Well, you can work the figures here. 14p from the yanks, but for 25k pieces, that gives £3500. So in essence if you quote him 50p per piece, he can go to the yanks, save 1k and have another 16k pieces to play with. That's a no brainer. As I said in my very first post, most likely the yanks have some kind of CNC machine (probably with a suitable bore going all the way through the spindle, so they can feed long dowels), and once they've set that thing up, all they need to do is watch it work (at a speed and accuracy you cannot possibly match by hand) and change dowels every 2 minutes or so.
I feel for you. It's hard to let a job go, especially if you're not really busy, but it's probably better to not do this rather than lose money, time and the will to live.