GW Plastics Inc. executive Tom Johansen jokes that when he makes trips to China, a few people there ask if the GW stands for Great Wall.
The name comes from the initials of the men who started the firm in the 1950s, John Galvin and Odin Westgaard, but company officials may want to encourage a little harmless confusion with the 4,000-mile-long marvel of the ancient world.
After all, any advantage, even a fleeting one, could prove helpful as the fiscally conservative New England injection molder tries to figure out how to deal with the immense opportunities and risks in China, and customers that want it to set up shop there.
The Bethel-based firm is cautious - it shunned the roll-up craze of the last decade, and has relied only on natural growth, foregoing acquisitions as a way to beef up the balance sheet.
While sales have been flat in the economic downturn, the $60 million, privately held company said it never has lost money since its current owners bought it in 1983. GW has little debt.
All four of its factories are in the United States, in Vermont, Texas and Arizona. But the swirling sands of a global customer base are putting pressure on the firm to set up shop in a low-cost location.
During a wide-ranging Oct. 21 interview at the company's headquarters, nestled in a small town in a central Vermont valley, executives said they are looking actively at China, after they examined and rejected Mexico earlier this year.
Company officials are vague, but said they are meeting with Chinese investment bankers and have been doing due diligence.
As they scout Asia, they also are pursuing new technology to make their U.S. operations more competitive. The company has invested several hundred thousand dollars in new laser machining technology that uses a pulse laser to cut mold cores and cavities. It takes the place of traditional electric discharge machining, and reduces mold production time and costs.
``Our tooling pricing in this country needs to globalize,'' said Tim Reis, vice president of health-care markets. ``The only way to do it is technology, as far as I'm concerned.''
GW claims it is one of only a handful of mold-making shops in the country with that technology.
The company sources molds in China now, but officials said many of the details of any potential Chinese investment beyond that remain undecided. Johansen, GW's vice president and chief financial officer, said the firm has ``evolving relationships'' with some Chinese firms. Still, the company is moving on China and expects to have operations there.
``We've been analyzing companies for the last year, and we've had people back and forth to China quite a bit,'' said Ben Bouchard, vice president of automotive markets. ``We believe we have narrowed our field down to a handful of companies and we are going through the appropriate specific due diligence.''
While some competitors have raced ahead, Johansen said the firm is comfortable with its approach, given that some of its customers still are trying to figure out what they want.
``We have a number of customers who have a presence there primarily to serve that market, but all the customers are aware of the growth in China and are trying to sort out what that will mean to their markets,'' he said. ``I think in many cases that's not yet clear.''
Bouchard said making the right bet can be tricky. For example, some auto industry projections say that China will hit overcapacity in its vehicle market by 2008, and the country will have to start exporting cars.
``That's where the volume is and that's where everyone is most excited,'' he said. ``It's going up the learning curve.''
The firm is a Tier 2 and 3 automotive supplier, and auto-related work makes up about half of its business. About 40 percent is health care, but that market currently enjoys a higher growth rate. The other 10 percent is in consumer and industrial products.
While the company is looking overseas, it has been making investments in its existing plants, from more automation on the plant floor to more emphasis on multishot and insert molding, to building stronger relationships with design houses. GW also has added or expanded clean room operations at three plants to beef up medical contract manufacturing capabilities.
Those investments are needed, company officials said, to help compete in a market that remains tough, three years into the downturn in manufacturing. GW executives said they still expect shakeouts in the U.S. industry, as markets like telecommunications dry up and more injection molders crowd into the health-care business.
``I still think there's excess capacity,'' said Reis. ``I think we've got another couple of years before the fittest of the fittest are still standing.''