(Oct. 8, 2007) — How can North American plastics processors survive in this age of global competition? This is a question I get all the time. Wet-behind-the-ears researchers, would-be private equity investors and wanna-be processors call or write and want to know the secret to being a successful company.
The names of the callers and e-mailers change, but their questions always sound the same. I have to admit, though, in the past few years, my answers have changed.
I used to suggest that processors select customers carefully. Pick firms with solid finances and a commitment to North America, I said. But strategies change, lower prices eventually trump principals, and that list of blue-ribbon customers keeps getting smaller.
I used to advise people to pick an end market that is resistant to moving offshore, like medical or automotive work. But now, even those markets have begun to migrate to lower-cost regions.
Until recently, I told people to pick a specialty that's hard to copy, or less likely to disappear. Learn to make really big parts that are costly to ship, I said, or very small parts that are difficult to mold. Specialize in two-shot molding, or multilayer extrusion, or another field that plain-vanilla competitors around the corner — and across the globe — can't copy.
Now it's clear that this advice is only a temporary fix, too. It's true not every company can afford to invest in the latest technology. But if they're in the right location, with the right customer, chances are pretty good they can find a partner willing to help them make the investment and get the necessary expertise.
That doesn't mean North American companies can't still be successful. Our coverage from the Plastics News Survival Boot Camp last month gave me a new perspective on that important question:
* First, speakers pounded home the importance of being lean. This seems like common sense. In fact, I doubt many North American processors have survived to this point if they haven't excelled at cutting costs and being more efficient. But there are various degrees of efficiency, and it seems like the best companies these days are ones that have invested in automation, software, energy savings and maximizing their production to the nth degree.
* Second, they emphasized that innovation is very important. Companies that give their customers something they can't get anywhere else have a fantastic edge. So do firms that make novel proprietary products. To me, this indicates the importance of hiring and retaining talented people, and making sure they have the freedom to be creative and the resources necessary to succeed.
There's an obvious conflict there with the first point — how can you cut costs, yet invest in people and resources needed to help the company grow? It's a tough balancing act.
* Finally, and perhaps most important, is the need to be nimble. As managers, you can't be happy just making the right choices. You also have to be ready to shift course when times change or opportunities arise.
Loepp is managing editor of Plastics News.