Advice from Abroad
While there are certainly hassles associated with operating overseas, the benefits outweigh the disadvantages for many corporations. And following the sage advice of composites professionals who have set up international plants can help ease the transition:
- Have a solid reason to go. Operating an international facility is a big commitment, so make sure you’re not just opening a plant du jour. For example, building a plant in Brazil might make sense if you can land business with aerospace conglomerate Embraer in São Paulo. But opening a facility in China because of favorable exchange rates or hourly worker wages may not be a sound strategy. “Using short-term economic reasons to expand globally is a bad idea,” says Rooney. “As countries and companies come up in the world, these things change.”
- Do extensive upfront research on the business opportunities and potential partners in any foreign country. “Don’t rush into anything,” cautions Rooney. “The decision for us to go to China took three years of vetting and nailing down a partner.” CSP’s operation in Tangshan, China, is a 50-50 joint venture with Qingdao Victall Railway. The combination of CSP’s technologies and Qingdao Victall Railway’s customer base and local market expertise will enable them to tap into vehicle lightweighting opportunities in the automobile and heavy-duty truck markets.
- Seek out international counsel on legal, environmental and financial issues. “Your little hometown CPA firm that’s run your books forever is probably not sophisticated enough to help you set up a business, manage foreign tax credit and handle other issues,” says Merrell. There are several ways to find experts: CSP asked its global suppliers for recommendations on experts, IDI turned to customers in foreign countries for advice and Fibergrate relied on relationships developed by its parent company, RPM International.
- Give it time. “Once you’re willing to go and commit the time and money, you have to stick with it,” says Breiner. “It would be very easy to pull back when things are tough.” Fibergrate opened its Mexican plant right before the Great Recession hit in 2007, but rather than shutter the operation the company invested more into the business. Today the facility is thriving. “These are not short-term decisions,” says Rooney. “You don’t go to Europe or China for a couple years: You’re making a long-term commitment.”
- Keep everyone in the loop. “It takes an extra thought process when I’m communicating with the organization to include the Mexico facility,” admits Breiner. “It’s very easy to send a quick message across the U.S. facility, but the same message needs to be sent to Mexico, too.” The two plants stay connected through frequent in-person visits, too. For instance, the company’s vice president of operations recently traveled to Mexico to conduct internal auditing, training and a review of completed capital projects. He also shared information on environmental health and safety issues.
- Beware of a laissez faire attitude. “Keep an eye on everything,” cautions Gill. “You’ve got to operate international plants to your own standards.” When Fibergrate hires new managers at its Mexican plant, they spend six to eight weeks in Texas shadowing peers and learning about the company. In addition, employees from various departments in the U.S. make monthly trips to Querétaro to ensure everything is running smoothly.
Deciding to open a plant in a foreign country is not a decision to be taken lightly. “We’ve been extremely conservative,” says Gill. “We don’t take a lot of chances.” The Gill Corporation waited a decade between the time it purchased its first international plant in Ireland and its second in France.
CSP also carefully considers opportunities to set up facilities outside the U.S. With its latest international venture slated to open this fall, CSP has no immediate plans to penetrate other foreign markets. But in the future? “We are certainly not done expanding our presence worldwide,” says Rooney. “It’s increasingly becoming a global marketplace.”