Huskey Injection Molding Essay Example

the market for injection molding equipment in the PET packaging sector saw significant growth. Sales increased from $346 million in 1993 to $755 million in 1995, with projections indicating further expansion. By 1998, sales were expected to reach $1153 million.

Husky, by dedicating its resources to PET packaging applications, gained an initial advantage in this specific market. The considerable investments and necessity for dependable equipment likely contributed to higher costs for customers looking to switch providers. However, Husky's strong reputation for resilient machinery enabled them to command a premium over their rivals. Generally, Husky produced machines tailored to each customer's specifications, allowing them to have a say in the design of their specific machines.

With production in two locations, Husky was able to benefit from the expertise and knowledge of employees in those regions. The production facility in Canada played a vital role in Husky’s strategy as it housed employees with technical know-how and a strong industry presence. This location provided a talent pool that could operate within the job shop atmosphere and meet Mr. Schad's high quality standards. As for sales and service, Husky decided to utilize its own in-house sales representatives, some of whom had previous experience as service personnel. This ensured additional product knowledge and expertise.

Contrary to industry practice, which usually involved a mix of in-house and independent representatives, Husky chose to solely use in-house sales representatives. This decision allowed Husky to have more control over compensation and incentives and reduced conflicts of interest between the sale of competing products. Additionally, Husky had a strong history of investing in technology and prioritizing innovation. This commitment to technological advancements played a crucial

role in establishing Husky as the leading firm in the perform niche and ultimately led to the company's success.

The market size of soda bottles grew significantly from $346 million to $755 million between 1993 and 1995. Husky specialized in the two-step process for manufacturing these bottles. As the soda bottling industry consolidated, there was an increasing need for larger quantities of soda bottles, which Husky's two-step process could fulfill. To remain technologically advanced, Husky invested $25 million in constructing the Advanced Manufacturing Center, aiming to achieve further progress through this investment.

Husky's main focus was on plastic injection molding equipment, but it also offered molds, hot runners, and robotics as part of its value-added services. By including these additional products, Husky aimed to position itself as a provider of "complete factory solutions" rather than just an equipment vendor. This approach was crucial for its differentiation strategy. Additionally, Husky competed in the markets for molds, hot runners, robotics, and value-added services. In addition to manufacturing hot runners for its own molds, Husky also sold them to other mold makers.

Huky's involvement in hot runners, as well as their production of robots for their own equipment and machines made by other customers, accounted for a small part of their business. However, this involvement allowed their high level sales force to build relationships and acquire new accounts for their equipment business. Huky positioned itself as a supplier of comprehensive factory solutions, thanks to its wide range of products. By establishing themselves as a premium brand for plastic injection molding equipment among Processors' Engineers and providing integrated products and services, Huky was able to generate revenue and

support their equipment business.

Husky gained a strong reputation in the 1970s as a top firm in the PET performs industry. Their machines had numerous advantages, such as shorter cycle times, smaller footprint, lower electrical consumption, and fewer surface imperfections. As a result, Husky charged a premium price that was 10-20% higher than their competitors. This extra cost was justified by the superior quality of their equipment and the strong integration between different Husky products, which made it harder for customers to switch to other options.

All of these aspects can be attributed to Husky's differentiation model, which includes their premium quality machines/brand. This model has generated a higher willingness to pay from customers. Husky's customers are high volume, large players in their respective industries, conducting business in over 70 countries. To accommodate the needs of their customers, Husky operates manufacturing plants in Bolton, Ontario and Dudelange, Luxembourg.

Husky's decision to have its manufacturing centrally located allowed the company to benefit from economies of scale and effectively deliver services. To better cater to customer needs and expand the business, sales and service offices were established in 17 countries. The company witnessed significant growth in Europe and Asia, with revenue increasing by 62.8% and 256.2% respectively from 1994 to 1995. Husky remained committed to key activities that supported and upheld its differentiation strategy. A noteworthy aspect of this commitment was Robert Schad's dedication to maintaining a pristine work environment.

The two primary facilities were created with child day care services and a primary focus on employee well-being. The facilities were environmentally friendly and maintained with exceptional organization and attention to detail. Additionally, all individuals,

including Schad, were addressed by their first names. This atmosphere, which prioritized values, interpersonal connections, and personal wellness, contributed to a reduced rate of employee turnover. Consequently, Husky was able to retain a highly competent workforce and minimize labor costs due to increased time efficiency. Furthermore, Husky's strategy benefited from an exceptional sales and services plan.

All sales and services team members underwent thorough training and education on the products that were being sold. This set Husky apart from its competitors, as both sales and service reported to the same manager, ensuring accountability for the customers throughout their entire purchase journey. Additionally, Husky had a dedicated facility in Buffalo, New York, which served as a warehouse for spare parts. This strategic location allowed for efficient global shipping of spare parts, ensuring that processors would not be out of commission for extended periods. Offering this level of service was an effective way for Husky to differentiate itself from its competitors.

Husky's value added services, which include training, molding facility plans, and guidance on establishing turnkey factories, contribute a small but increasing portion of their revenue. By offering these services, Husky is able to establish trust with processors, potentially leading to future purchases of machinery, molds, hot runners, and robotics from Husky.

The competitors' rivalry has intensified due to two issues. The increasing price of resin has led customers to seek cost-cutting measures, putting pressure on Husky. Additionally, existing competitors are entering Husky's core competency areas at a lower cost, further intensifying the competition. This goes against Husky's core business strategy of differentiation, as the industry is treating equipment as more of a commodity. Our first recommendation

to Schad is to maintain a strong focus on its traditional markets.

Husky stands out by offering a high-quality product at a higher price, but it remains the most appealing choice for efficient preform systems. When comparing the specific machine in question, a buyer would have to invest an additional $340,000 for a competitor's machine to match the production capacity of a Husky machine. Furthermore, annual operating costs would increase by $76,480 to produce the same amount as a Husky preform system.

To summarize, the customer's willingness to pay for a Husky machine is approximately $1.5M, indicating that the current price of $1.2M is an excellent offer. These estimates take into account resin costs and may even be higher. It is therefore advisable to maintain current pricing levels in these industries, allocate funds for research, and continue pursuing a differentiation strategy. This approach not only ensures that Husky does not fully exploit the available value but also creates barriers for potential competitors entering the market.

In order to enhance its primary business strategy, Husky should actively promote efforts to educate consumers about the long-term savings that come with buying Husky equipment rather than a competitor's. This approach will ultimately boost customers' willingness to pay. Additionally, Husky should prioritize selling molds, hot runners, and robotics when there is a decline in Husky machine purchases. The company can also aim to increase revenue through value-added services.

By maintaining relationships with customers and understanding their needs, Husky can potentially win future machine business. In the current competitive market, where equipment manufacturing is evolving into a commodity business, Husky can reduce risk by offering equipment leasing options, whether new

or old. This expansion of product offerings presents an opportunity to generate margin that may not be available elsewhere in the system.

Furthermore, Husky has the opportunity to tap into the affordable market by using older models to expand operations in developing countries with lower machinery demands. To guarantee sustained growth, it is crucial for Husky to establish itself as a trailblazer in the recycling sector. Investing in research and development in this field would be beneficial. By integrating recycling as a fundamental aspect of its business strategy, Husky can efficiently cut costs, especially when compared to its rivals.

One suggestion for Husky is to thoroughly analyze its international market to decide whether they should expand their reach. They might have the chance to reposition, add, or decrease their regional offices worldwide and simultaneously target new customers. In summary, we advise Husky to stay devoted to their core differentiation strategy without reducing their prices. Additionally, they should explore possibilities like leasing, global expansion, outsourcing, and customer education programs.