What Is Husky Injection Molding
Husky Injection Molding Systems
As part of the global plastics sector, Husky used a differentiation strategy rather than low cost or dual advantage. Its primary business was in plastic injection molding equipment and related services. Of the molding techniques, injection molding is the most specialized and therefore required the most intricate, customized, and expensive equipment. Husky chose to focus its main business on a few specific machine products, sold to several plastic processors over a large geographic region. This strategy allowed Husky to focus on its core products while stimulating growth with international expansion. Its main customers were all focused primarily on the manufacturing of plastics and plastic bottles as their …show more content…
main business. For these customers, the item produced by Husky’s machinery was their major product and the system was their primary capital expenditure. For this reason, it was important for these customers to have reliable, efficient machinery, with good customer service which is something that Husky had a reputation for doing. This strategy was evident in all its business functions.
Manufacturing
Processors used a variety of techniques to form products from resin.
However; the most complicated plastic shapes required injection molding. Husky applied this technique exclusively for its equipment. By focusing solely on this technique, Husky was able to perfect its injection molding systems and incorporate upgrades such as hot runners, which improved the quality of parts and reduced resin waste. Injection molding techniques were typically categorized by the force they could exert as this affected the type of product that could be manufactured. Husky focused on sales in the medium tonnage classification (150 – 900 tonnes), which were designed for PET preform and thinwall applications. Small-tonnage machines were excluded in its product mix as these machines are used for commodity products produced by assembly lines. The majority of large-tonnage machines were excluded which enabled Husky to keep costs down and focus on its core competency. This proved to be advantageous, as the market for injection molding equipment for the PET packaging application increased from $346 million in 1993 to $755 million in 1995 and was expected to increase to $1153 million in 1998. By focusing its resources on PET packaging applications, Husky was able to establish a first mover advantage for this particular application. Large capital expenditures and the need for reliable equipment, likely increased switching costs for customers. As a result, Husky’s reputation as durable …show more content…
machinery allowed them to charge a premium over competitors.
Production
Husky machines were typically manufactured made-to-order which gave customers input when their particular machines were designed. With production in two locations, Husky could leverage the intellectual capital in the specific regions. The production facility in Canada, was very important to Husky’s strategy due to the technical know-how of the employees in this region and the strong industry presence in the area. This provided an attractive talent pool that could work in the job shop atmosphere at the quality standards Mr. Schad had come to expect.
Sales and Service
Husky chose to use in-house sales representatives, several of which were previously service people providing additional knowledge on products. This was contrary to industry practice which typically used a hybrid of in-house sales representatives and independent representatives. With in-house sales representatives, Husky retained more control over compensation and incentives. Just as importantly there were fewer conflicts of interest among the sale of competing products.
Technology
Husky had a history of investing in technology and making innovation a priority. Husky’s ability to establish itself as the leading firm in the perform niche with its new product innovation proved to be key to Husky’s success. From 1993 to 1995, market size of the soda bottle increased from $346 million to $755 million respectively. The main system used to manufacture these bottles was a two-step process, something in which Husky specialized in. As the soda bottling industry consolidated, there was a bigger demand for larger volumes of soda bottles. Husky’s two-step process was able to meet the needs of processors demand. Husky continued to focus on technology advances by investing $25 million to build Husky’s Advanced Manufacturing Center with hopes that its investment will lead to greater advancements.
Valued-Added Services
Husky chose to primarily focus on plastic injection molding equipment while offering molds, hot runners and robotics as part of its value-added services. By offering other products, Husky could market its brand as "complete factory solutions" rather than simply being an equipment vendor. This also was important to its differentiation strategy.
Products:
Additionally, Husky competed in molds, hot runners, robotics, and value-added services. Husky not only made hot runners for its molds, but also participated in the market selling them to other mold makers. This accounted for a small proportion of Husky’s business but enabled their high level sales force to develop relationships to gain new accounts for its equipment business. Similar to their involvement in hot runners, Husky made robots for its own equipment as well as for machines made by other customers. Its brand was marketed as a supplier of complete factory solutions which resulted from its breadth of products.
Husky made money by establishing itself as a premium brand for plastic injection molding equipment among Processors' Engineers and by having other products and services that integrated with and supported the equipment business. Husky products were superior on almost all levels, and this reputation began in the 1970s when Husky became a leading firm in the PET performs niche. Husky machines operated with a lower cycle time, occupied less floor space, consumed less electricity, and produced fewer surface blemishes. As a result, Husky charged a premium price equal to 10-20% to that of their competitors. The premium investment related to the equipment and the high level of integration between Husky products increased the switching costs of their customers. All of these attributed to Husky’s differentiation model and generated a higher willingness to pay by the customer. (should we include paragraph 3 info before we say “all of these attributed to Husky’s differentiation strategy? I think their premium quality machines/brand was a big part of the differentiation strategy.)
Husky's customers were high volume, large players in their respective industries and conducted business in more than 70 countries.
In order to accommodate their customers, Husky had two manufacturing plants, one in Bolton, Ontario and another in Dudelange, Luxembourg. Having manufacturing centrally located allowed Husky to take advantage of economies of scale and was important for effective service delivery. Sales and service offices were dispersed across 17 countries to provide greater attention to customer needs and to grow the business. Growth was the most robust in Europe and Asia with a year-over-year increase in revenue of 62.8 percent and 256.2 percent respectively from 1994 to
1995.
Husky maintained several key activities that supported and maintained the differentiation strategy. Robert Schad set forth a very pristine work environment. The two main facilities were established with day cares for children and focused on the employees’ personal wellness. The facilities were “green” and kept very neat and orderly with great attention to detail. Also everyone, including Schad, was called by their first name. This environment of promoting values, relationships, and wellness aided in a low turnover which enabled Husky to maintain a highly skilled labor force and also kept the labor cost low as employees were more efficient with their time.
An excellent sales and services plan also supported Husky’s strategy. All sales and services team members were well trained and educated in the products sold and unlike competitors, sales and service both reported to the same manager, making him/her accountable for the customer over the lifetime of the purchase. Husky also maintained a facility in Buffalo, New York that warehoused spare parts. This allowed Husky to ship spare parts to any location around the world in a timely manner. Considering processors can not afford to be out of commission for long periods of time, this is an excellent way to differentiate your service from competitors.
A small, but growing part of Husky’s revenue is value added services. For a fee, Husky provided processors with training, plans for molding facilities, and how to produce turnkey factories. Providing these services allowed Husky to build a trusted relationship with the processor, ultimately with the potential of the processor purchasing machinery, molds, hot runners and robotics from Husky in the future.
Two major issues face Husky: 1) competitors have entered and are using a low cost strategy, and 2) a shortage in the supply of resin has adversely affected demand for plastics products and therefore that of machines. Both of these issues have increased the rivalry amongst the competitors. The rising price of resin is causing tougher competition as customers are looking to cut costs and Husky is feeling the squeeze as existing competitors are expanding their business into Husky’s core competency areas at a lower price. The industry is moving towards treating equipment as more of a commodity which goes against Husky’s core business strategy of differentiation.
Our first recommendation to Schad is to continue focusing aggressively on its traditional markets. Husky has differentiated itself by producing a premium product for a premium price and is still the most attractive option in preform systems for operating efficiency. For the specific machine in which comparisons were previously made, a buyer would need to spend $340,000 more on a competitor’s machine to establish production capacity equivalent to that of a Husky machine. Additionally, an extra $76,480 would be required each year in operating costs to produce the same amount as a Husky preform system. In sum, a customer’s willingness to pay is close to $1.5M and therefore makes the price tag of a Husky machine a bargain at $1.2M. These estimates are conservative with regard to the cost of resin and therefore could be much higher. Thus, it makes sense to maintain current price levels in these segments, invest in research, and continue to pursue a strategy of differentiation. With this approach, Husky is not capturing all of the value available to them, but in keeping with this model, they are raising the barriers to entry.
To complement its core business strategy, Husky should aggressively push initiatives to educate consumers on the annual and lifetime savings associated with purchasing Husky equipment as opposed to a competitor’s equipment. In effect, this will increase its customer’s willingness to pay. Husky should also complement the core business strategy by putting more focus on selling molds, hot runners and robotics during the time in which Husky machine purchases have declined. Husky can also focus on increasing revenues on value-added services. This allows Husky to maintain relationships with their customers and have an insight to the customer’s needs. Building this relationship may win Husky the future machine business.
Since the threat of competition is high and equipment manufacturing is perceived as becoming more of a commodity business at this time, Husky can hedge risk by expanding its product offerings through leasing equipment, whether new or old. We see this as an opportunity to gain margin that might not be realized anywhere throughout the system. Additionally, this could provide a foray for Husky into the low price market by potentially using older models to establish business in developing countries that do not require the same rate of machinery as established countries.
Husky should also strategically position itself to become the first-mover in the recycling business. Since the long term growth of the industry depends on recycling, it would be beneficial to invest in research and development in this area. By making this a key component of its business model, Husky can drive down their costs, especially in comparison to its competitors.
One final recommendation is for Husky to look closely at its international market and determine if they should broaden their scope. There may be opportunities to relocate/add/reduce the regional offices located around the world while pursuing new customers. In conclusion, we recommend that Husky remain committed to its core business model of differentiation while not lowering their price. They should also look at other opportunities such as leasing, global expansion, outsourcing, and customer education programs.
Exhibits:
[pic]
As part of the global plastics sector, Husky used a differentiation strategy rather than low cost or dual advantage. Its primary business was in plastic injection molding equipment and related services. Of the molding techniques, injection molding is the most specialized and therefore required the most intricate, customized, and expensive equipment. Husky chose to focus its main business on a few specific machine products, sold to several plastic processors over a large geographic region. This strategy allowed Husky to focus on its core products while stimulating growth with international expansion. Its main customers were all focused primarily on the manufacturing of plastics and plastic bottles as their …show more content…
main business. For these customers, the item produced by Husky’s machinery was their major product and the system was their primary capital expenditure. For this reason, it was important for these customers to have reliable, efficient machinery, with good customer service which is something that Husky had a reputation for doing. This strategy was evident in all its business functions.
Manufacturing
Processors used a variety of techniques to form products from resin.
However; the most complicated plastic shapes required injection molding. Husky applied this technique exclusively for its equipment. By focusing solely on this technique, Husky was able to perfect its injection molding systems and incorporate upgrades such as hot runners, which improved the quality of parts and reduced resin waste. Injection molding techniques were typically categorized by the force they could exert as this affected the type of product that could be manufactured. Husky focused on sales in the medium tonnage classification (150 – 900 tonnes), which were designed for PET preform and thinwall applications. Small-tonnage machines were excluded in its product mix as these machines are used for commodity products produced by assembly lines. The majority of large-tonnage machines were excluded which enabled Husky to keep costs down and focus on its core competency. This proved to be advantageous, as the market for injection molding equipment for the PET packaging application increased from $346 million in 1993 to $755 million in 1995 and was expected to increase to $1153 million in 1998. By focusing its resources on PET packaging applications, Husky was able to establish a first mover advantage for this particular application. Large capital expenditures and the need for reliable equipment, likely increased switching costs for customers. As a result, Husky’s reputation as durable …show more content…
machinery allowed them to charge a premium over competitors.
Production
Husky machines were typically manufactured made-to-order which gave customers input when their particular machines were designed. With production in two locations, Husky could leverage the intellectual capital in the specific regions. The production facility in Canada, was very important to Husky’s strategy due to the technical know-how of the employees in this region and the strong industry presence in the area. This provided an attractive talent pool that could work in the job shop atmosphere at the quality standards Mr. Schad had come to expect.
Sales and Service
Husky chose to use in-house sales representatives, several of which were previously service people providing additional knowledge on products. This was contrary to industry practice which typically used a hybrid of in-house sales representatives and independent representatives. With in-house sales representatives, Husky retained more control over compensation and incentives. Just as importantly there were fewer conflicts of interest among the sale of competing products.
Technology
Husky had a history of investing in technology and making innovation a priority. Husky’s ability to establish itself as the leading firm in the perform niche with its new product innovation proved to be key to Husky’s success. From 1993 to 1995, market size of the soda bottle increased from $346 million to $755 million respectively. The main system used to manufacture these bottles was a two-step process, something in which Husky specialized in. As the soda bottling industry consolidated, there was a bigger demand for larger volumes of soda bottles. Husky’s two-step process was able to meet the needs of processors demand. Husky continued to focus on technology advances by investing $25 million to build Husky’s Advanced Manufacturing Center with hopes that its investment will lead to greater advancements.
Valued-Added Services
Husky chose to primarily focus on plastic injection molding equipment while offering molds, hot runners and robotics as part of its value-added services. By offering other products, Husky could market its brand as "complete factory solutions" rather than simply being an equipment vendor. This also was important to its differentiation strategy.
Products:
Additionally, Husky competed in molds, hot runners, robotics, and value-added services. Husky not only made hot runners for its molds, but also participated in the market selling them to other mold makers. This accounted for a small proportion of Husky’s business but enabled their high level sales force to develop relationships to gain new accounts for its equipment business. Similar to their involvement in hot runners, Husky made robots for its own equipment as well as for machines made by other customers. Its brand was marketed as a supplier of complete factory solutions which resulted from its breadth of products.
Husky made money by establishing itself as a premium brand for plastic injection molding equipment among Processors' Engineers and by having other products and services that integrated with and supported the equipment business. Husky products were superior on almost all levels, and this reputation began in the 1970s when Husky became a leading firm in the PET performs niche. Husky machines operated with a lower cycle time, occupied less floor space, consumed less electricity, and produced fewer surface blemishes. As a result, Husky charged a premium price equal to 10-20% to that of their competitors. The premium investment related to the equipment and the high level of integration between Husky products increased the switching costs of their customers. All of these attributed to Husky’s differentiation model and generated a higher willingness to pay by the customer. (should we include paragraph 3 info before we say “all of these attributed to Husky’s differentiation strategy? I think their premium quality machines/brand was a big part of the differentiation strategy.)
Husky's customers were high volume, large players in their respective industries and conducted business in more than 70 countries.
In order to accommodate their customers, Husky had two manufacturing plants, one in Bolton, Ontario and another in Dudelange, Luxembourg. Having manufacturing centrally located allowed Husky to take advantage of economies of scale and was important for effective service delivery. Sales and service offices were dispersed across 17 countries to provide greater attention to customer needs and to grow the business. Growth was the most robust in Europe and Asia with a year-over-year increase in revenue of 62.8 percent and 256.2 percent respectively from 1994 to
1995.
Husky maintained several key activities that supported and maintained the differentiation strategy. Robert Schad set forth a very pristine work environment. The two main facilities were established with day cares for children and focused on the employees’ personal wellness. The facilities were “green” and kept very neat and orderly with great attention to detail. Also everyone, including Schad, was called by their first name. This environment of promoting values, relationships, and wellness aided in a low turnover which enabled Husky to maintain a highly skilled labor force and also kept the labor cost low as employees were more efficient with their time.
An excellent sales and services plan also supported Husky’s strategy. All sales and services team members were well trained and educated in the products sold and unlike competitors, sales and service both reported to the same manager, making him/her accountable for the customer over the lifetime of the purchase. Husky also maintained a facility in Buffalo, New York that warehoused spare parts. This allowed Husky to ship spare parts to any location around the world in a timely manner. Considering processors can not afford to be out of commission for long periods of time, this is an excellent way to differentiate your service from competitors.
A small, but growing part of Husky’s revenue is value added services. For a fee, Husky provided processors with training, plans for molding facilities, and how to produce turnkey factories. Providing these services allowed Husky to build a trusted relationship with the processor, ultimately with the potential of the processor purchasing machinery, molds, hot runners and robotics from Husky in the future.
Two major issues face Husky: 1) competitors have entered and are using a low cost strategy, and 2) a shortage in the supply of resin has adversely affected demand for plastics products and therefore that of machines. Both of these issues have increased the rivalry amongst the competitors. The rising price of resin is causing tougher competition as customers are looking to cut costs and Husky is feeling the squeeze as existing competitors are expanding their business into Husky’s core competency areas at a lower price. The industry is moving towards treating equipment as more of a commodity which goes against Husky’s core business strategy of differentiation.
Our first recommendation to Schad is to continue focusing aggressively on its traditional markets. Husky has differentiated itself by producing a premium product for a premium price and is still the most attractive option in preform systems for operating efficiency. For the specific machine in which comparisons were previously made, a buyer would need to spend $340,000 more on a competitor’s machine to establish production capacity equivalent to that of a Husky machine. Additionally, an extra $76,480 would be required each year in operating costs to produce the same amount as a Husky preform system. In sum, a customer’s willingness to pay is close to $1.5M and therefore makes the price tag of a Husky machine a bargain at $1.2M. These estimates are conservative with regard to the cost of resin and therefore could be much higher. Thus, it makes sense to maintain current price levels in these segments, invest in research, and continue to pursue a strategy of differentiation. With this approach, Husky is not capturing all of the value available to them, but in keeping with this model, they are raising the barriers to entry.
To complement its core business strategy, Husky should aggressively push initiatives to educate consumers on the annual and lifetime savings associated with purchasing Husky equipment as opposed to a competitor’s equipment. In effect, this will increase its customer’s willingness to pay. Husky should also complement the core business strategy by putting more focus on selling molds, hot runners and robotics during the time in which Husky machine purchases have declined. Husky can also focus on increasing revenues on value-added services. This allows Husky to maintain relationships with their customers and have an insight to the customer’s needs. Building this relationship may win Husky the future machine business.
Since the threat of competition is high and equipment manufacturing is perceived as becoming more of a commodity business at this time, Husky can hedge risk by expanding its product offerings through leasing equipment, whether new or old. We see this as an opportunity to gain margin that might not be realized anywhere throughout the system. Additionally, this could provide a foray for Husky into the low price market by potentially using older models to establish business in developing countries that do not require the same rate of machinery as established countries.
Husky should also strategically position itself to become the first-mover in the recycling business. Since the long term growth of the industry depends on recycling, it would be beneficial to invest in research and development in this area. By making this a key component of its business model, Husky can drive down their costs, especially in comparison to its competitors.
One final recommendation is for Husky to look closely at its international market and determine if they should broaden their scope. There may be opportunities to relocate/add/reduce the regional offices located around the world while pursuing new customers. In conclusion, we recommend that Husky remain committed to its core business model of differentiation while not lowering their price. They should also look at other opportunities such as leasing, global expansion, outsourcing, and customer education programs.
Exhibits:
[pic]