DUSSELDORF, GERMANY - A Midwestern U.S. tooling specialist has weathered some hard times and is on the rebound now, expanding into blow molding machine manufacturing in India and winning a significant turnkey Pakistani contract via its Mexican machine-building alliance. Rao Design International Inc. of Schiller Park, Ill., owns a one-third stake in the Indian venture, which last month began refitting a 25,000-square-foot plant inHyderabad. That plant is scheduled to start operating in January with a staff of 100.
Rao Design and its two local Indian partners - Optomech Engineers, a mechanical engineering firm, and Yodeva, a large blow molder and injection molder - jointly are investing about $2 million to get that operation started, according to Rao Design founder and owner Rao K.Murukurthy. He was interviewed Oct. 7 at his firm's K'95 booth in Dusseldorf.
The Indian venture, whichMurukurthy named Arizona Tool Works India Ltd. (inspired by Rao Design's Phoenix-based sister company, Arizona Tool Works Inc.), will build double-parison, double-station extrusion blow molding machines that can make 1,400 bottles per hour.
Priced at $67,000 each, these machines are designed to be affordable, simple, basic - yet highly automated - units, he said. Though of his own design, the machines are modeled to some degree after the popular Bekum 111, he said.
Worker training is a major plank in the Arizona Tool Works India strategy. The firm, which already employs 50, advertised in India recently for 20 workers willing to spend two years in training in Schiller Park.
Compensation is $1,200 permonth plus accommodations - or more than 10 times the usual salary for engineers in India, according to Murukurthy. The ads drew about 2,000 applicants.
The intense training program, which will take about five years for the company to complete, is designed to immerse its participants in Western business practices in general, and in Rao Design's own corporate culture in particular, Murukurthy said.
Murukurthy, a resilient, Indian-born entrepreneur with a doctorate in engineering, has undergone some real-world education of his own in building his firm. In 1964, he started Rao Design as a mold design firm in Morton Grove, Ill., making what Murukurthy likes to describe as ``some very sexy bottle designs.''
The company - which eventually relocated to Schiller Park - branched into mold manufacture in 1970 and grew steadily, peaking at about 115 employees in the late 1980s. Then the bottom fell out.
Throughout the 1980s Rao Design was doing strong business with Mexico and, flush with overconfidence, Murukurthy in 1988 started a wholly owned subsidiary in Mexico City to design and build blow molds. Rao Design Mexico SA de CV bought a 20,000-square-foot facility, hired 10 people - and fell flat on its face.
``I couldn't find people to manage it,'' said Murukurthy, who ended up spending one week per month in Mexico City trying to handle the company's affairs.
``We'd been doing a lot of business there, and I loved Mexico. It seemed natural'' to expand with a local operation, he said. ``I made a big mistake. I lost a lot of money. I'll never do that again.''
Murukurthy estimated the venture, which he shut down in 1991, cost him nearly $1 million. The lesson he said he learned was, ``Never have a company outside your own country without a local partner'' - hence Rao Design's three-company partnership in India, and its less-involved position in Mexico now through an alliance with a local machine builder.
Driven to find a low-cost base, Rao Design in early 1993 began looking at Mexico again. But this time Murukurthy found a local partner - a small Mexico City-based blow molding machine manufacturer called Estel. About two years ago, they created a 50-50 joint venture called American Plastics Technologies Inc. in which Rao Design provides the designs and technology and Estel builds the products - lower-end, single-station machines that use the reheat process to produce PET bottles.
Murukurthy said the 12-person, 5,000-square-foot Mexican operation has sold>about 20 machines to date in Mexico. The units cost about $80,000 each and can produce 750 bottles per hour, he said.
Though the Mexican market has been depressed since the peso crashed last year, American Plastics Technologies received a boost in September when it inked a $2.5 million deal to sell a turnkey PET bottle plant to a Pakastani firm that blow molds two designs of Coca-Cola 11/2-liter bottles.
The deal, Murukurthy said, includes: four of Estel's PET reheat blow molding machines, preform molds and blow molds from Rao Design, preform injection molding machines from Cincinnati Milacron Inc., resin dryers from Universal Dynamics Inc., and high-pressure compressors from Ingersoll-Rand.
Murukurthy, meanwhile, is looking to apply his sharpened international business acumen to other overseas ventures. In addition to hawking a consulting service now for turnkey plastics and packaging plants, he noted: ``I'm desperately looking for someone to make my PET blow molding machine - especially in Eastern Europe.''
