Growth Strategies for the U.S. Moldmaker - Overseas Exploration: Moldmakers Participating in the Global Market
Part three of a four-part series that will describe the current challenges for the U.S. moldmaking industry and what strategies some companies are executing to grow their business.
As technology advancements help make the world of business become one, exploring overseas opportunities is not optional for companies that are charting their course for growth in the years to come.
At different times various manufacturing sectors have been awakened to both the pressures and opportunities of the global marketplace. From toy manufacturing in the '60s, to the automotive industry in the '70s, consumer electronics in the '80s and then the cell phone explosion in the '90s, U.S. companies have either become big winners or big losers when evolved globalization of their market came knocking at their door.
The world is now at the doorstep of the U.S. moldmaking industry and those directing their companies' futures can either greet this visitor and learn the challenges and opportunities ahead or pretend that nobody is home and hope it will go away.
This article is part three of a four-part series that will describe the current challenges for the U.S. moldmaking industry and what strategies some companies are executing to grow their companies.
Recently, during the MoldMaking 2000 Expo in Cleveland, OH, there was a presentation held entitled, "Global Strategies: A Panel Discussion." Individuals who are directing the strategy for their moldmaking companies were present while three questions were asked to generate a discussion and reach a consensus regarding this global moldmaking market.
1. How can we address our customers' changing needs?
The pressures on OEMs and molders have been changing dramatically. Costs have to be reduced for these OEMs to be globally competitive, while time-to-market demands are great. What is a U.S. moldmaker to do?
"You have to be sure that you are really close with your customer," states Andy Edlund of Marland Mold (Pittsfield, MA). "If a Fortune 100 customer of ours is further expanding its operations overseas, then we have an opportunity to assist them. We can ship proven, production-ready molds and provide a value advantage."
By being involved in the initial product development, and subsequently the manufacturing of the production tool, mold-makers can offer their customers an opportunity to reduce the time required to have a production-ready mold in place, while doing that within reach of the OEM.
With a close customer relationship, moldmakers can learn the 'pain' that their customers are encountering and be a part of the solution.
Jim Meinert of Meinert Marketing Services (Mequon, WI) illustrates this point. "Being involved with the customer early on in the product development cycle is key," he states. "The number of tools required can be reduced with part modification and geometry can be changed to make the molds as straight forward as possible."
But early involvement alone may not be enough to retain that customer. "If I have a customer in Mexico that is under cost reduction pressures, they also may want the assurance of the quality that I have provided in the past," Meinert states. "Then, for example, I may have to take an eight mold package and outsource three of the simple tools to an overseas shop to keep that customer. At least that way, I'm able to meet both of their needs, while controlling the project and remaining a competitive exporter."
OEMs and molders are telling us what they need and sometimes it's difficult to see this as an opportunity, especially the way that changes are coming at us. However, a non-adversarial history is key for there to be trust to ensure the development of real solutions.
2. How 'real' is the threat of foreign competition?
We are aware of tooling programs going offshore rather than going to ourselves or a neighboring moldmaker, yet we also hear of tools that were built overseas where the savings were quickly negated due to the time and expense of 'getting it up to standards.' How 'real' is the threat of foreign competition and what are moldmakers doing to keep it from impacting their business?
"Sell value," urges Ron Cisliek of Delta Tech Molds (Arlington Heights, IL). "If it's all going to be based just on initial price, that's a tough challenge for anyone. But if the customer understands what that tool means to his business, the years of production that will be required and the need for fast and qualified service should there be repairs, a substantial value advantage can exist."
Some recent studies backing up this point have been surfacing, and the American Mold Builders Association (AMBA) plans to make these known, through marketing efforts underway.
Undeniably, there are current relationships with OEMs and overseas mold builders that are 'real,' and that are of value to the mold buyer. But once one factors in the time it takes to develop the source, the flights and hotels, the hand-holding expense, the revisions required to get the mold to specs and the escalated cost of repairs, the playing field gets a little more even.
Of the thousands of mold building companies located in markets that export to the U.S., there are only a handful positioned to be competitors to a U.S. moldmaking company. For example, on the recent SPI trade mission to Asia, participants may have been impressed by the capabilities of some of the companies, but would later learn that these capabilities are very much the exception, rather than the rule. There are few companies that can compete in promotion, communication, reporting requirements and understanding of customer specifications. Experienced tooling engineers who are familiar with these markets may tell you there are only five such companies in Hong Kong, five in Singapore, etc.
However, these governments recognize that tooling is 'good work,' and there are more organized, concerted efforts to expand upon training, R&D and export. For example, some countries cover 30 to 50 percent of the expenses of an overseas moldmaker coming to the U.S. to visit contacts or exhibit at a trade show. So, one can see the trends that the number of competitive mold builders will grow over time.
3. How achievable is overseas selling?
"Last year we set up a booth for the AMBA at a plastics show in Japan and we had people walking up to us saying, 'What are you doing here?'" says Gerry Hobson, of Hobson Mould Works (Shell Rock, IA). "But we do have some advantages, and we were there to sell them. For example, we were able to look at some of the ways they traditionally have manufactured blow molds and delivered to them a tool that offers dramatically improved cycle times. And then, in turn, we can not only be a competitive source selling into Asia, but also selling to their transplant locations in the U.S. - with a price and service advantage."
For those companies that export their molds, it is common to hear that the opportunities won't fall into one's lap. A lot of work and relationship building has to go into getting any business developed. Meinert explains, "I've been selling molds in Mexico now for more than 30 years and one just doesn't run an ad, display in a booth and have something come their way. It takes a lot of work and patience."
A very common statement heard among mold exporting companies is, "We started by riding on a customer's coattails." That partnering - combined with a whole lot of faith, trust and time - is the difference between companies that are exporting and those that are not.
To be encouraged one only needs to hear the Hobsons, the Delta Techs, the Marlands and the Meinerts describe a sales mix of between 15 to 50 percent of their molds being exported overseas. And in addition, these companies are not feeling the impact of overseas tooling as strong as non-exporting companies seem to be.
Where Do I Begin?
How does one begin to learn firsthand the opportunities outside one's own country code? Here are a few possible first steps:
- If a customer or colleague is frequently conducting business overseas, they may welcome a tagalong for at least a portion of their trip. It's likely how they learned, so much like a master moldmaker finds it rewarding to pass along some knowledge to an apprentice, so too will most who are now accustomed to travelling outside of our borders.
- Consider alliances. More shops are finding it tougher to 'go it alone.' A well-planned, documented, strategic alliance allows two companies to pool their strengths and resources. Company stock does not change hands, a merger does not occur, but rather a strategic alliance is a contract that spells out the rules and the roles, and allows both companies a larger offering. Whether the partner is across town or across the world, an alliance can enable a moldmaking company to better serve its customer, retain the business and maintain control over future projects.
- Overseas trade shows are a great place to start. Whether it's Euromold in Frankfort or AsiaPlas in Singapore, one can't help but to really start thinking once immersed in an entirely new market. Others also may be going so that there is some security in numbers. Any language barriers are typically much less than one would think. English is the IGES of the business world - it's not a perfect means for a moldmaker in Israel to talk to a processor from Germany, but it works.
- Contact a trade association for assistance. For example, the Society of the Plastics Industry (SPI) has excellent contacts and resources that can likely put you in touch with someone who can be of some real help. Lori Anderson of the SPI directs the International Trade Advisory Committee. Comprehensive reports on processors in various regions have been completed with more underway.
- The government can actually help you. This may seem like a shock at first, and don't expect the subsidies that were described earlier, but through the Commercial Service of the U.S. Department of Commerce, there are certain services that are provided at extremely reasonable prices. One package will gather information on companies that may be a match for you to sell to, they will then send your brochure to them, collect the respondents' information and forward these qualified contacts to you. Furthermore, there are USDOC contacts overseas that are U.S. citizens, paid for with your tax dollars and privy to the local customs who can serve as an excellent resource for the U.S. businessperson. Contacting your local USDOC office is painless and all of the options will be spelled out for you.
A World of Opportunities
There are both opportunities and challenges throughout the world and nothing could illustrate this more than an anecdote from Jim Meinert. "My son is a tooling engineer for a large processor and he buys molds, many of which are from Asia. I've been on the same flight as him, travelling to the other side of the world. He's going there to buy molds and I'm going there to sell molds," Meinert quips. "And at one point, we look at each other and say, 'what's going on here?'"
What's going on is that both individuals are identifying opportunities and forming alliances throughout the entire industry to meet their customers' needs - and as a result, growing their U.S. companies.
For those who are concerned about their company's future and their country's competitiveness there are opportunities. Taking steps to better understand these opportunities may take us outside of our comfort zone at times, but during what is now an industry-wide time of change, that might be the safest place of all.
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