Not all of the foreign exhibitors at the recent International Home & Housewares Show were from lower-cost regions, trying to compete on price points.
At least that wasn't the case for Tontarelli SpA of Castelfidardo, Italy, with its bright-colored containers labeled ``made in Italy.'' Tontarelli items are already on shelves in Wal-Mart, Dollar Tree and the Container Store. But the company hopes to secure more significant market share in the U.S.
Compared with other regions, ``we are selling very little in the States,'' saleswoman Agata Esposto Talevi said at the housewares show. The family-owned injection molder was one of many companies from all over the world showcasing its latest products at the Chicago event, March 11-13.
Cristian Tontarelli, the owner's son, expects U.S. sales to grow 30-40 percent this year while the company's overall annual growth stays around 15 percent.
The ``appeal of Italian products'' is the trump Tontarelli is playing, he said. ``Everything from design to mold to resin is done in Europe.'' Consumers don't pay extra for the European origin or freight cost, Tontarelli said. The firm's products are no more expensive than similar U.S.-made products - about 10-15 percent higher than Asian imports, he said.
Talevi said the company exports 85 percent of its output and is trying to make products more stackable to fit shipping containers better. To offset freight costs and improve the cost structure, the business is investing 20 million euros ($26.5 million) to update machinery at its six plastics molding plants in Italy, France, the United Kingdom, Luxemburg, Germany and the Czech Republic.
``We are looking at higher level of automation, not necessarily expansion,'' she said.
Tontarelli has a total of 150 injection presses, with clamping forces of 65-1,500 metric tons, and a workforce of 600, she said.
Success in the U.S.
The U.S. market for plastics housewares lures international suppliers, like Tontarelli, with its enormous scale and potential. Incentive also comes from the ``clean business'' nature of export, said Tony Rock, export manager at Turkish injection molder Irak Plastik San. ve Tic. AS of Istanbul.
``We don't need to deal with payment issues as we do with domestic buyers,'' Rock said.
Some firms already have established sales in North America. Ningbo Lisi Plastic & Rubber Co. Ltd., which claims to be China's largest plastic housewares injection molder, was at the show for the 11th consecutive year. It began exporting to the U.S. in 1990, and now the U.S. market represents 70 percent of its sales.
Although the Ningbo-based company declined to disclose sales figures, the scale of its facility, at 2 million square feet, and 3,000 employees reflect its success. General Manager Sally Jin said the firm's product line covers more than 2,500 items in seven major categories.
Shanghai Beston Plastics Co. Ltd. also has been successful in the U.S. market. The $10 million-in-sales extrusion firm is completely export-oriented and ships 70 percent of its products - PVC blinds and fence - to the U.S.
``We make private-label goods for Lowe's and Home Depot,'' said Polly Anna Wong, manager of the company's Far East operations.
Other foreign firms, however, are having difficulty competing in a saturated U.S. market.
Plasútil Indústria e Comercio de Plasticos Ltda. of Bauru, Brazil, wants to grow in the U.S. with design and service. It injection molds 15 million pieces a month on 120 presses.
``Our labor cost is not comparable to the labor cost in China, so we can't compete on that,'' export manager Everson Targas said. But, he noted, there are advantages over Asia. ``We buy resin domestically. Our freight cost to North America is a lot lower. We know better about the culture as well.''
Plasútil employs 10 in-house designers and introduces a new item every five days. ``Also, since we are closer to the market, we can provide better service,'' he said.
Sales manager Antonio Magana at Mexican molder Plasticos Herol SA de CV of Xalostoc agreed that it makes no sense to compete with China. ``Electricity is more expensive in Mexico than China, so is labor. We pay our workers $150 a week,'' Magana said.
But, he said, ``The U.S. consumers look at the price, not the quality.'' He pointed to a bucket on display. ``This is not a thin-wall bucket. If you squeeze it, it won't break. But many people don't care about the details for a bucket.
``We are here to meet international buyers, not relying on the U.S. market,'' Magana said.
The company primarily sells inside Mexico and exports 5 percent of its sales to the U.S.
Mumbai, India-based Nilkamal Ltd. does not sell into the U.S., but claims it is Asia's largest injection molder of furniture, with $130 million in sales. The firm runs 47 presses, of 600-1,000 metric tons, in six plants, and has a joint venture in Nepal with Alcoa Inc. to make plastic closures. It employs 1,500 and processes 132 million pounds of polypropylene and polyethylene resin a year.
Nilkamal has opened seven retail stores in India with plans to expand to 60 within three years, said Vinod Warrier, senior general manager for the furniture unit.
While thriving in the Indian market, Nilkamal hopes to expand exports, which currently account for just 5 percent of sales. To enter North America, the firm first needs a distribution channel and marketing network, Warrier said.
Globalized supply
International trade is no longer simply shipping goods from one country to another. The supply chain consists of locations that offer the best competitive advantage for each stage of production.
If you go to a Dollar General store in your neighborhood and pick up a bucket made by Mexico's Plasticos Herol, the mold used to make that bucket came from China. The simple economics of international freight means Chinese-made molds, unlike molded products that take too much space in shipping, travel to many parts of the globe.
``Out of the 15 molds we purchased last year, 14 were sourced from China,'' said Dean Lail, president of Asheboro, N.C.-based molder Sapona Plastics LLC. ``It allows customers to have better return and still have products made in the U.S.A.''
Another North Carolina-based manufacturer, Counter Art of Mooresville, is launching its first line of plastic cutting boards made with in-mold-decoration technology - at its newly formed Chinese joint venture.
``Not just resin and labor, [but also] the cost of staying in business in the U.S. is too high,'' said President Steve Farmer.
Irak Plastik, one of Turkey's largest housewares molders, said 30 out of its 80 presses were bought from Chinese press giant Ningbo Haitian Group Co. Ltd. Irak buys resin from South Korea, the U.S., Brazil and Iran. It also sources finished furniture and household items like dish racks from China.
Chinese processors, on the other hand, generally buy their resin from other countries, according to nearly a dozen Chinese exhibitors.
``We buy PP from [South] Korea and India, because the price is better and quality is decent,'' said an official from Ningbo Yinzhou Xinxin Plastic Factory, a Ningbo maker of molds and injection molded housewares.
Tough environment
When everyone complains about ``volume up, profits down,'' boosting productivity can help. Many international companies at the show said they are buying new injection presses and replacing old, inefficient ones.
Plasticos Herol's Magana said his company is installing an energy-efficient press. The main reason: ``We will need to use more automation to compete,'' he said.
Constantly developing new products that cater to local consumers' tastes counters the negative impact of products being copied by competitors.
``You have to sell fast and move on to new products,'' said Touchapol Pettaweebuncha, export manager of Bangkok, Thailand-based injection molder Pastina Co. Ltd. The family-owned firm has sold plastic promotional pieces to Los Angeles-based Creatable Media Inc. and Dreamworks LLC of Glendale, Calif.
Patents do not necessarily protect product designs, said Rock of Irak Plastik. ``Everyone in the industry knows, as long as you make some minor changes, you are safe,'' he said.
And, he said, legal remedies are not always the smartest solution. ``A company two aisles away [at the housewares show] is exhibiting almost the same products as mine, but I'm not going to spend the time, money and energy to stop it,'' Rock said. ``And this happens very often in trade shows.''
Companies need to cut less profitable items to stay viable. In the 1990s Irak sold products into U.S. ``dollar stores,'' then stopped.
``There is too much competition,'' Rock said. ``We reduced small items that are not profitable and right now have no sales in U.S. But the company is growing. We are developing customers in Europe and South America.''