Irish injection molders have unearthed a delicious nugget of truth in their complaints about a recent invasion of foreign competitors.
As the Irish cleverly point out, some processors and original equipment manufacturers define a global supplier as any molder with more than one plant in the United States.
We've long been amused by the number of processors and OEMs that claim to be global enterprises, when in fact they have no presence in key markets like Latin America, Southeast Asia or Europe.
Nevertheless, the bigger issue is not with OEMs' definitions. Instead, the debate should be about whether OEMs are doing the right thing by encouraging U.S. suppliers to move to Ireland, and what the Irish molders should do about the trend.
Most of the recent activity has been in the fields of computers and business equipment. Thanks to European efforts to tear down trade barriers, OEMs now are able to serve the entire European market from just one or two key manufacturing locations. As a result, OEMs including Dell Computer Corp., Xerox Corp. and Hewlett-Packard Co. are beefing up their manufacturing facilities in Ireland.
As part of the process, some of the OEMs have encouraged longtime U.S. molders to set up plants in Ireland. Why? Mostly to keep their supplier base trim, a trend that's familiar to all plastics processors in the 1990s.
Irish molders are right to complain about being displaced. First, local molders are right to question why the Irish government provides relocation incentives to foreign companies. That's clearly an issue where they can apply some political pressure.
Second, they're right to draw attention to the issue. Otherwise, local suppliers might be overlooked. And, if it's true that there has been a slowdown in Ireland in recent months, U.S. molders may reconsider plans to locate there.
Still, complaining alone doesn't address the root problem.
Selection of suppliers is like a grand beauty contest, and electronics OEMs are free to pick and choose based on whatever criteria they feel are important. Many U.S. suppliers have boosted their chances by adding design or extensive assembly services. Others have expanded their repertoire by partnering with metal component suppliers.
If they haven't already, then molders in Ireland must consider the same strategy to stay competitive. The European market is too important for OEMs to settle for second-tier suppliers.