CISA Meeting Examines Global Factors, Reinventing `Companies to be Outside-In'.
Ron Crawford, Southland Marketing, discussed the industry perspective on international competition, which is changing the orientation of foundries and suppliers alike. Southland is a casting sales rep firm, and Crawford also is involved in setting up a foundry operation in Brazil with a local partner.
"The current global market conditions are very favorable for China, Korea, Brazil, India and Mexico," he said. While he mentioned that these nations have lower labor costs as well as environmental and safety standards, he said freight offsets those factors. "The key in my opinion is their currency exchange rates that can fluctuate based on need."
He added that with the recent devaluation of currency in Brazil, U.S. foundries can expect more imports in the near future. "Tupy has plans to increase capacity by 150,000 tons to 400,000 tons total over the next 2 years. The Brazilian market is expected to grow and to increase sales to the U.S. and Europe."
With regard to Mexico, he reiterated that it is not NAFTA or low-cost labor that makes the nation competitive with the U.S., but is instead the current increased value of the dollar, adding that this picture could change if it returns to 1994 levels. "Mexico, in my opinion, can only become a major factor in the foundry industry if we export the capital and technology to build there, like Citation/Caterpillar and Blackhawk/Emerson. Given our current labor issues, this may be one option for us to compete with Asia," he said.
Crawford also added that "if you are living with the myth that Asia can't compete on quality except in the large automotive foundries," his visits to China, Taiwan and Korea have proven otherwise. He added that there will be many joint venture foundries in China over the next 10 years.
Crawford said that if U.S. foundry suppliers expect to sustain or grow business there are two options. First, the American foundry industry must increase market share by being able to compete with foreign foundries on a global basis (which means reducing costs or increasing exports) or they can go where the action is--exporting product. Specifically, he challenged the suppliers in the room to solve cleaning room problems that hurt foundries' cost-competitiveness and to improve machinery options for the medium and small volume foundry.
Howard Hyden, The Center for Customer Focus, provided the group with the elements of a customer-driven organizational philosophy, or what he call an "outside-in" company. Rather than adding bells and whistles that the customer may not want ("inside-out" thinking), this mindset involves truly listening to the customer.
Tapping into true value-added functions, he said, is a huge, yet mostly dormant competitive advantage. "When there's product parity, the suppliers look the same, and the one that cuts the price generally gets the business," said Hyden. "On the other hand, the one that brings more value--even as simple as eliminating redundant functions between you and the customer--can raise the price." This value-added is found not only in the product itself, he said, but also through sales, legal, operations, shipping and accounting. As an example of how this permeates an organization, he recently asked a bookkeeper what she was doing to bring more value to the customer than the bookkeeper at Brand X. Asking the question prompted changes in how she approached her job.
Hyden said that the very first question to ask every year--before any budgets are made--is "what are we going to do differently to increase value for the customer?" "That must come first," he said, "because you may need to allocate the resources to accomplish it."
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|Title Annotation:||Casting Industry Suppliers Association|
|Comment:||CISA Meeting Examines Global Factors, Reinventing `Companies to be Outside-In'.(Casting Industry Suppliers Association)|
|Author:||Lessiter, Michael J.|
|Article Type:||Brief Article|
|Date:||Nov 1, 1999|
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