In Depth: Taking a big step to establish a global footprint
Martin Engineering VP Jim Turner discusses the company's recent expansion into the Jiangsu Province of China.
If people in the U.S. aren’t sure where the Jiangsu Province of China is located, there are probably many Chinese who couldn’t find Neponset, Ill. on a map. But from that small central Illinois town, Martin Engineering is expanding its global operations. The manufacturer of conveyor and bulk material technologies announced last month that it would expand its plant in Kunshan. The new 107,000 square foot facility will be eight times larger than its current site. Also of note is that the new manufacturing facility will be Silver LEED certified. Jim Turner, VP of sales and marketing for Martin Engineering, discussed the new plant in China, how it matches with the company’s global manufacturing goals, and the advantages of being a global manufacturer.
PE: Congratulations on the new building in Jiangsu. What’s driving your company’s growth in the China market?
Turner: Our direct presence – in-country manufacturing, sales, marketing, etc. – gives us a real competitive advantage. Our China business has grown rapidly since we have committed to an investment in direct Martin employees who serve key customers across a broad spectrum of industries. The key material handling industries we serve are in growth mode and are anxious for Martin solutions. With direct sales resources and local manufacturing, we take full control of delivering solutions that drive customer satisfaction and loyalty.
PE: We hear a lot of about outsourcing of manufacturing facilities. What are the economic advantages to you to build in China rather than export from a U.S. facility?
Turner: The Chinese government offers generous incentives for foreign-owned enterprises to establish manufacturing and commercial presence in-country. It was quite economical for us to establish our business unit in 2005, and the quick growth that has occurred has allowed us to fund the construction of a significantly larger facility, which will help to further reduce our cost, increase product quality and reduce lead times. For several years prior to 2005, Martin Engineering exported products from the U.S. to China, with limited success. The manufacturing costs and shipping expenses placed our technology in a non-competitive position against local Chinese manufacturers. We now benefit from well-skilled local labor at significantly lower costs and have virtually eliminated long distance shipping expenses.
PE: LEED certification is not a Chinese standard. Why does it make sense to deliver a LEED-certified building into the China market?
Turner: As a U.S.-based company, we feel that using best practices in all aspects of our business model is solid policy, and we view an environmentally-responsible building design as a worldwide best practice. Using LEED design concepts regardless of where we build is good for Martin and good for the communities where we do business. We reduce our operating expense by constructing energy-efficient buildings, and our communities benefit from a neighbor that is environmentally conscious.
PE: Assess the U.S. bulk material handling market. Where are its strengths and weaknesses right now?
Turner: We are having a nice rebound in our U.S. business coming out of the recession period, with double-digit growth in end user business, which we expected to take a bit longer to redevelop. Our dust and spillage control technologies are in demand, as material handling customers face regulatory compliance pressure, production improvement needs and enhanced safety goals in the plants and mine sites we serve. Cement production is still in recovery mode, but we are seeing an increase in demand. Aggregate industries that are tightly connected to construction growth are also responding slowly. Capital projects in the coal-fired power industry are very slow to develop.
Many greenfield plant projects are being delayed or cancelled in deference to alternative energy developments. Modernization in many existing plants is being cautiously funded, as future status is somewhat uncertain. Steel processing and iron ore mining are growing, and both entities are investing in Martin Engineering technology and services. Most mining sectors are performing well, and coal mining is strong, as demand from Asia is high.
PE: You also have operations in Europe and Africa, as well as other sites in Asia. What are the regional differences in product lines and in operations?
Turner: Martin Engineering’s product development philosophy is organized such that during the technology concept stage, all business units are given the opportunity to offer insight on design, pricing and delivery requirements which will be necessary to meet local customer demands. In many cases, the unit requirements are very similar, so the development process incorporates design flexibility to accommodate local needs.
It is vital for us to keep our technology platforms uniform across the world, as we serve global customers that expect us to deliver the same technology in South Africa as we deliver in Alabama. Our manufacturing processes incorporate “lean based” principles, and we use similar manufacturing process and tools across the globe. This approach strongly supports our high product quality standards. From a field service and installation perspective, Martin Engineering technicians are trained on global best practices using our Foundations and Certified Conveyor Training programs. This assures that we deliver the lowest cost of ownership for our customers.
PE: What’s the biggest advantage of being a global manufacturer?
Turner: Customers are becoming increasingly more global and expect us to serve them wherever they are. When a global company is properly served, they benefit across all the locations they do business, we have to be there with local products and people. The global footprint we have established also helps us withstand geographical business cycles.
While the U.S. was suffering through the recent recession, we set growth records in China and South Africa. By maintaining a growth profile, we can continue to invest in new products and services for our customers and continue to open new business units in emerging markets across the globe.