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May 7, 2002

9 Min Read
Strategic marketing is key in tough times

Editor's note: Clare Goldsberry is a contributing editor for IMM and has written several books on sales and marketing strategies, which are available through the IMM Book Club: (800) 655-3330 or www.immbookclub.com.

When the going gets tough, the tough go selling! Right? Well, almost right. Before your salespeople hit the road they need a map or, more precisely, a marketing strategy. Never has a marketing strategy been more important to growing sales than in the economic climate we've experienced during the past 18 months. More and more molders recognize that planning is key to sales growth, and to that end more are dedicating resources to marketing and selling.

In a survey conducted by the Mid-America Plastics Partners (MAPP), 67 plastics processors responded that their number one plan of action for 2002 is "rededicating company resources to marketing and selling."

Troy Nix, executive director of MAPP, says, "Processors are planning more aggressive marketing efforts and according to one processor, they are searching for and actively calling on potential customers, and flipping over every new rock."

Comments from MAPP's survey participants included everything from "hired a marketing firm" to "developing a more comprehensive sales network" to "more aggressive marketing."

What is Marketing?
Many, however, do not understand how marketing can be used effectively, or even what marketing means. Marketing creates demand for goods or services. It doesn't matter if you have the best equipment, capabilities, and expertise in the industry if no one knows about them. However, to develop and implement a strategic marketing plan requires some work.

First, what is your goal? For many molders, the goal is to diversify customers and end markets served, attract new customers, promote capabilities and technology, and keep the company name in the forefront of customers' and potential customers' minds.

Molding and moldmaking companies never used to think much about marketing. Most didn't even have salespeople. However, with global competition pressing on the doors of U.S. manufacturers, there's an increased recognition that marketing will be critical to the success of U.S. molders and moldmakers.

Large or small, molders and moldmakers need to think about how they will promote themselves in a crowded, competitive market, how to differentiate themselves from the competition, and how to use those differences to find a niche. Nypro Inc. is a sizable molder that serves multiple markets, staying diversified in the services it offers so that it can thrive in a global marketplace. But you don't have to be a Nypro to survive.

For example, Plastic Molding Technology Inc. (Seymour, CT and El Paso, TX) has developed an expertise in advanced insert molding capabilities to help its customers in electronics, medical, automotive, and consumer appliance markets reduce costs.

Precision insert molding, says PMT CEO Charles Sholtis, is an innovative process technology that enhances product functionality, reliability, and economy. "Depending upon the design need, stampings, screw-machined parts, four slide parts, coils, and even microchips can be encapsulated with plastic," Sholtis says. "Component integration is achieved by combining the high-volume processing advantages of plastics with the mechanical and conductive properties of metals."

Almost every molding or moldmaking company develops a niche over the course of its business life, whether it's a capability niche, an expertise niche, a market niche, or a specific customer niche. Finding your niche—what it is you do best—and then promoting that niche to customers who value what you provide are the optimum ways to grow your business.

Being Global vs. Going Global
Marketing to global OEMs requires being global in some form. That could mean having a facility located close to OEM customers' facilities or forming strategic partnerships with a molding or moldmaking company in specific locations from which to serve OEM customers. It's a fact of life: Being global often means going global.

Bob Alvarez, vp of application engineering at United Plastics Group (UPG), explains that being a supplier in today's marketplace means molders must be low-cost, global, and multidisciplined in manufacturing, engineering, and procurement. That's a huge bite to swallow for many molders. But without these, Alvarez says, "Plastics companies today can't service the needs of the multinational OEMs. We're not in the manufacturing industry, we're in the service and consumption industries."

The prime objective of OEMs today, says Alvarez, is fourfold: Be first to market, be the highest quality, have the lowest price, and have global capabilities. "The molder is an extension of the OEM," says Alvarez. "We're not just providing a service, but a relationship."

That relationship often requires molders to go where the OEM needs them. To that end, UPG is closing four of its 12 U.S. plants and moving that manufacturing to China and Mexico.

Not that every molder needs to open a plant in China or Mexico. But, as Alvarez puts it, "You don't have to own all your manufacturing and technology, but you'd better know where to find it."

Molders marketing themselves to global OEMs need to know what it will take to serve these OEMs and be willing to make the investment and take the risk.

Marketing to Contract Manufacturers
For almost a decade now contract manufacturers, and more specifically electronic contract manufacturers, have been extending their reach into molding. This vertical integration of capabilities has given these companies something that molding companies don't have: the ability to make, assemble, package, and ship products anywhere in the world from almost anywhere in the world. For a while the big players like Flextronics, Celestica, Solectron, and Jabil kept getting bigger. But Flextronics' plan to acquire more molding companies was put on hold during 2001 because it discovered—as custom molding companies already know—that when things slow down, like they did in the electronics sector last year, the presses stand idle.

That leaves molders with an excellent marketing opportunity. However, knowing how to turn opportunity into profitable new business is the challenge. Being competitive is key. UPG's Alvarez says that "80 percent of injection molding companies cannot compete with plants in the U.S. because they're not lean and mean."

Being able to service contract manufacturers, which have many of their plants in places like Asia and Eastern Europe, is another challenge. Alvarez notes that full-service status requires molders to have a knowledgeable and centralized engineering and procurement department that functions 24/7. When a plant in Asia needs something, the U.S. molder had better be ready to answer that call.

Also, to service a contract manufacturer requires knowing your niche. Offer the contract manufacturer something that company doesn't have the capability to do, or something the molder can do more efficiently. The name of the game is low cost to manufacture and high productivity. That's why companies jump from one country to another in search of the lowest-cost labor. If U.S. molders can figure out a way to do it better, faster, and cheaper, then even the CMs can do the math on that one.


As Alvarez notes, "Ask yourself, 'What do I bring to the deal as a core competency vs. my partner's strengths?'" Molders need to focus on those core areas and become better than anyone else, and then market those strengths to the CM.

Contract manufacturing, says Alvarez, will continue to dominate the landscape of manufacturing. All the profit is in value-add.

Molders, to be successful, need to find ways to be in the contract manufacturing business at their own level, or learn how to play with the big CMs in a low-cost niche.

New Opportunities
Almost every market segment offers new opportunities for molders, but these don't come knocking at the door. It usually requires molders to keep abreast of changing technologies in various market segments to capitalize on these opportunities. For example, the electronics sector has undergone numerous paradigm shifts over the past decade.

Jack Dispenza of Lucent Technologies/Bell Labs' design and engineering center of excellence notes that market changes forced a new business model for most electronics companies. One major change is in product cycles. "Electronics businesses were cyclical and cycles tended to rise and fall over a few years," he says. "Now it's months."

There is also the global slowdown in the electronics markets and the downsizing, spin-offs, inventory write-offs, and outsourcing of many manufacturing capabilities. Today's telecommunications and electronics markets are "doing some soul searching and getting back to fundamentals—revenues, profits, and careful future planning," he says.

How does that impact opportunities for moldmakers and molders? Dispenza says that there's more collaboration on design at the concept stage with moldmakers. Product development is concurrent, with candidate vendors chosen early. "Sometimes we'll [start working with] a moldmaker before the design is done," he says. "Numerical analysis and simulation help us bring products to maturity faster, and there's more effective utilization of internal and external resources."

New opportunities exist in the medical industry, but like the telecommunications and electronics industries, changes are taking place that affect custom molders serving this segment. Rocky Morrison of American Technical Molding painted a revealing picture of the medical molding industry at the recent IMM Management Conference. To be a medical molder requires a higher level of training and adherence to good manufacturing practices (GMPs). "Most do not do enough training to be a medical molding facility," says Morrison, "and the GMPs make it difficult for the smaller custom molder to compete."

However, one way to get a foot in the door of the medical industry is research and development. R&D can be a business for moldmakers and molders, notes Morrison. "Custom molders tend to give the R&D away and make it up in the molded parts," he says. "But you have to realize that 90 percent of R&D projects never become a reality."

Medical molding is a business that is moving steadily toward contract manufacturing, similar to what is taking place in the electronics industry. That means being more than just a molder of medical parts, as value-adds increasingly become a critical component of servicing the big medical OEMs.

Finding these new opportunities demands that molders and moldmakers mine these industry segments and understand the changes that drive these new business models. They then must develop strategic plans to meet these changing requirements. What industry segments are you best able to service given your company's expertise and equipment capabilities? How can you respond to the challenges of concurrent engineering, new product design assistance, global manufacturing, and supply chain management?

Marketing strategies today go far beyond just finding customers, beyond just promoting your company with a brochure and facilities listing.

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