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Moldmaking Technology Magazine Growth Strategies for the U.S. MoldMaker Actively accepting the challenge to think globally, plan globally, and manufacture globally is essential for maintaining a prosperous moldmaking business today. Take a minute to think about the current situation of the moldmaking industry and how your customers‟ conditions are changing, how your competition is no longer limited to the shop next door and how new doors have opened up that are bringing additional opportunities to export your products. Then think about how you can take these issues and make them work for your business. What is it that you can do to continue to compete in this global moldmaking marketplace? Consider corporate alliances, dramatically decreasing delivery times and increasing awareness of the international marketplace, to name a few. These issues and more are addressed in the following pages of this Special Reprint of "Growth Strategies for the U.S. Moldmaker" a four-part article series brought to you through a collaborative effort between MoldMaking Technology magazine and Progressive Components due to the positive response of our readership. Understanding Your Competition Here and Abroad page 3 Harnessing Rapid Technologies for Plastic Tooling Applications page 7 Overseas Exploration: Moldmakers Participating in the Global Market page 11 Positioning Your Company for Growth During Challenging Times page 14 Christina Fuges Editorial Director MoldMaking Technology magazine In the past 12 years, we have seen dramatic change implemented within our country‟s moldmaking companies. From the migration of board drawings to CAD, milling machines to CNC and traditional lead man-based job coordination to project management utilizing specialized departments. The innovations that emerged in the seventies and eighties became the norm during the nineties. What will the next 10 years hold? Further technology refinements of course, with rapid tooling advancements, extensive standardization, and more powerful parametric CAD/CAM tools can be expected. But what may not have been expected is that as much as technical practices have changed in the past 10 years, the biggest changes in the next 10 years may be with business management techniques. And that the primary focus may not be regarding manufacturing advancements, but rather strategic business management challenges. It is hoped that this special reprint assists in raising awareness of the changes ahead, and serves as a resource for your company‟s competitiveness in the next 10 years and beyond. Glenn Starkey President “Your customers are global, your suppliers are global, so you better think global or you‟ll be left in the dust,” stated Lori Anderson of the Society of the Plastics Industry‟s (SPI) International Trade Advisory Committee (ITAC). Understanding Your Competition Here and Abroad Those watching the climate of the mold building industry in North America have seen changes in recent times - rapidly evolving technologies, increasingly challenging customer criteria and continued concerns about tomorrow‟s workforce. But if that isn‟t making life interesting enough, add in concerns about foreign competition and you really have a collection of factors that can make even the bravest of hearts concerned about the future. This article begins a four-part series that will describe the current competitive conditions in the plastics tooling industry and what some companies are doing to grow their businesses amidst challenging conditions. Where Is It Going? As one who grew up in and around the mold business, and now whose business is overwhelmingly linked to the fate of the U.S. moldmaker, there is more than just a passing interest in where this is all headed in the next five, 10 or 20 years. In the spring of 1998, during a conversation with Jim Meinert, international sales director of Meinert Marketing Services (Mequon, WI), the issue of the future competitiveness of the moldmaking industry came up. "One thing‟s for sure, you won‟t learn anything sitting at your desk," Meinert said. "Buy a ticket and get on a plane." There are several mold markets that have been promoting their competitiveness to U.S. OEMs and molders. These include Canada, Ireland, Italy, and Portugal - along with many countries throughout Asia. Lately, the most promotion has been coming out of Taiwan, Hong Kong and China, so it was decided that in order to get an education on the competitive forces in the world, these would be the places to visit. In a 10-day trip that included stops in Shanghai, Hong Kong and Shenzhen, a trade show was walked; a variety of molders were called upon; numerous mold building companies were visited; and a number of American tooling engineers who are sourcing tools in Asia shared their success and failure stories, while Asian moldmakers directly stated to what degree they planned on exponentially growing their business and from where that growth would be coming. The Good and Bad News Much can be learned from visiting an overseas mold building market. But to sum it up, it can be said that there is both good news and bad news for the U.S. moldmaker. The good news for the U.S. mold builder is that your location is the envy of the world. You are in the biggest economy in the world with the most stable government. The largest OEMs on the earth are right here within reach. You can service what you sell. You speak the same language as your customer. You have an existing relationship. What better place in the world to be? However, the bad news for the U.S. mold builder also is that your location is the envy of the world. Overseas moldmakers want what you have - to sell to the world‟s largest market and take in some of those stable American dollars. To achieve this, overseas moldmakers will use their lower-priced workforce and government subsidies to market to companies that may be feeling the global squeeze on their profit margins. And although a U.S. moldmaker may speak the language better, the overseas mold-maker knows that a potential customer will strain to comprehend what is being said - especially when the conversation is about savings. So, knowing that this location is the envy of the world, will that turn out to be good news or bad news for a U.S. mold building company? The answer to that question depends on whether U.S. moldmakers correctly commit to using their location as an advantage. What About Them? What is an overseas moldmaker like? That‟s like asking what a North American restaurant is like. Do you describe a Manhattan bistro or a tortilla being flipped on the streets of Tijuana? One can find that same degree of difference in overseas moldmakers. Walk into a top moldmaker in Taiwan or Singapore - which is gearing its work toward export - and you will see more that looks familiar than foreign. There are machining centers from Japan, mold steels from Germany, hot runner systems and components from Germany, U.S. and Canada, etc. Just as U.S. moldmakers have access to these products, so do moldmakers around the globe. While per capita there may be fewer mold building companies that would be considered equivalent to a quality U.S. mold shop, capable companies do exist. We all hear horror stories from companies that have placed tools overseas, but then we also hear that large OEMs have successfully sourced tooling there for years. Which is true? Both. Another factor to keep in mind is that the U.S. moldmaker is not alone when it comes to competitive concerns - you can speak with a moldmaker in Portugal concerned about "the cheap labor in Poland”, a moldmaker in Singapore con-cerned about "the cheap labor in Malaysia" and a moldmaker in Taiwan concerned about "the cheap labor in China." Areas that are a concern to a U.S. mold builder contain their own fierce competitive climate within their market. Therefore, many of these overseas moldmakers are setting up production plants in Malaysia, China, etc., to be competitive in their own country. For example, there are state-of-the-art manufacturing facilities with 50 employees in Hong Kong - one of the most expensive cities in the world to live in - and that same company operating a lower-tech manufacturing facility in China containing hundreds of workers. Although this could be a strong competitive combination, there are significant practical difficulties and cultural differences for companies that conduct business across that border. It‟s not as easy for them as one might think, and the moldmaking companies that are doing this well while also marketing to the U.S. are few. Not a Bad Business to Be In Taking an overall look at the world of manufacturing, one can see that plastics tooling is a great business with which to be involved. There are more and more consumers in the world and these consumers want more and more "stuff" and plastics tooling is right there riding those coattails for growth - from computers and cars to better health care and bottled water. With that said, how can a U.S. moldmaker participate in that growth while fending off competitors who also recognize the opportunities? Business Profiles From A to Z After not only attending but exhibiting at trade shows in Asia and Europe and extensively visiting mold building companies throughout the world, I‟ve seen certain patterns and characteristics emerge time and time again. Regardless of the mold builder‟s country of origin, an impartial observer can visit these companies and see a definite variety of mindsets, and subsequently, a variety of growth patterns and anticipated rates of success. To illustrate this, let‟s examine two hypothetical companies. Company A is called "Always The Same Tool & Mold," while Company Z is called "Zooming Forward Industries, Inc." Company A - as the name would imply - is not really open to adapting to the changing conditions in the market or to its customers‟ changing needs. This company will play it safe - if the customer wants what they have, fine, if not, oh well, why take chances. Minimal growth is expected here if conditions for this company‟s customers are changing. Company Z - as the name implies - is very dynamic and open to change. This company will react to market conditions and competitive factors in order to meet its customers‟ changing requirements. Within this company, there will be a nearly limitless potential for growth. Hopefully, not too many of our companies sound like Company A, but at the same time not too many of us feel completely like Company Z every working day either. Most companies are somewhere in between, trying to get their business a little closer to Company Z every day, every year. It‟s definitely more profitable, more secure, and more fun. Growth Strategies There are certain attributes and actions which characterize a mold building company that resemble the latter of the two hypothetical examples. A growth strategy consists of paying attention to particular areas - enabling a competitive advantage. Of course, training apprentices, maintaining a safe and positive work environment, adding benefits to retain the workforce, etc. are essential strategies to a successful existence, but are not necessarily part of a strategy to excel past competitors. A strategy for increasing competitiveness may contain a mix of the following factors: 1. Harness time compression technologies. More and more, time-to-market demands are driving required mold deliveries down. For those who are experts in time compression technology and pursuing the work that is benefited by it, the competitive playing field narrows greatly. 2. Utilize alliances to achieve maximum competitiveness. Some companies are using overseas agents to sell their molds into overseas markets. Others are sourcing out portions of multiple tooling programs to overseas sources. Still others utilize a combination of both. Alliances also can be formed with other domestic moldmakers - as we are seeing now with some U.S. moldmakers merging, acquiring or forming an umbrella company so that they can offer their customers both full-service capabilities along with the expertise within a niche. 3. Market aggressively. In leading plastics industry publications, moldmakers from outside of the U.S. as a whole are advertising at a rate that is relatively comparable to that of U.S. mold-makers (see Charts I a and b, page 6). Although in the past it could have been said that “I don‟t have to advertise," now more and more companies are finding that if they don‟t promote their names and specialties to their customer base, the competition will. 4. Work a strategic plan. This final point is the least spectacular, but the most important. A company can strongly benefit from having a real Board of Directors and consistently working a three- to five-year strategic plan. Step by step, a strategic plan can give the appropriate attention to the factors listed above, developing each in compliance with a documented, yet reviewable course. Know The Competition The more we know about our competition - both domestic and overseas - the better we can put together an effective strategy to grow. And because most moldmakers have more of a read on their domestic competitors than overseas, developing one‟s competitive knowledge may include "getting on a plane." Overseas trade shows, which are listed in major publications, are a great place to begin and not as challenging or as costly to visit as one might think. In fact, after the trip many find it almost disturbing that it wasn‟t as difficult as they had expected it would be for them ... or how it might be for their customer. Even if one never intends to buy or sell anything from outside of U.S. borders, understanding overseas competitors will allow him/her to execute a strategic plan with confidence. A Growth Industry in a Growing Market As mentioned earlier, the plastics tooling industry is one of growth. The region of the market in which we are located within the U.S. is not a bad place to be. Whether our location will be used as an advantage or work against us as a disadvantage depends primarily on our mindset, and subsequently on our actions. The bottom line is that we must meet our customers' needs by whatever means necessary to keep the primary contact - the tooling engineer - away from the competition. Harnessing Rapid Technologies for Plastic Tooling Applications Those watching the business climate throughout the moldmaking industry are seeing great changes occurring - mold delivery demands resembling time frames formerly encountered only in prototype applications; and increasing demands by OEMs (for conformance to quality standards, payment policies and CAD platform compatibility). Furthermore, as a developed U.S. tool building market looks to increase recruitment efforts for tomorrow‟s workforce, concerns are increasing regarding competition from both Europe and Asia. What these trends mean to moldmaking companies is that in order to continue company growth they also must react and change. Because U.S. moldmakers have many decision-makers from the largest OEMs in the world very near to them, there is an opportunity to serve their customers needs in ways that foreign competitors cannot. These moldmakers are selecting a "do more and do it faster" approach, which includes turning to rapid technologies. It is by these companies‟ examples that we can see the course which may apply to our own companies - as conditions continue to change and technologies continue to develop. In this article we will look at businesses that are using these rapid technologies for growth and profit. Sales Tools Versus Reality When CAD/CAM systems first arrived in moldmaking facilities in the late 1970s, many shop owners admitted that the value was more to the sales department than to the engineering department. Although customers were shown demonstrations of the system‟s capabilities, it was likely that somewhere there was a room filled with manual drafting boards. That was the way the job got done. But, now the drafting boards have disappeared and CAD/CAM is a way of life. However, during those early years, it was "an investment" more than a "profit center." In order to make use of the equipment, many times the task would be screened for the system‟s or operator‟s capabilities. So, many high-end systems would be used for 2-D work, while the cavity and core details would be traditionally manufactured using patterns, models, duplicating machines, etc. But, at different times in different companies, CAD/CAM usage matured to become a legitimate tool for a moldmaker to build molds better and faster, and they crossed that "productivity line." With this example in mind, which side of the "productivity line" are we on with rapid technologies in moldmaking? Some say that it‟s not "there" yet. In fact, the market is clearly stating that belief by the relatively small percentage of tools that are made using these technologies. However, there are those that believe we are there now, and are proving it within their business. Evaluating Technologies Scott Schermer is the director of Rapid Solutions (Neshota, WI) - a division of Dickton-Masch - which is a large custom injection molder with an in-house tooling facility consisting of 35 moldmakers. "Three years ago, like a lot of other companies," states Schermer, “we began getting pressure from our customers to make changes to be faster and cheaper. So, we spent $100,000 and nearly a year evaluating the various technologies. Then, rather than just "purchasing a machine," we set up a separate division of the company located nearby.” Starting Up In April 1998, Schermer purchased a DTM Sinterstation 2500 and began using Rapid Steel 2.0. “We started with nothing - a 6,000 s.m. warehouse, a machine and me,” Schermer says. Approximately 18 months later, this location had three moldmakers, one engineer, and an operator at an injection molding press. In 1999, Rapid Solutions built an estimated 50 tools and has become the world‟s largest user of the RapidSteel material from DTM. “This is a new business.” states Schermer, “but I can tell you that this year, our first full year, we will show a profit - and not all new businesses do that.” Schermer is calling on large OEM customers that typically had little interest in pursuing discussions with yet another traditional molder and moldmaker. “But when I tell potential customers about a 12- to 17-day delivery, they hop on a plane to come see what we‟re doing.” The ultimate goal was to attract customers at the part design/prototype stage, to bring them in as a customer at Rapid Solutions first, and then procure production tooling and molding. It has done just that. They have brought customers to Dickton-Masch. However, Schermer thought his business would be assisted more by the parent company‟s customer base. “That hasn‟t happened, probably because they didn‟t think of us and our rapid technology capabilities, so we are developing our own customer base.” Potential Growth Schermer sees the potential to be "unlimited.” In the short term, there‟s the potential to do two to five million dollars in 2000 and seven to 10 million dollars in 2001. Being partners has its advantages. “If I need work, Ill take anything and expedite it to the parent company‟s tool room. If I don‟t need work, I can be more selective when pursuing projects that fit the technology.” Rapid Solutions can provide assistance with the product design, tool build, and sampling and short-run capability. Most runs are for 200 to 2,000 pieces, although in three cases more than 60,000 parts were molded. The materials on those runs were polycarbonate, ABS and a 20 percent glass-filled polypropylene. The Next Step Rapid Solutions is using this technology and seeing profit and growth. Schermer feels that success is not solely due to the process. “Any of these technologies are just tools. When making the investment, don‟t think you‟re buying a magical turnkey machine. You have to take ownership of the technology, pushing it past where even the manufacturer‟s awareness may be. What you learn at the start-up is just a guide to get you close. After that, it‟s all up to you,” Schermer says. Schermer has helped DTM push the technology and feels that with processes this young, it‟s the users that will drive it further. When will a dramatically refined generation system be available? “The people waiting for ±.01mm with out-of-the-box directions will be waiting a long time,” Schermer says. “If someone feels that this will help their business now, then now is the time to move.” Is more widespread acceptance of rapid tooling technologies anticipated? “This is where the big growth is going to come from. To make use more widespread, OEMs will have to identify critical areas, critical tolerances and then loosen up tolerances in non-critical areas. Doing this will lead to more growth for the technology and further development of the technology itself.” This example illustrates how Dickton-Masch was able to see that its core business was being threatened and how it successfully did something about it. Various rapid technologies were evaluated and a separate business unit was created. This division dedicated itself to harnessing the technology and as a result quickly achieved profitability, while expanding the customer base for the parent company. Comparing Technologies Ben Staub, owner of Bastech Corporation in Dayton, OH, also saw how changing business conditions threatened his core business. When he started his company six years ago, it was primarily an SLA model service bureau. As that market became more competitive and other technologies developed, he invested in the Keltool process available from 3D Systems (Valencia, CA) to take advantage of his moldmaking background and offer his customers more than just SLA models. “RP had gotten so commoditized, that it could only become profitable if it was used as a means to an end,” states Staub. His company, which assists product developers from concept to molded parts, now uses a variety of rapid technologies. Increasing his company‟s capabilities by adding a new technology may require the cooperation of a key customer. “The need is great to partner with a customer, and say, „We'll buy the machine and use it on your project. This will be the first time and there may be some difficulties. But in the end, we‟ll be adding a capability that will decrease your cost and help speed your product to market.‟ Getting the customer‟s agreement to this before the machine is even ordered, helps justify a new machine purchase. The work is already there and the customer is aware of the learning curve in the beginning. And as our experience develops, there is a benefit to the customer,” explains Staub. One example of this benefit is shown in Chart I. The Keltool process was used by Bastech and for his customer resulted in significant time and cost savings over prices and deliveries of conventionally manufactured tools. However, the longevity of this tool did not match that of a conventionally manufactured tool. “That didn‟t concern our customer,” says Staub, “They wanted to get their product to market as fast and economically as possible. Then, if there was initial market acceptance, high production tooling could be manufactured after the initial investment had been recovered.” Along with the Keltool process, Bastech added DTMs RapidSteel 2.0 process two years ago. Like Schermer, Staub has a close dialogue with DTM. “We are sharing a lot of information with them on some of the nuances that we have learned to help them push this closer to a more competitive technology.” The result, as shown in Chart II has been a dramatic decrease in deliveries and costs. However, there also is a sacrifice in tool life. For this particular project, a long tooling life was not a requirement. Bastech's most recent technology investment was a CNC machine. Staub found that there are some applications where shaping cavity surfaces with what can be thought of as the “modified traditional” method of high-speed CNC machining is the most competitive means of production. Jim Mishek, of Vista Technology (Minneapolis, MN) agrees with this point, only stronger. “We're a SLA house that is very experienced in using SLA molds and powder metal molds. However, we‟ve abandoned the RP process for tooling, but still use what some may call rapid technologies. That is, using high-speed machining to cut cavity and core surfaces. There are legitimate processes out there, but for us and our type of work, we‟ve shifted primarily toward CNC machined tools.” Which Technology Is the Answer? Scott Schermer, Ben Staub and Jim Mishek are very familiar with the array of options available and are frequently asked which is best. All agree that there are several technologies - and regardless of which is selected - these are just tools, and there is no one process that is the solution for all requirements. When CAD/CAM technologies began to mature, many may have felt that the big decision was which system to purchase. But regardless of the choice for a leading, capable system, success depended upon the allocation of the resources to dedicate oneself to making it a productive venture. Similar to the evolution of CAD/CAM, rapid technologies for tooling applications is at the stage where there are some methods available, but dedication and additional development work will be required. There is not yet a technology that delivers optimum results for the desired speed, accuracy, surface finish and tool life for production molds. But rather than waiting for an optimum method, there are technologies available today and applications that can benefit from what is currently available. This allows a company to establish itself and grow now - positioning itself for using the advancements that will come. Controlling One’s Path What is another benefit of investing today in rapid technologies for plastics tooling applications? “It‟s fun,” states Schermer. “We're at the cutting edge of breakthrough technology within the entire world of manufacturing there are the 14-hour days, the risks, the frustrations, but in the end there is growth, profitability and success. Being at the forefront of this means controlling ones own path.” Rather than fearing the negative trends that are currently impacting much of the plastics tooling industry, moldmaking companies that are embracing rapid technologies sound a lot different than those that are not. Where to Begin? There are several resources available to learn more about technologies applicable to your work: Attend SME's annual Rapid Prototyping & Manufacturing Conference & Exposition. See firsthand companies that are using this technology today, and discuss the benefits and limitations. Call (800) 733-4763 for information. If attending this show is not possible, you can learn about the state of the industry by picking up the “Rapid Prototyping & Tooling State of the Industry.” by Terry Wohlers. Terry is widely regarded as one of the best sources of information in the world of Rapid Technologies. His publication can be ordered by calling (970) 225-0086. Furthermore, his website www.wohlersassociates.com is a great source of information, and serves as a hub to inform of the many technologies available. A Tool in the Tool Box Although integrating new technologies can serve as a means of differentiating oneself from competitors, it is still just a tool in the toolbox and alone does not ensure a moldmaking company‟s security. Overseas Exploration: Moldmakers Participating in the Global Market 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. Three Questions 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, moldmakers 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 Ser-vices (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 its 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 traveling outside of our borders. Consider alliances. More shops are finding it tougher to “go at 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, traveling 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. Positioning Your Company for Growth During Challenging Times If your responsibility is charting the path ahead for your mold building company, it‟s understandable that at first it would seem like a daunting task because business conditions have dramatically changed. In the previous three parts of this series, we discussed a competitive overview, how to harness time-compression technologies and how to expand toward overseas exploration. This final part will describe how to formulate a strategy in order to position your company during challenging times. Quite a Difference All that used to be needed to start a moldmaking business was a Bridgeport milling machine, a surface grinder, a robust amount of tools, a stack of business cards and the word getting out to a few local shops. Boom ... You were in business! Today many of the mold shops that were able to start up and thrive from such humble beginnings are finding that it‟s a whole different ball game to continue that growth. One must do more than just possess the capabilities required. It's now necessary to pursue a position in the market by working a strategic plan. Growth won‟t come to us because we‟re ready; we must get ready in order to go for it. Strategic Planning As nice as it would be, there‟s no quick action one can take to single-handedly secure the growth of his/her company - no magic rapid prototyping machine, no grand slam advertising campaign and no quick hand-shake on an alliance that puts us on easy street. It's the working away at these areas and the advancements over time that lead to a stronger position in the marketplace. How does one formulate a strategic plan? 1. Identify core competencies. What is your company inherently good at? What skills, aptitudes, and resources are possessed? What specialties can be leveraged? 2. Identify the market’s needs. What will your key customers need you to provide in years to come in order to continue to justify selecting your company? 3. Define your vision. What do you want your company to look like in three or five years? This can be defined in capabilities, markets served, approximate company size, etc. 4. Define the steps. If one were aspiring to be recognized as a premier builder of high-cavitation, multi-shot injection molds, it would not be achieved by running a big advertisement in a couple of magazines. One would have to communicate his/her advantage to the market through a program of actions carried out over time. Define a timeline that includes an increase in product development capabilities, time-compression technologies, overseas alliances, the addition of molding capabilities, increased marketing presence, etc. In order to determine which areas within your shop would be logical to develop further, you should consider the previous three factors. What Does Your Company Really Do? I recently asked an owner of a moldmaking company this question and he replied, “We build molds.” I then asked, "Is that really the most accurate definition of what your company does?” After pressing on, he described how he goes beyond just building the mold. He is skilled at cleaning up his customer‟s geometry to assist in product design. He also designs and outsources overflow tooling to other sources and oversees the first run at a local sampling source. “So, it may be more accurate to say that you‟re a plastics tooling provider or maybe even most accurate to say that you‟re a product development company that provides a means of producing production volumes of parts - when starting with nothing more than preliminary CAD geometry.” There is something to be said for looking at what a moldmaking company totally provides to his/her customer in order to identify the next areas to develop. If the above moldmaking company thinks of itself as simply a manufacturing company, then maybe purchasing a third electrode-cutting machine is the area to expand. But if the shop is considered a means of assisting its customers in developing products, then maybe those resources should go into hiring a full-time product designer, purchasing a sampling press, etc. Staying on Plan After identifying the key areas to grow, the steps that should be defined do not have to be overly ambitious. Think of the "tortoise and the hare" example - it‟s better for one to define eight steps to be achieved throughout two years than aspiring to carry them out in the next month. Knowing that there is a higher authority within one‟s company to whom to report can assist one in executing these steps. This is where some small- to medium-sized company owners choose to form a board of directors, which allows them to report on a biannual basis exactly where they are in their efforts to grow and position the company at the next level. Avoiding Marketing Reluctance As a company‟s capabilities increase, so does the need to properly communicate its advantages to the market. This entails having an appropriately sized marketing program in action at all times. At one time, "word of mouth" and an occasional effort to "rustle up business" may have been enough to keep a company in RFQs, but today as buyer‟s needs and habits change and the competitive playing field increases, it can become a "sin of omission" not to actively market one‟s company. Getting the word out about your specialty - whether it is through mailings, trade shows, ads, presentations at industry events and conferences - should bring more than just requests for quotations. By highlighting a true advantage and having that advantage recognized by current and potential customers, a moldmaking company can be more selective in regards to the type of work - and the type of customer - with which to align itself. Marketing efforts alone may achieve little or nothing. But, when used as part of a total communication program, it makes the job a lot easier and more efficient for the salesperson. Much like a basketball crowd is considered "the sixth man," these additional efforts make the traditional sales efforts more effective. The Course Ahead Few will say that the moldmaking business will be getting any easier in the years to come. As a matter of fact, it is widely recognized as an industry that is undergoing significant change, but that is not to say that the change needs to impact us negatively. The plastics tooling industry is one of the greatest industries in the world with which to be involved and as more and more sophisticated consumers inhabit the world, they want products, and these products require tooling. Where we stand in what has become the global tooling industry greatly depends on where we plan our steps today. The current strengths we use, the steps we take to pursue our vision and how well we communicate this to the market will determine the winners in the years ahead.
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