Cost savings more than make up for the risks of dealing with another culture and longer lead times. Currency variation, however, is a concern, Wang says. The U.S. dollar is growing stronger, but it still lost a lot of value against the yuan.
Get the basics
Having the right business mix and approach will make manufacturers more successful in today’s global world. But before those developments, Starn says it’s even more critical to understand your company’s strengths, weaknesses and numbers.
“A lot of people in small business — I call them checkbook businessmen — they don’t really know their finances,” Starn says. “They just look at the business at the end of the month and say they’ve got money in the bank. They follow their inventory; they don’t follow their scrap or their repair. They don’t do the little things that make a difference, recognizing whether the business is succeeding or failing.”
The majority of bankruptcies are companies that show a profit on their books, he says.
Manufacturers, in particular, spend millions on equipment, but they still must create the atmosphere to make that equipment successful. They have to know what they’re investing in.
Strategic partnerships or new customers won’t be successful if business leaders don’t understand what they’re putting at risk, he says. And even then, it might not be enough.
“Unfortunately, even our company, as hard as we work at it and the financial information we draw on new customers, we still get burned. We still have companies that don’t pay us, that are hard to collect from,” Starn says.
Plan for the cycles
Elliott Group knows how to weather downturns and plan for business cycles.
Elliott manufactures and services critical-duty centrifugal compressors and steam turbines for mid-stream and down-stream oil and gas applications. Demand for new rotating equipment, however, is closely tied to the price of oil, says Christiann Bash, corporate communications manager.
“For the past several years, the drop in oil prices and the delay in market recovery has impacted our customers and the investment decisions they are making,” she says. “During downturns, plant operators are more likely to postpone the purchase of new equipment in favor of servicing and extending the operating life of their installed equipment.”
New equipment may have been down, but Elliott also maintains service facilities and teams to help customers with their installed equipment — and that side of the business has been busy.