs (because the first shift had paid for everything).
I never asked about the phantom second shift-I understand the stuff produced was sold for export, through a different distributor.
Does it sound like something fishy was going on?

This type of dual line production goes on all the time. Generally, it’s the same company that merely re-brands the product. I wonder if there is some union, patent, or contract provision that prevents the owner from just operating the second shift himself and selling the products to another distributor under different labels. I assume the quality control and material is exactly the same, but that could vary too. The tires on my truck are supposedly made by a major manufacturer and sold under this private brand. I got a deal on price and the quality has proven to be good.

Bottom line: I don’t see anything fishy, just innovative.

What does this mean?


It’s common in manufacturing for the same goods to be produced under different names for different markets.

In Spanish it’s called “maquilas” or “maquiladoras” (from Basque “makila”, meaning “walking stick”, “support”), in English I’ve called the process referred to as “farming out the work” (from the purchaser’s point of view) but I’ve also seen maquiladora. A maquiladora can work exclusively for others, but it’s much more common to work for more than one customer and to have their own product line. Pretty much every single “supermarket brand” out there is made by a company with this combined business model. Some companies (I understand Dell is one of them, Radiola used to be another) do not have a single factory, every single item they sell is made by a maquila and as I said before those contracts aren’t exclusive; a specific design/model/SKU may be (may!) but the manufacturer can make any other products for anybody else.

Contract manufacturing is a common practice. The owner of the equipment makes better utilization of his capacity by manufacturing products for others. Typically the workers are employed by the same owner, however it’s not too uncommon to have contract workers perform the additional shift work.

This is what a lot of OEM electronic manufacturers once did. Nowadays, a lot of electronics manufacturing is subcontracted to contract manufacturers (CMs) who provide manufacturing services for any number of customers.

I would bet the second shift wasn’t making the same thing, but was manufacturing a completely different product line using the otherwise idle equipment.

ETA: Ah. Nava’s response makes more sense!