Mexico City — A conversation with Bernardo Nussbaum, general manager of Ecuadorian injection molder Sudamericana de Brochas Ecuador S.A., sounds a lot like one with an executive from say, the United States or Western Europe.
The need for automation and cost control are front and center. The small manufacturer, which molds household goods like paint brushes, believes customer focus groups, industrial design and social media are vital to staying competitive.
A big reason for the focus on robots and design, Nussbaum said, is that Ecuador uses the U.S. dollar as its currency. That rules out a competitive strategy built around being low-cost.
“By using the dollar as our currency, we have to think like a developed country,” he said. “We need to look at high-value added production. We have installed a lot of robots and high-technology.”
The country adopted the American dollar as legal currency in 2000 to end a period of high inflation and economic instability.
Nussbaum spoke with Plastics News at the booth of Ecuador's plastics trade group, the Asociación Ecuatoriana de Plásticos, during Plastimagen in Mexico City in March. The soft-spoken executive offered a glimpse of plastics processing in the small country of 16 million people.
Ecuador has among the highest labor costs compared with productivity in Latin America, he said, so his company has invested in automation to substantially increase output per employee.
“I would say our output has tripled with the same number of employees vs. four or five years ago,” he said.
The government sets a relatively high minimum wage for the region, he said, and every year it calculates what it calls a “dignity wage” that can sometimes adjust salaries up. Laws also mandate profit sharing with employees.
It poses challenges for the manufacturing sector, especially when faced with cheap imports from countries that don't face those conditions.
But some economic analysts argue they are part of policies that have helped Ecuador reduce inequality and expand the middle class.
The World Bank says Ecuador's economic growth has been “inclusive,” with the percentage of people in poverty dropping from 37 percent in 2006 to 22 percent in 2014.
The last two years, however, have seen economic growth stop, to near zero, as falling global oil prices have slashed government revenues, which depend on oil exports.
Sudamericana de Brochas has six injection molding machines and 80 employees in manufacturing, and focuses all of its production on its domestic market. Nussbaum said it has one of the country's better known brands, Wilson, for household goods like brooms, brushes and cleaning supplies.
Nussbaum said he travels to trade fairs like Plastimagen and NPE in the United States to stay current on manufacturing technology.
The company also has to market heavily, since Sudamericana de Brochas is facing stiff competition from imports, especially from China, which is taking a large share of some products, he said.
“The brand has been in the market for 56 years, so to remain current we use advertising in different forms,” he said. “We're facing competition with lower end products, cheaper products. So that's why we resort to communications, to position the product as a premium product.”
The company uses social media to reach a younger audience that in the past it would have used TV ads to communicate with, he said.
It hires research firms to lead customer focus groups, has an in-house staffer handling social media marketing and uses industrial designers to translate that research into new products. Its products can be twice as expensive as the cheapest imports, he said.
“Our products are not low end,” he said. “If a customer calls me a for a cheap broom, I tell them to go to [Chinese e-commerce site] Alibaba. We cannot make something like that.”