Window on the world

Posted on May 9, 2012 :: Cover Story
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Posted by , Insight on Manufacturing Staff Writer

The shipping of manufactured goods to an overseas location is often a fairly routine scene of pallets moving onto trucks.

Not at Feeco International, a Green Bay-based manufacturer whose typically giant-sized industrial equipment turns waste or other materials into useable products. At Feeco, shipping one product such as a rotary ore drum to a destination like a mine in Africa is a sight to behold.

First the drum – which can be more than 15 feet in diameter and 45 feet in length, has to be lifted onto a tractor trailer rig by a couple of construction cranes. The rig may be more than 200 feet long – and heavy duty enough to safely transport the drum by road to the Port of Milwaukee. There, the massive drum may be loaded onto a barge to make its way down the Mississippi River system to the Port of Houston, where it will be loaded onto the deck of a cargo ship for ocean transport.

The logistics of shipping an item this big, that far can be complex, but Feeco executives say there is more to success with exports than mastering logistics, or even customs details. The difference for Feeco starts with product quality, but also spans a range of other factors, says Lee Hoffmann, Feeco’s vice president and general manager. It includes working with prospective customers on the processes they might want to use equipment for, field installation, and working with banks to set up financial arrangements such as lines of credit or progress billing arrangements, he says.

“We’re definitely a solutions provider, not just an equipment maker,” says Hoffmann. “In fact, we just upgraded our lab in the past year to expand our capabilities for working with customers.”

In one instance, Hoffmann recalls, Feeco used its production-testing capabilities to show a Canadian-based nickel producer that it was feasible to recycle nickel from used batteries by separating plastic housings from the underlying material. That gig eventually resulted in equipment sales to the nickel producer, says Hoffmann.

Feeco has grown its exports so that it now represents about 45 percent of sales over the past five years, but many other manufacturers based in Northeast Wisconsin also do well with exports or have grown into international operations. In many cases, they are building off of traditional strengths such as industry-specific engineering expertise and specialization in building customized equipment.

Companies that export tend to perform better financially, says Lora Klenke, vice president of international business development for the Wisconsin Economic Development Corporation. According to WEDC, exporting companies in the state grow 2.4 times faster than non-exporters, and their wages run 13 percent to 18 percent higher. Already, 36 percent of the state’s manufacturing, mining and farming gross domestic product is exported.

“The question shouldn’t be whether or not you should export, but what region holds your next best opportunity,” says Klenke.

Setting yourself apart
For Feeco, the core of its exports success is equipment quality, says Hoffmann. The equipment, as big as it is, has precise tolerances between its moving and inter-meshing parts. That precision comes from factors including many years of experience in the design of particular types of equipment, use of modern computer-aided design software, and rigorous laser measurements during the manufacturing process.

Hoffmann says quality gives Feeco a leg up over foreign competitors who can underprice them in some markets for upfront equipment costs, but whose equipment typically requires more servicing to get and stay productive. “When our customers buy a product from us, they have confidence that it will work reliably for them from the day it’s installed,” he says.

Dan Madigan, Feeco’s president and CEO, acknowledges customers in far-flung regions may have to pay more in freight versus a more regional competitor, but adds that customers ultimately judge the cost of equipment over the long term. “Our customers are going to be running this equipment for 30 or 40 years or more, so their primary concern is that the equipment is reliable and productive over its life cycle,” he says.

With explosive middle-class growth projected in countries such as China and India, Klenke says these countries will have large consumer populations and export potential. Much of the potential growth is in business-to-business exports, such as selling industrial or agricultural equipment that producers overseas will use to make goods for domestic markets. With B2B equipment sales, value-added services such as field installation or advice on optimizing production processes is often part of the overall solution Wisconsin companies excel at, says Klenke. “The companies that are the most successful tend to sell that complete solution,” she says.

Indeed at Feeco, the company has invested in industrial automation technology and trending software so that its lab can prove out industrial processes for clients, says Hoffmann. And when big pieces of gear like rotary drums are installed, Feeco sends experts to oversee details like making sure the base has exactly the needed degree of slope.

In short, manufacturers in Northeast Wisconsin often  win internationally by offering uniquely engineered solutions rather than off-the-shelf goods. Another example is the       De Pere-based company MEGTEC Systems, which operates globally, selling engineered systems that leverage unique drying or solvent recovery technologies into industries such as printing and battery manufacturing.

Mohit Uberoi, MEGTEC’s president and CEO, says the company is able to tailor equipment solutions to regional needs around the globe. “We share technology on a global basis and then develop products that are specifically suited for the local market. Having local engineering and development resources helps us to have a better appreciation of the needs of our global customers.”

Uberoi points out MEGTEC is truly a global company, often employing senior managers and engineers for its worldwide operations who are from the country or region they are leading. “Our success internationally comes from having local sales and business people who understand the markets, customer needs, and competition. We combine this with our global technology and research and development efforts to provide products that are uniquely suited for the local markets.”

Not exactly easy
To do well as a global company takes long-term effort, notes Mark Schwabero, president of Mercury Marine, the Fond du Lac-based marine motor manufacturer that also operates globally. In Mercury Marine’s case, says Schwabero, strengthening the worldwide dealer channel takes constant attention. The company also has plants, offices and sites worldwide, and top executives including Schwabero travel regularly to places such as New Zealand to build business.

“There is a different philosophy between exporting some product on an incremental basis, versus thinking about what you need to compete on a global basis,” Schwabero says.

A smaller manufacturer looking to dabble in exports might be able to do so without travelling personally to other countries, but in other cases, it may be wise to travel overseas to at least assess potential dealers, says Fred Monique, program manager of the Northeast Wisconsin International Business Development Program, which advises regional businesses on exports.

For Feeco, Hoffmann says its website has been a powerful tool for communicating with potential buyers overseas, but Feeco also regularly sends its field service engineers to work at foreign sites, and sales staff representatives also make occasional foreign trips. A year ago, the company also opened an office and lab in Melbourne, Australia.

Besides long-term efforts such as building up dealer channels, marketing and sales trips, or even establishing worldwide divisions, most any company that exports has to deal with an array of customs and trade regulations. Monique says there are many details a company new to exporting should be aware of. These include tariffs that might exist in certain countries or working with banks to obtain letters of credit to ensure payment. In some countries, it’s necessary to translate manuals or other documents for the customer.

Government programs and education can help (see sidebar, this page), but so can finding the right partners. Hoffmann says that for some of its bigger international shipments, Feeco has hired a global logistics partner who manages the customs and transportation details.

The payoff for global efforts is that you open your products to a worldwide market, while also smoothing the risks of a sluggish economy in one region with faster growth elsewhere, says WEDC’s Klenke.

Uberoi concurs that global market reach, as well as a diversified product line, helps deal with “cyclicality” of economies and industries. For example, he says, Asia generated strong demand for MEGTEC when the U.S. economy was slow in recent years.

Simply put, export success isn’t exactly easy, and often starts with the uniqueness and quality of your product offering.

As Hoffmann sums up, “having unique and well-built products that are not readily available around the world are really some of the keys to success.”