When you think of precision, what is the first thing that pops into your head? Some people will
say Swiss watches, while others might immediately think of German engineered automobiles. With long traditions of quality and excellence behind them, these tend to be the kind of things Americans will think of first. 

When it comes to precision manufacturing, however, many Americans are surprised to learn that, throughout the world, products manufactured in America or by American companies overseas are considered the gold standard in the industry. The American precision manufacturing industry is quite simply more efficient, more versatile and able to manufacture products needed by customers to more exacting specifications and with higher quality than anyone else in the world. Those precision manufacturing companies that have expanded their operations outside of the United States have, in many cases, found the demand for their products to be larger than they expected. Particularly for small to midsize precision manufacturing companies, expanding operations abroad can mean a vastly expanded customer base and the potential for huge profits. The ability to complete small to midsize jobs quickly and to specifications every time is something that is not common in many overseas markets and which many overseas customers will pay premium prices for. 

There are several reasons why American precision manufactured products are so sought after in South America, Europe and across the globe. Primary among these is the ability of the American precision manufacturing industry to fill both small specialized orders and very large orders without the massive production delays often times found when dealing with European or Asian firms. The American precision manufacturing industry has developed technologies – many of them robotic in nature and far more advanced than their overseas counterparts – which allows it to retool machines more quickly and efficiently, making it both possible and practical to take on smaller, more specialized jobs which most local overseas precision manufactures would be unable to complete cost effectively. Additionally, American precision manufacturers have a reputation – particularly in Europe – for meeting their deadlines without sacrificing the quality of their products. In cultures where time is generally not as much of the essence as it tends to be in the United States, this is a huge selling point to a customer who may be up against a hard deadline themselves and unable to find a local firm that can meet their time requirements. And it is also important to remember that – particularly in the European markets – quality tends to be more important than price. 

There are, of course, a number of factors that go into successfully expanding your operations abroad, and many of these are completely dependent on the kind of expansion your company is looking to make. For example, if you are looking to expand into the South American or Canadian markets then in many cases you will find it to be most cost effective to fill orders from your own base plant and ship the product direct to your customer. However, if your expansion takes you into the European or Asian markets, it may become necessary to either outsource larger orders to local companies that can be outfitted by your team to manufacture orders to your specifications, or – in the case of servicing a large, long term customer – building your own plant overseas. In both cases, finding the right companies to partner with or the right people to staff your satellite will probably prove to be quite challenging. It will be necessary for your team to study and weigh all the possible pros and cons of both methods of servicing customers, and you will in all likelihood need to hire a consulting firm that specializes in international business expansion to help you make the most informed, most desirable choices.    

We recently helped a client do this as follows.  Changes in the Euro/Dollar exchange rate had affected the company’s strategy of serving as an entry point into the larger NAFTA marketplace.  Sensing an opportunity to grow this part of their business, they asked GMI to design a strategy that increased revenue while taking into account who they are as a company.  Knowing the client’s strengths allowed us to put together a targeted market intelligence report that helped them move forward in the right countries while avoiding markets that would not be as profitable.  Our client implemented this strategy as we designed it and is enjoying a significant growth in their business. 

The most important aspect of your expansion however – and the one that in my experience tends to make American companies the most gun-shy about their expansions in the first place – is identifying and understanding the general market trends overseas and then finding customers that need the products you are capable of providing. There is an old cautionary tale about the button manufacturer who tripled the size of his company the day before his biggest customer decided to convert to zippers, all because he hadn’t been keeping up with the current trends. While you are probably familiar with the trends in your industry here in the US and have a reasonable idea of what you can expect to be coming next, many of your potential overseas customers will not be requiring what your current customers in the states need. The “can do” attitude that Americans are known for around the world is all well and good, but the “can do, and here’s how” answer to a potential customer’s question can often times mean the difference between a lucrative contract and a wasted presentation to a foreign customer. It is always necessary to keep in mind that when doing business overseas you are dealing with people who have a different set of cultural and historical imperatives from you, and what drives their needs are often times not the same things that will drive the needs of your American customers. To understand and be prepared for both attracting and servicing foreign customers, you will in all likelihood need sound advice and guidance from someone who has a great deal of experience in the markets you are looking to break into. 

Expanding your manufacturing operations abroad is a very large commitment of your company’s time, resources and manpower – and yet in case after case, precision manufacturers have vastly increased their net worth and bottom line profits by doing just that. It is simply a matter of expending the effort – and hiring the help – to identify the industry trends and get your products to the customers who need them. You are already at the top of your game on your home court. Now, it is time to find the ways to win on the road! 

Author Bio: Steve McLaughlin founded Global Market Insights, with offices in Europe and the U.S., with his vision of giving clients two synergistic competencies: knowledge of the global marketplace and industry expertise in manufacturing, finance and information technology. Steve McLaughlin has over twelve years of international experience in three continents, having started in executive search as a Beckett-Rogers Associate. Steve McLaughlin is a graduate of Rice University where he was student body president, and completed post-graduate studies in International Economics at the Universidad Mayor, Santiago, Chile. He is available for consultation and can be contacted directly by Email: smclaughlin@gmi.lu or Phone: 352-26364921. Additional information is located on his website: http://www.gmi.lu