SAN ANTONIO (Oct. 24, 2 p.m. EDT) — The new economy is in full bloom at Moll Industries Inc., where workers from Mexico are trained at Moll's U.S. plants, sometimes for months at a time.
"We've done that for several years, and it works well for training our workers," said Chuck Schiele, president of the Knoxville, Tenn.-based plastics processor. "It also builds a lot of camaraderie in the company when the employees get to know each other."
Getting to know new global realities became a linchpin for discussion Oct. 15 during a panel discussion on business growth strategies at Plastics News' Executive Forum in San Antonio. The pressing need to move overseas and grow larger forced several panelists to adjust their thinking.
Take tool builder Snider Mold Co. Inc. and its jet-setting director of international marketing, Jim Meinert. His job at the Mequon, Wis.-based company is to travel the globe seeking new business in such places as Latin America and Asia.
Exported tools account for about 30 percent of Snider's business in injection and structural-foam molds. Customers such as automotive supplier Lear Corp. need to ship tools to Brazil and other spots where automakers are setting up new factories, Meinert said.
The new world view provides an opportunity, Meinert said. Instead of complaining about foreign competitors, the company collects knowledge of those markets to help its customers understand the complexities, he said.
"We have to learn about different nations," Meinert said. "We look at the type of market and the size of the market where we appear. It makes it much easier to get involved in product decisions."
Meinert also traveled in late January on a trade mission to China, Hong Kong and Singapore that was sponsored by the Washington-based Society of the Plastics Industry Inc. He said the level of sophistication of mold shops in China surprised him and many others on the trip.
"The quality was very good in the shops we visited in Asia," Meinert said. "The Chinese really know how to use (computer-aided design and manufacturing) systems. It's good to have a partner there if you want to do business in Asia."
Meanwhile, many Asian mold shops are doing business with the United States, he said. To compete, U.S. mold builders need to embrace global change and learn to compress time as proficiently as their overseas counterparts do, he said.
Yet doing business on a global scale can be a complex task, said panelist Richard Wambold, chairman and chief executive officer of packaging company Pactiv Corp.
Pactiv, spun off last year from Tenneco Inc., has been active on the acquisition front. The company, based in Lake Forest, Ill., has purchased nine companies since 1995, adding $2.2 billion in annual sales.
At the core of the process was starting with a vision and then organizing an integration team to sweat the details, Wambold said. In the fragmented specialty packaging segment, that meant finding companies that complemented Pactiv's products and contributed to cost efficiency, he said.
Wambold also is a strong believer in planning. Even before negotiating a price, his acquisition team does due diligence, he said. A company's strategic fit is judged and weighed long before the deal is made.
"You've got to really dig for information," he said. "And as part of the strategy, should consider what you will do with the company after you get it. Why is this an interesting company?''
SPI President Donald Duncan helped engineer a 1996 joint venture between DuPont and Dow Chemical Co. that became DuPont Dow Elastomers LLC. Duncan, who was president and chief executive officer of the joint venture, said both resin suppliers needed to find a compatible partner to spike overseas growth and develop new technology.
"Getting something done quickly was paramount," Duncan said during the panel discussion. "There had to be at least a 25 percent synergistic component to our activities. We found business people who understood the market, technology and customers better than anyone else."
Yet negotiations between large companies is not always smooth. At one point, DuPont walked away from the multibillion-dollar deal when the difference between the two sides was less than $500 million, Duncan said.
DuPont restarted the process after realizing the advantages of joining forces, he said.
Injection molder Moll Industries knows those advantages, with 29 plants in six countries. Schiele said globalization can be an exhilarating, enriching and profitable path to a company's success.
It also is a necessity, he said.
"We must follow customers to international markets," he said. "If you're not thinking about your organization in those terms, think about the (original equipment manufacturers) and what they need."
But making the move is not as simple as making the decision to go global, he said. Companies must consider potentially unwieldy elements such as economic and political stability, trade tariff agreements, labor availability and skill level, and transportation difficulties, he said.
At times, a joint venture can be the best way to move, especially when a partner is well-connected to the region. At other times, such as with Moll's Mexico operations, the easiest option is to go alone and build a new plant, he said.
The risks should not be downplayed, Schiele said. They include a huge investment in time and cost to get a plant running efficiently. But they also can include the culture shock, when overseas partners do not understand the expected rate of return on those operations.
"(Low) labor costs are a big part of the reason to move (globally)," Schiele said. "It usually is a good company decision, but it's not always as inexpensive a move as you think it is. It has to be done with patience and planning."