SCOTTSDALE, ARIZ. — What goes around, comes around—even in the plastics machinery business. And Raymond E. Ross says that what is happening now in global equipment markets looks distinctly familiar to his seasoned eye.
Ross, the 30-year veteran of Cincinnati Milacron Inc. who retired as its president and chief operating officer in December 1997, shared his insights, and some management advice, with attendees at the recent joint spring meeting of the Society of the Plastics Industry Inc.'s Machinery and Moldmakers divisions in Scottsdale.
``What we're seeing today is very similar to what we saw 10-15 years ago. We need to use history as a guide to what needs to be done in the future,'' Ross said.
In the mid-1980s the U.S. dollar was very strong and ``the Japanese manufacturing machine was the wonder of the world,'' prompting strong U.S. imports of those units and much domestic consolidation.
Today, with a strong dollar and the collapse of Asian markets — where Japanese plastics machinery makers usually sell 40 percent of their production — Japanese exports to North America are strong once again.
``What happens in Thailand affects us here. You can't control it. You will be affected,'' said Ross, who went on to prescribe a strategy for remaining competitive in this cutthroat global marketplace. Among his tips:
Reduce costs. You may think you've pared to the bone, but you haven't taken enough out, he warned. Define your core business, focus on what you do best and consider farming out the rest (e.g. cleaning services, accounting, etc.). ``Reducing costs isn't always cutting people,'' he said.
Restructure your organization. Strive to create more value-added jobs. Skinny down. Be as competitive as you can be.
Rededicate your company. Make your people aware of the current market situation and of your challenges. Many just read headlines about how the economy and stock markets are booming, and may be under the illusion that business is flush.
Redesign your product. Work with your suppliers. Form alliances and partnerships, and work to the lowest-cost basis — not just to the lowest price.
Go international and learn to export. Start reducing costs by using a ``market basket'' approach to source the materials and components in your products in such a way that your company benefits from currency exchange rates.
Ross said there is a tremendous amount of business going on in Mexico that needs the types of machinery and molds supplied by SPI member companies. The North American Free Trade Agreement has given U.S. firms the upper hand in winning that business, he said.
``We've got the advantage there — not the Germans, not the Japanese. We've got it,'' he said.
Exporting takes a long-term commitment. Allow five to 10 years for a strategy to take hold, he recommended.
Find out which countries have a need for the types of products you manufacture — your product should be unique or different and not readily available there already.
If your firm is too small or inexperienced to tackle the international scene on its own, then form alliances with other companies in your business, and go forward together. That can lower the cost and make the whole experience more palatable.
``This is no place for amateur hour. If you don't have the people or the talent with experience in those markets,'' don't forge ahead blindly, Ross cautioned. ``You need operators, not administrators, to go into new markets.''
He recommended the Department of Commerce as an excellent resource for firms exploring how to expand their businesses abroad.
And he suggested that companies work with trade associations, which can lend critical mass to an initiative. This can be important in how seriously a firm's efforts are perceived by authorities in target countries.
``Make sure the people you send abroad have a specific goal in mind. You need a focused approach. This is especially true in China. Get a lot of credentials before hooking up with anyone there.''
If you don't take that approach to going international, then, ``Don't waste your time; use the money [instead] to reduce your costs.''
And, finally, Ross emphasized, regardless of whether you serve local, domestic or global markets, ``Make serving the customer an obsession.''