How can you, as a local manufacturer, compete globally? According to Houston Chronicle writer, Brian Hill, in his article, “How Can Small Business Enterprises Compete in a Global Market?”, there is “tremendous opportunity for revenue growth through selling … products and services internationally” because “about 95 percent of the world’s population [is] located outside the United States.”
The opportunity is out there. But how do you seize that opportunity? What are the keys to expanding your business beyond North America? What are the challenges to having a global business?
Hill admits that “It is challenging for businesses that do not have brand name recognition overseas to get a foothold in a foreign market.” However, he argues that “One advantage is that American goods and services are highly regarded in other countries because of their reputation for quality.”
For the article, “How Some US Manufacturers are Successful in Competing Globally”, written for Industry Week, Michele Nash-Hoff “… interviewed several companies that do all or the majority of their manufacturing in the U.S. to find out what they are doing to successfully compete in the global marketplace.”
Here’s what she found out that the companies had in common:
- All of the products are sold to other businesses (referred to as B-to-B) instead of to consumers.
- The products fill specific needs and requirements of other manufacturers.
- All of the companies manufacture their products in America.
- The companies export their products to other countries.
Although not included in Nash-Hoff’s interviews, Team 1 Plastics, a plastic injection molding company for the automotive industry, fits these common denominators:
- It serves Tier 1 customers and OEMs (original equipment manufacturers) in the automotive industry. None of its parts are sold to consumers.
- All of the parts are manufactured in its plant in Albion, Michigan.
- The company currently exports its parts to Canada, Mexico, China, Spain, Japan, Thailand, Honduras, and Germany.
From its beginnings, Team 1 Plastics has focused globally. According to Craig Carrel, President, Team 1 has always had an international focus to its business. “Our target market at the business inception was the Japanese transplant automotive suppliers in south central Michigan -- in particular, in Battle Creek. Automotive is truly a global business. All major suppliers are international and have operations around the globe. Thus our competition is global also.” In fact, Team 1’s business has grown with mostly international automotive suppliers – now mainly European with a North American presence.
A key lesson that Team 1 can share is that it takes time for international customers to feel comfortable with American suppliers. And, in turn, it takes time for the American suppliers to understand the international customers’ systems, requirements, expectations and needs. Carrel said that you want to make sure that your company can meet, and hopefully, exceed the customers’ expectations and needs. In Team 1’s experience, once the international customers gained confidence in its abilities, then their relationships and business together grew quickly.
As with any business venture, Carrel pointed out that there are challenges in being globally focused. For example, “Sometimes key decisions require approval from the company’s Headquarters. This can cause delays, change of direction, or a requirement for additional information. You need to be able to provide support for the company’s local operation so that the Decision-makers at Headquarters feel comfortable and will support the decisions made by the local operation.”
To help the relationships and communication, Team 1 encourages and welcomes visits from its customer’s international teams. “We want to make sure we are known as much as possible throughout their whole organization,” Carrel said.
Another challenge is to make sure your company is globally competitive against the best international competitors. Many of Team 1 Plastics’ international customers have created benchmarks to rate their plastic molder suppliers, looking for the best overall value in service, quality, delivery and price. According to Carrel, Team 1 has received high marks in most areas and has been recognized as a top global plastics molder. The ratings systems “force us to continually improve all phases of our company so that we are the number one choice for precision plastic components.”
Although its customers are international and have operations around the world, Team 1 does not need to follow them around the globe. Carrel said, “We need to make sure we are globally competitive but laser focused on being the top plastic molder in the Americas (NAFTA region). At the tier 2-3 level, our main competition is in the U.S., Canada, and Mexico.”
Acknowledging that many Presidential candidates are discussing the negative effects and major job losses caused by the NAFTA treaty, Carrel offered a counterpoint based on Team 1’s experience. He said that Team 1 Plastics has been a major beneficiary of NAFTA and the ease of trade between the countries in the NAFTA region. “We have over 20% of our sales going to Mexican automotive facilities and have grown our business and added jobs because of NAFTA.”