Rick Martin
President, Walter Grinders
For complicated products like machine tools, dominating the US market requires manufacturing in the US, because market leaders must offer superior support and stability. The leader will be an importer only when the niche is so small it doesn't support domestic manufacturing.
If you don't believe there are competitive advantages to manufacturing here, think again about the value of what you produce. The value of a complex product is much more than the cost of simply building the product. The real value includes the ability to truly understand the customer's needs and offer creative, costeffective solutions—including product adaptations—and the ability to provide comprehensive after-sales support. Creating a US-based support organization without a manufacturing arm is not enough, because you never develop the deep understanding and flexibility that comes with manufacturing. Nor will your relationship with customers be as close.
Manufacturing here offers two other advantages: First, you can "Americanize" the product with domestic components. This gives the US customer the comfort of being able to source many components and support from domestic sources. And of course the manufacturer himself is a ready source, unlike a situation in which everything is being imported. Second, it gives your customers more stable pricing, as you're largely isolated from exchange rate fluctuations.
I've heard all this from other builders, but I'll use WALTER as an example. We started making tool grinders in Germany in the 50s and established our first US plant in 1981, facing entrenched domestic competitors plus sophisticated European importers. But within about three years we were able to source about half our components domestically and assemble everything here while maintaining high quality and functionality. Our team became thoroughly knowledgeable about the product and over time we proved the value of superior support. If a customer needed a special fixture or tooling, we could build it and integrate it with the machine. If the customer had an unusual request, we could draw on a wealth of knowledge, plus get into the guts of the machine to study options (the shop is filled with machines in various states of completion). And so over time we surpassed both the other importers and the other domestic manufacturers of tool grinding machines. Meanwhile we expanded into other markets and the lesson was always the same: Our success depends on our commitment to providing the support and customized solutions required by that market.
You can't lead from the back (i.e. overseas). It's like saying you can win the Superbowl with only five players on the field.
