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July 02, 2001 02:00 AM

Step2 stepping up to challenge

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    CLEVELAND - In an uncertain economic environment, Step2 Co. Chairman and Chief Executive Officer Tom Murdough didn't sugarcoat his message to machinery manufacturers, processors and compounders in his keynote address at Plastics Encounter Cleveland: It's time to fight back.

    Step2's strategy? Focus on international sales, product innovation and developing alternative methods of distribution.

    Although he would not elaborate, Murdough said distribution options will be a ``major thrust'' for the company, whose sales stagnated at $100 million last year. And don't rule out recycled materials for the manufacturer, whose primary material is linear low density polyethylene.

    ``It's possible,'' he said as he addressed the question from an audience member. ``At this day and time, we're very slow to rule anything out.''

    Murdough encouraged the audience to consider the growing sector of international sales, which represents more than 20 percent of his firm's business today.

    New President John Sinchok disclosed in a May 11 interview that the company is eyeing expansion in South America, but Murdough did not give further details. The deal would be similar to the company's license agreements in Asia, Sinchok said. Step2 also has a rotomolding plant in Coleraine, Northern Ireland.

    ``We're in it together,'' Murdough told the crowd of 85. ``We've all got tremendous challenges in responding to the changing market. Our challenge is to make you aware and encourage cost effectiveness in all you do without losing a position of integrity.''

    The retail environment has been Murdough's nemesis, as accounts from the top six retailers represent 70 percent of Step2's business.

    ``You've got to have the volume of these people to make it a go,'' he said.

    Facing the challenges of just-in-time shipping and demands for price reductions, Murdough admitted his company was slow in responding to retail market changes.

    ``The buyer doesn't care about quality,'' Murdough said. ``We're now reducing weight of some products, bringing that down to an acceptable level that allows us to come in at a competitive price. That's something that's difficult to admit.''

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