Globalization: Increasing
Competition and Opportunities
Presented at Marquette University
By
Briggs & Stratton Corporation
March 3, 2010
Agenda
• Briggs & Stratton Profile…and Globalization
• Global competition is increasing
• Global opportunities are increasing
• Globalization as a threat to engineers
• Thriving as a company and as an individual in a
Global world
Presenters from Briggs & Stratton Corporation
Paul Neylon
President of Engine Power Products Group
(Retired)
neylon.paul@basco.com
Phil Cappitelli
VP & GM Business Development
International Power Products Group
cappitelli.phil@basco.com
Jessica Lindquist
Asst. Marketing Manager
International Power Products Group
lindquist.jessica@basco.com
Globalization (or globalisation) describes an ongoing process by which
regional economies, societies, and cultures have become integrated
through a globe-spanning network of communication and trade.
• Early Roman Empire
• Late 1800’s
• Late 1900’s “explosion”
• You folks are growing up immersed in it.
•Take advantage of it. Embrace it. Prosper from it.
B&S Business Profile
Total business-2009 Sales: $2.1 billion*
Engine business-2009: $1.4 billion
Equipment business-2009: $ .9 billion
*After Eliminations of $215,000
B&S Business Profile
Total business-2009 Sales: $2.1 billion
Domestic business-2009: $1.6 billion
International business-2009 $ .5 billion (24%)
Plants Manufacturing B&S Engines
1985 2007
• 25,000 engines per day • 54,000 engines per day
• 6,000,000 engines per year • 13,000,000 engines per year
• All in Milwaukee • 5 domestic plants, mostly in
southern U.S.
5 international plants in Japan,
China, Philippines, Australia
and the Czech Republic
U.S. Operations
1985-1996: move from the
expensive, inflexible Midwest
Milwaukee, Wisconsin, 1954 to the Southeast…lower cost,
BRIGGS & STRATTON
®
flexible and close to customers
Rolla, Missouri -
1996 BRIGGS & STRATTON
®
BRIGG S & STRATT ON
Poplar Bluff, BRIGGS & STRATTON
®
®
Missouri - 1988
BRIGGS & STRATTON
®
Murray, BRIGGS & STRATTON Statesboro,
Kentucky - 1985 ®
Georgia, 1995
Auburn,
Alabama - 1996
Growing Worldwide Operations
2005-2009: Add capacity for
Both new and existing products
flexible and close to customers
Ostrava
Czech Rep
2006 Shanghai Osaka
BRIGGS & STRATTON
®
China Japan
2005 1987
Manila
Philippines
Chongqing
2004
China - 2005
Sydney
Australia
2008
Global Competition is Increasing
Manufacturers of Engines:
1980 2009
U.S. manufacturers • U.S. manufacturers
•B&S • B&S
• Kohler • Kohler
• Tecumseh
• Japanese Manufacturers
• Wisconsin
• Honda
• Robin
• Kawasaki
• Chinese Copiers
• 30 or more
Global Competition is Increasing
Global Competition is Increasing
United States Western Europe
Eastern Europe Consumer Latin America
Japan India
China
Global Competition is Increasing
Many other industries:
Electric motors Hand tools Automotive
Televisions VCR’s/DVD’s Computers
Textiles Services Engineering?
Automotive (brands only)
ORIGIN ITEM 2010 2008
USA Buick
SaturnLesabre
Japan
USA
Japan
USA
Pontiac Bonneville
Toyota Camry
Saturn
Honda Pilot
Country % %
USA
Japan
Japan
Honda CR-V
Chevy Blazer
Nissan Armada
Mitsubishi Montero
USA 68% 76
USA Mercury Villager
Chevy Blazer Japan 20% 20
Japan
USA Ford Taurus
Mazda MPV
USA Cadillac Fleetwood
Dodge Caravan Korea 4% 4
USA Dodge Pick-up
Ford Explorer
USA
Germany BMW X-3
Olds Aurora Sweden 4% 0
USA Lincoln Continental
Dodge Pick-up
USA Ford Explorer
Chevy Van Germany 4% 0
Japan
USA Honda Odyssey
Mercury Mountaineer
USA Ford Taurus
Buick Century
USA Pontiac
Ford 500Vibe
Japan
USA Chevy Prizm
Mazda 6
Korea Kia Amante
Hyundai Sonata
Japan
USA Ford Expedition
Toyota Corolla
USA Saturn Neon
Dodge
USA Saturn Sebring
Chrysler
USA
Japan Buick Avalon
ToyotaLesabre
USA
Sweden Saab
Saturn
USA Chevy Trailblazer
Ford Windstar
USA Ford Edge
Chevy Impala
USA Pontiac Torrent
Mercury Gran Marquis
Fortune magazine January 18 edition
described it (Hyundai) as "the toughest car company of them all".
…has shown the fastest growth in the world
"Toyota used to say that Hyundai was the company it feared most. Today
those fears have grown into a nightmare," the magazine said.
…switched the focus of the company from volume to high quality
Technology-based management strategy and continuous investment
…push into the luxury-car game,“
Hyundai Motor and its sister company Kia Motor saw sales increase in the US
market, while other American and Japanese competitors struggled.
…enhanced brand image, boosted by Hyundai's Genesis Sedans, Hyundai
assurance programs that provide trade-in bonuses, and a gas price protection
program.
Congressional Toyota Recall Hearings
Expanding last year’s recall that affected 4.3 million Toyota and Lexus vehicles
repairs of 2.4 million…trust his company again?
Decision to stop selling eight popular models…damage its reputation for reliability,
Hinder its return to profitability and unleash a wave of lawsuits.
Analysts estimate potential loss of revenue of $500 million a week.
TAG Survey
Home Depot
ORIGIN ITEM
USA
China Pressure Washer
Rake
USA String Trimmer
China Gas BBQ Grill
Basting Brush
China
Taiwan
USA
Light Bulb
Gas BBQ Grill
Patio Furniture
Hose-watering
Country 2010 2008
Malaysia
USA Wireless Doorbell
Box-to hide a hose
USA
Thailand Dolly-cart
Floor Tile
USA 40 40
Taiwan-China
China TV Cable
Kitchen Sink China 40 32
China
USA Light bulbs
Faucet
China
USA Toilet
Caulk Seat Mexico 4 12
USA
China Miter Saw Mask
Respirator Stand - painting
USA
China Mallet
Paint brush Canada 0 8
USA
China Spray Lights
Vanity Paint
USA
Canada Fire Proof Safe
Shelves-Organizer
Brazil 0 4
USA
Canada Mailbox
Mat-Front Door India 0 4
USA
Mexico Door
Oak Threshholds
USA
India Staplegun
Area Rug Malaysia 4 0
USA
Mexico Insulation
Zip Drill
USA
China EarPlugs
Hand Drill - electric Thailand 4 0
Mexico
China Twine
Spray head - sink
China
Mexico Sandpaper
Water Softener
Taiwan 8 0
China
USA Drill
Toilet Seat
China
USA Carbon Monoxide Alarm
Tape measure
Taiwan
USA Safety Doors
GarageGlasses
China
Brazil Door Knob
Bi-fold closet doors
Wal-Mart
ORIGIN ITEM
Haiti
China Toothbrush
Brewers T-shirt
El Salvador
China
China
Thailand
Ladies
bicycle Rock Star shirt
Toy Bear Dew men's boxers
Mountain
Country 2010% 2008%
USA
China Boys track pants - Starter
Mailbox China 64 56
Indonesia
USA Tire-Car
White Cloud Training Pants
China
Philippines Greco high chair
baseball glove USA 20 12
China
USA Diaper bag-
Treadmill Winnie the Pooh
China
Malaysia television
Girl's Boots Indonesia 0 4
Mexico
China Sunglasses - Printer
Greeting CardGeorge
China
USA Storage Tote -
Candle Holder Rubbermaid
Philippines 0 4
China
Mexico
China
Ironing office
LeatherBoard chair
Fake Flowers
blinds-window
Malaysia 0 4
China Wedding Invitiations
blender-margaritas Mexico 4 4
China Paint Brushes
wallet-ladies' kit
China
Pakistan Singer sewing machine
bed sheets-Spider Man Pakistan 0 4
China Panasonic Telephone
plastic flowers and pot
China Gym Shoes Frame
Digital Picture Bangladesh 0 4
Bangladesh
China Men'sHawk Skateboard game
Tony Dress Shirt
El Salvador
China Phillips HD 19" TV
Men's underwear El Salvador 4 4
China Packer's HatFootball
Wilson NFL
Nicaragua
China Ladies' tank top exerciser
AB Lounge/Sport
Nicaragua 0 4
China
USA
USA
China
Man's watch
Prestone anti-freeze
Porcelain Jesus
GE light bulbs
Haiti 4 0
USA
China Ear rings chain saw
Poulan 22" Thailand 4 0
USA
China AA Batteriesimpact wrench
Camp-Haus
Global Competition is Increasing
Why is global competition growing?
• Lower cost products**** (China & less developed areas)
• Higher quality products (Japan)
• Advances in Technology (Germany, Japan)
• Protectionism (India)
• Currency fluctuations (Europe, Japan, etc.)
Global Competition is Increasing
How can overseas competitors be a lot less expensive?
• MUCH lower labor costs***(China & less developed areas)
• Lower tooling costs
• Flexible working rules = shorter lead times
• Government subsidies = much less investment
• Profit requirements vs. employment requirements
• Tax requirements…
Global Competition is Increasing
So, many companies are expanding globally
• Some as a response to competitive threats
• Some seek to build an advantage
• Some recognize lower capital barriers by outsourcing
• Some look to develop new markets
• All see opportunities that outweigh the risks!
How do Companies survive Global competition?
(Look for these companies when you enter the working world…you want to work here)
• Minimizing labor content through automation, etc.
• Developing proprietary manufacturing processes
• Developing new and innovative products and services
• Cost effectively meeting stringent regulatory hurdles
• Redesigning new products to adapt to region specific needs
• Developing new or alternative materials
Global Markets Provide Opportunities
Global markets can serve as a source of supply
• Unemployment is higher
• Cost of labor is lower
• Parts may be purchased at lower costs
• Tax/Investment incentives may be available
• Parts or products may be manufactured at lower costs
Maslow’s Hierarchy of Needs
Global Markets Provide Opportunities
Global markets can serve as a source of demand
Products
Demand Food/Water
Shelter
Lifestyle T.V.’s
Spending Phone
A/C
Income Washers
Jobs Computers
Cars
Investment Education
House
Companies Lawnmowers***
Healthcare
Global Markets Provide Opportunities
Global markets can serve as a source of demand
• EXAMPLE: Chinese Agriculture
• 1.2 billion Chinese…900 million farmers
• Mechanize the farming processes
• Demand for equipment
• Demand for engines
Viet Nam…over-the-road trucking system (2006)
Viet Nam…high-end mini-vans (2006)
Viet Nam…mini-combine (2006)
Fewer laborers…means more machines (opportunity)!
Where are all the Buffalo? (2006)
World Population Distribution
2007
World Literacy
2007/2008
Development
2008
• Most developed countries are shown in Blue
• Less developed countries are shown in Yellow
• Least developed countries are shown in Red
"Don't call us poor people, call us
consumers"
• In India, in Mumbai's
largest slum, there is
no clean water.
• But 90% of
households have
invested in a color
television or at least a
radio.
Globalization
• Until a few years ago, some 80% of the
world's population - about 5 billion people -
were well below the radar screen of big
business
• Tailoring products for [poor] consumers
will be a huge source of innovation
HIPPO ROLLER
Globalization and the Individual?
• Remember the 4 C’s
• Communication
• Culture
• Currency
• C…logistics
Engine Cost= $52 Price=61 Euros Price @ 2/02=$54 Price @ 12/03=$78
Price @ 2/02=$54 Price @ 12/03=$78
Globalization as a Threat to Engineers?
1. Lack of intellectual property enforcement and
recognition in some growth markets (i.e. China)
• Impact on innovation and R&D
• The commodity focus
2. Lower cost engineering and technical staffs in India,
China, etc. replacing comparable U.S. functions.
U.S. complains to WTO on China
By David J. Lynch, USA TODAY, April 10, 2007
In the sharpest sign of a toughening U.S. stance on Chinese trade, the Bush
administration Monday lodged a pair of formal complaints with the World Trade
Organization over the widespread availability in China of counterfeit American goods
and barriers to sales there of U.S.-made copyrighted products.
"This is more than a handbag here or a logo item there; it is often theft on a grand scale,"
said U.S. Trade Representative Susan Schwab.
The action signals a more assertive administration approach to Chinese trade practices
that contributed last year to a bilateral trade deficit of $232.5 billion and an overall trade
gap of $764 billion. In recent weeks, the U.S. filed a separate WTO case accusing China
of employing illegal subsidies to benefit its export industries and reinterpreted Commerce
Department rules to permit the use of special duties on Chinese imports.
The U.S. has complained to China for years about pervasive copyright violations. In most
Chinese cities, pirated goods — from North Face jackets and Nike running shoes to
Microsoft software — are available for a fraction of their actual price. Street vendors a few
blocks from the American embassy in Beijing, for example, hawk DVDs of Hollywood's
latest releases for little more than $1.
China has responded by tightening its laws and periodically raiding factories. But Chinese
violations cost copyright-protected industries $2.3 billion in 2005, according to the Motion
Picture Association of America.
Engineering Salaries by Region – in U.S. $ / Year
Good news……Bad news?
China China w/ India India w/ Czech U.S.A.
English Big Co. Republic
Starting - out $6,000 $10,000 $7,100 $8,500 $16,000 $52,000
of a University
5-10 Years of $9,000 $15,000 $12,000 $14,500 $23,000 $70,000
Experience
Management $22,000 $34,000 $19,500 $23,500 $32,000 $90,000
For your own benefit, check out salary.com or other similar websites
Opportunities for YOU,…the individual
?
How do Individuals succeed in a Global World?
There is a world of engineering jobs out there!
For instance, at Briggs & Stratton, we have….
• Design engineer • Environmental/Compliance engineer
• Test engineer • Metallurgist
• Quality technician • Materials Engineer (eg. polymer, ferrous)
• Manufacturing (process) eng’r • Tooling designers/engineers
• Quality engineer • Casting engineers
• Engine technician • Sales engineer
• Fuel systems • Supplier quality engineers
How do Individuals succeed in a Global World?
• Continue to work smarter…exploit access to education* Wooden
• Work harder…40 hours/week won’t cut it
• Travel, re-locate, adapt culturally
• Communications!!!…technological and multi-lingual
• Be a cross-functional team player
• Embrace change, get to know the unknown
• Have integrity (be moral and trustworthy)
One last thought…
According to World Bank….
For the of 2008, the estimated GDP (gross domestic product)
for the United States was 14.2 trillion. To put this into
perspective, the European Economic Union (16 countries)
account for only 10.9 trillion. The estimate for China is
$7.9 trillion and Japan is $4.4 trillion.
The estimate for the world is $70 trillion.
Where would you prefer to be?
Thank You
Stay Hungry!!!
Good Luck!