Blair Souder frequently arrives at his office in Pittsfield, Mass., by 5:30 a.m., not by choice but by necessity. Early morning is prime time for Souder, global marketing manager for GE Plastics' media unit, to reach the rest of the world at a decent hour.
"Everybody is still awake then," said Souder, who manages marketing for such areas as compact discs, digital versatile disc players and recordable devices. "It's the only time I can physically talk with them. Otherwise, it's mostly Internet or e-mail."
Souder talks to optical-media sales engineers at GE's technology centers and offices in Japan, Taiwan, India and parts of Europe. He also racks up thousands of frequent-flyer miles and works at understanding the cultural divide that can undermine some business relations.
Yet, his revamped schedule is by no means an anomaly. Not when Internet and e-mail can send communication at light speed and more companies are looking overseas for new plants.
It's a global biz
Processors, material suppliers and equipment companies all are starting to operate under new rules of business engagement. Many of them have no choice but to start working within new-world models.
Labor rates and shipping costs globally can be dramatically lower than in North America, and processors' end-use customers are rapidly shifting manufacturing to farther-afield locales.
"We have new opportunities because customers want identical packaging globally," said Joseph Prischak, president and chief executive officer of Erie, Pa.-based Plastek Industries Inc. "Instead of each region doing its own products, we can develop [packaging] in one place and then use the technology worldwide."
Plastek, an injection molder of packaged consumer goods, has entered the global revolution by opening new plants in England and Brazil last year and recently breaking ground on another molding factory in Venezuela.
Shipping and import duties from the United States to South America or Europe can cost 30 percent more annually than building a factory in those regions, Prischak said. Its customers have urged Plastek to look overseas.
Other molders will have no choice but to join the revolution, Prischak said. "It will almost come without anyone intentionally going after it," he said. "[Global expansion] will just evolve."
The price is right
Labor costs, especially in underdeveloped nations, have forced other molders to start looking at world maps for new factories. Flambeau Corp., a blow and injection molder based in Baraboo, Wis., opened a plant in Saltillo, Mexico, in July and purchased a molder in Ramsgate, England, in December.
Now, the company is moving further from its Wisconsin roots by talking with a French company about forming an alliance, said Flambeau President and Chief Operating Officer Bill Flint.
Flambeau has found a larger labor pool elsewhere, Flint said. And in Mexico, bottom-rung labor rates have left Flambeau with no choice but to make a move there, he said.
A typical Mexican plant worker earns roughly $1.50-$2 an hour, compared with $12-$14 an hour at Flambeau's U.S. plants, Flint said. The company is training many of the Saltillo plant's 65 workers in Baraboo, some for as long as six months, Flint said.
"Today's contract manufacturers need to be prepared for all kinds of services in a lot of locations," Flint said. "We look at it as a lunch box that can be opened, with a lot of different offerings all over the world."
Shipping and labor can be just two parts of the equation. Duties, taxes and freight charges made it cost-prohibitive for Columbus, Ohio-based extruder Crane Plastics Co. to keep sending parts from the United States, said President Tanny Crane.
The company, a maker of vinyl siding, decking and custom profiles, opened a plant near Warsaw, Poland, in 1997 and established a joint venture two years ago in Santiago, Chile.
Crane became one of the first siding companies to start manufacturing in Poland, Crane said. The firm is adding its third extrusion line to the plant this year, where the home-construction market is growing quickly.
"We determined we'd miss the boat in a growing market if we didn't go there then," Crane said.
Another processor with years of international experience has been Nypro Inc. The injection molder launched its first joint venture in Taiwan more than 20 years ago. Today, the firm has operations in 12 countries, with 26 locations performing injection molding.
The company cut its teeth early as a global player, said Randy Barko, corporate vice president of marketing and sales with Clinton, Mass.-based Nypro. Its focus has always been on Asia, he said.
"Over the next three or four years, we see Asia as the fastest-growing area of the world for our products," Barko said. "Our competitors are molders who have global operations in Asia and elsewhere. Consolidation is taking place, and those survivors are getting stronger."
The company expects to move deeper into Asia in this decade. Already in the planning stages is a new plant near Shanghai, China, and the company also is targeting future plants in the Philippines and Malaysia, Barko said.
In most cases, Nypro is not attempting to be the lowest-cost producer in those countries, he added. Instead, the company is focused on quality, even if it means replacing less-expensive labor with automated machinery.
"We want the best manufacturing solution instead of a short-term stay," Barko said.
Loranger Manufacturing Corp., an automotive molder in Warren, Pa., has used a different model for its global forays. Chief Executive Officer George Loranger first visited Hungary in January 1990 at the behest of Ford Motor Co., a customer opening an assembly plant there.
A decade later, Loranger is operating three molding plants in Szekesfehervar, Hungary — the country's original capital before Budapest — totaling about 150,000 square feet and employing about 200.
The molder also has turned industrial developer. Loranger, working with the Hungarian government, has attracted 25 major companies, including Philips Electronics Corp. and Shell Chemical Co., to the 650-acre industrial park. The companies represent about a $500 million investment in the park, on a former Soviet military base.
The work in Hungary has boosted the status of the midsize molder, which has annual sales of about $60 million. The company executive spent more than four years living in Hungary.
"People look at us as being more international than most small companies in Warren, Pa.," Loranger said. "This really broadens our capacity and knowledge of what is going on in the world."
Labor rates in Hungary are about a quarter that of the United States, Loranger said. The company's main difficulty has been training workers, both for itself and other companies, to meet world-class standards, Loranger said.
The company is considering opening a new plant in Mexico during the next several years, he said.
Toolmakers also need to pay attention to the competition overseas, said Glenn Starkey, president of Progressive Components Corp., a mold-parts supplier based in Wauconda, Ill.
The company opened a distribution center in Singapore last year and also offers a phalanx of distributors in Europe.
Countries like China and Singapore are gaining in tooling expertise and shop numbers, while offering 20-30 percent lower labor rates.
"Every one of us is in a global economy," Starkey said. "One might only buy and sell locally. But if a competitor enters our market or a customer goes overseas, we're in a global marketplace by association."
Other companies have taken overseas tooling seriously. FRC Corp., a maker of complex aerospace parts based in Mason City, Iowa, now buys most of its molds worldwide from AQM-Advanced Quality Molds of Marinha Grande, Portugal.
The relationship goes deeper. FRC bought AQM two years ago, said FRC Vice President Michael Castek. FRC found the Portuguese shop offered the best quality and price for its needs, Castek said.
With the ability to transfer files quickly over the Internet, the need for a local mold shop has lessened, he said.
The company married technology from the Portuguese shop, formerly called Moldes Lecomema Ltda., with FRC's planning abilities, Castek said.
"They are hard workers in Portugal, but they didn't always see the big picture," Castek said. "The cultural differences and communication issues are not pervasive problems the way business is conducted today."
Molds can take five days to ship and pass through customs, Castek said. But in the aerospace industry, that time does not matter as much as quality, he said.
Mold shops themselves have gone that direction. M2M International Ltd., a toolmaker based in Wallaceburg, Ontario, has strategic alliances crossing global lines: The company swaps work and technology with mold builders in Japan, China, Taiwan and Germany.
And an alliance with Windsor Mold of Windsor, Ontario, also gives M2M access to other shops in Italy and Mexico, said M2M President Richard Myers.
One of its longtime partners, Tokyo-based Ikegami Mold Engineering Co. Ltd., has a saying that it should `not disappoint the customer,' Myers said. That means sharing all communication, even when problems arise, with customers, he said.
That philosophy attracted M2M to shops overseas and helped raise the comfort level, he said.
"There are no delays in transferring math data in the computer age," Myers said. "It's harder to get work done and take it overseas without a good partner, though. I think more companies are starting to realize that."
The shift to a world economy has attracted some large North American toolmakers. David Brown, chairman and chief executive officer of Rexdale, Ontario-based StackTeck Systems Inc., recently stepped down as company president to spend more time looking for acquisitions. The company owns three mold shops in Canada and the United States.
StackTeck's Tradesco Mold Ltd. unit in Rexdale, Ontario, wants to buy a European toolmaker that fits its needs for high-precision, thin-wall molds, Brown said. Within five years, the company is targeting buying a shop in Asia, possibly in Malaysia or Singapore, he said.
While the company expects growth in North America, overseas development could grow at a faster pace. In Asia, however, quality is still not at a level preferred by many StackTeck customers. But that will change soon, he said, as technology catches up to the West.
"North America may have been the kingpin for a number of years," Brown said. "But we can't turn our backs on the world any longer."