Flexan discusses the need to prepare for the best competition from all over the world, and the risk of not succeeding if you set your sights only on domestic competition.
12/19/13
In an interview with Rubbernews.com, Flexan discusses the need to prepare for the best competition from all over the world, and the risk of not succeeding if you set your sights only on domestic competition.
CHICAGO -- The owners of Flexan Corp. are big believers that manufacturing operations can be successful in North America.
The maker of molded rubber goods for industrial and medical markets has production facilities in Chicago, site of its headquarters, as well as in China, and the firm continues to invest in both
That doesn't mean remaining competitive as a rubber products manufacturer—or in any other manufacturing industry—is easy, said Scott Severson, CEO of Flexan and one of three partners in owning that firm and its FMI Inc. medical components unit.
"You have to be prepared for the best competition from all over the world, and if you set your sights only on your domestic competition, you probably won't succeed," Severson said.
He participated on a panel earlier this year sponsored by Crain's Chicago Business, a sister publication of Rubber & Plastics News, which focused on manufacturing prospects in the U.S. He said part of the discussion was about how the state and federal governments could do more to support domestic manufacturing and, and the notion that there is a place for high-quality manufacturers, but they have to be willing to invest in world class technologies.
Companies also have to realize that with the global nature of business, it may be necessary to have operations elsewhere, as Flexan has done.
"You have to be reasonable with your customers when they want a logistics answer for their Asian assembly plants," Severson said. "You have to go where your customers are. You have to listen to what customers need first and foremost, and that really is what has to drive your business growth."
The panel also had discussed whether some production is returning because of rising costs in China, he said. Manufacturers in China don't have as big an advantage as they might have had six or seven years, ago, but it is still a very competitive place to produce parts.
"The attractive thing from our point of view is there's a huge and growing middle class in Asia, and we're well-positioned to supply the Chinese and Asian consumers as they become more affluent," Severson said.
Be willing to change
Manufacturers must realize the way they ran their business in the past won't cut it today, according to Bruce Cohen, Flexan president and one of the other two partners in the business.
"You have to find ways of being more efficient, leaner and smarter about things," he said. "You have to invest in technology, and you have to change yourself if you want to be able to compete on a global basis. And people in America can compete on a global basis, depending on what it is you're looking for. If you're looking for niches and places that you do well—places that you bring value—you can. If you're looking at very basic products, I don't believe you will."
Flexan has worked at being leaner and taking the waste out wherever possible. The owners meet with supervisors, talk about each individual's efficiency, track the data and let them know how they're doing on an ongoing basis. A lot of that improvement, he added, is because of employee input.
"It's not just leaning on the employees, but it's also listening to them, learning what tools they need to do things better," Cohen said.
Flexan has run a number of kaizen projects, and Cohen said the mast satisfying part is seeing the buy-in from the employees who actually are doing the work to help change how their jobs are performed. "It only works when you've got the employees giving input," he said. "When you're feeding it the other way, it doesn't work."
The company also looks at what technologies are available and buys equipment that will allow it to make parts faster and more efficiently. "You take those types of investments with a long-term view, and payback will come over time," he said. "If you want to compete in North America, you have to pay attention to being as competitive as you can and being as smart as you can as a supplier."
Flexan last year spent more than $250,000 on an upgraded ERP system for the business, but the firm will be able to manage its information much better. "The payoff for that is going to be less than two years," Cohen said.
Severson added that being able to overcome the disadvantage of the higher overhead and labor costs that North American manufacturers face means to invest not only in the latest technology, but in human capital as well. "It's investing in the right people and the right methods of manufacturing—not just equipment."
