Haitian's standardization efforts paying off

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Haitian International Holdings Ltd. Haitian's Helmar Franz

HONG KONG — Streamlined design efforts and robust export sales helped propel Ningbo, China-based injection molding machine manufacturer Haitian International Holdings Ltd. to strong profits in the first half of 2014, the company announced in its interim financial report.

Gross profits jumped 10.6 percent from the first half of 2013 to 1.2 billion yuan ($195 million) for the six months ending June 30. Revenues were 3.8 billion yuan ($618.7 million) a 5.2 percent rise from the previous year.

While year-to-year domestic sales in the face of a cooling economy inched up a scant 2 percent to 2.5 million yuan ($407,000), export sales vaulted 14 percent to 1.2 billion yuan. ($195 million). Exports now make up 31.6 percent of Haitian’s total sales. Haitian’s top foreign markets are Turkey, Brazil and Russia, the company said during an Aug. 28 presentation to investors in Hong Kong.

“Standardization and complexity reduction are the keys for exploiting efficiency results,” said Haitian executive director and chief strategy officer Helmar Franz. Franz is aggressively trimming the roster of components that the company’s 450 engineers can select from.

An engineer can always apply to a committee to add a component to the roster, he said, “but the committee president is me. It isn’t so easy for the engineer to come to me,” Franz added with a wry smile.

Turning to the macroeconomy, Franz was supportive of higher interest rates and reforms that make buyers think twice before making capital investment decisions.

“The new government is not looking at the topline of growth so much as the quality of the growth,” Franz said. “Now, not every time I need a new factory, [will] I build a new factory, but I use the existing one better. This is something new. The current policy is supporting efficiency, which we are very happy with.”

The downside, especially for Western companies selling into China, is the end of a “paradise” of aggressive capital investors.

In India, Franz said Haitian’s recently announced Ahmedabad-based facility will focus on customizing machines made in Haitian’s Ho Chi Minh City, Vietnam, factory for the local market.

“Some assembly can be done, but the prime issue is customization, better service,” he said.

Franz brushed off the impact of India’s antidumping efforts, which he said only apply to small and medium-sized hydraulic injection molding machines.

“It doesn’t hurt us so much as it hurts the local manufacturers… and now that they’re protected by the government, they have no competition. Then they get more expensive.”

While hydraulics continue to comprise the bulk of Haitian sales, the company is expecting its strongest growth in electrics and hybrids. Haitian expects to sell about 35,000 hybrids and electrics in 2014, up from 33,209 last year.

In a series of trade shows across Europe beginning in May, Haitian rolled out its new Zeres series of electric injection molding machines. An integrated hydraulic unit allows late-adopters to continue using their legacy hydraulic molds.

Within the next six months, Haitian will begin production in two new factories in Ningbo totaling 270,000 square meters. The Chunxiao facility will focus on producing electric machines. When fully operational, it will be able to turn out as many as 10,000 machines every year. Tong Tu Lu II facility will focus on large two-platen machines. Haitian already has 11 Ningbo factories.

Haitian is continuing its drive into applications engineering. A widespread practice among Western injection molding machine manufacturers, it is only beginning to catch on in China. The main challenge is a dearth of home-grown talent, Franz said.

“We cooperate with universities to get [engineers] trained. This will take some time.”