LEOMINSTER, MASS. — Nypro Inc.'s first venture offshore in Puerto Rico in 1973 didn't go well: There was a lot of worker unrest, and the firm's labor lawyer was murdered in a situation unrelated to Nypro.
The custom injection molder's first try in another country — France in 1974 — also didn't work out.
Nypro wanted to close the money-losing plant, but its unions threatened to block the gates and prevent the firm from getting equipment and molds out for a year. So Nypro sneaked the molds out in a truck in the dead of a Saturday night and left the injection presses behind.
Twenty-five years later, Nypro is considered a U.S. industry leader in international ventures, with 24 molding plants around the globe and 40 percent of its 5,500 employees outside the United States.
But as those stories of early disasters told by Nypro owner and President Gordon Lankton make clear, it wasn't always that way.
Nypro executives and others spoke at a forum on developing international ventures. The event, held May 12-13 in Leominster, was sponsored by the Society of the Plastics Industry Inc.'s International Trade Advisory Committee.
Companies seeking an international partner should think of the relationship as being like the television sitcom Laverne & Shirley, where the two roommates struggled from one chaotic event to the next, said Sylvester Di Diego, director of business development for Latin America for Mitsubishi International Corp., the U.S. subisidiary of Mitsubishi Corp.
Partners need to define the relationship from the start, but be prepared for change, he said. The partners should have an exit strategy if it doesn't work out, he said.
``It is a difficult conversation to have ... but there ought to be some understanding if this doesn't work out, what are your objectives,'' said David Skala, vice president of marketing at D-M-E Co. in Madison Heights, Mich. ``That will reduce tension in troubled times.''
D-M-E has majority share of seven of its eight international ventures, he said. That contrasts with Nypro, which generally favors 50-50 ownership in its ventures.
While overseas ventures are risky, D-M-E's international efforts account for 25 percent of its worldwide sales, Skala said. He said U.S. businesses involved in international joint ventures have an average return on investment 5-6 percent higher than firms that do not.
Mold-making firms, in particular, may be interested in international ventures because they already face stiff competition from abroad.
Glenn Starkey, president of Progressive Components in Wauconda, Ill., told the ITAC meeting that U.S. mold builders need to be aware that their competition in developing parts of Asia is getting more sophisticated and has abundant labor. There will be a continued flow of work overseas, he said.
``You can walk into a factory in Shenzhen, [China,] and think you are in Elk Grove Village, Ill.,'' he said.
For mold-making firms thinking of international ventures, SPI is considering a trade mission for mold makers to Southeast Asia. The mission probably would be timed with Taipei Plas '99 in Taiwan, scheduled for Oct. 2-6, and would include Taiwan, Hong Kong-Shenzhen, and Singapore-Malaysia, Starkey said.
Asia figures prominently in Nypro's future, said Jim Buonomo, corporate director of international business development for Clinton, Mass.-based Nypro and chairman of the firm's Chinese operations.
Nypro wants $350 million in sales in Asia in 2009, up from $60 million now, Buonomo said. By 2015, China will be the world's largest economy, and Nypro wants $200 million in sales in that country alone by 2009, he said.
Nypro's Singapore plant has the highest profit margin in the company right now: 33 percent gross profit and 23 percent after taxes, Lankton said.
Venturing overseas requires some flexibility, Buonomo said.
In China, Nypro's plant in Tianjin has two assistant general managers who are Communist Party members, and the operation is 30 percent owned by the city government, Buonomo said. That gives the firm advantages dealing with the bureaucracy, he said.
Nypro is considering option insurance for currency devaluation in China, but that is expensive, he said.
International ventures also require some patience, Lankton said.
The company's plant in Russia is a ``total disaster'' that is known at Nypro as ``Lankton's folly,'' Lankton told the forum. That plant had to fire all of its employees except two in the past six months for stealing or being drunk on the job, he said.
``We don't have any customers,'' he said, half in jest. ``We'll never have any customers.''
But Lankton, who picked up ITAC's International Businessperson of the Year award at the meeting, said he stays in Moscow partially because of idealism and because ``they have half the world's nuclear weapons.''