Husky Injection Molding Systems

1
Husky Injection Molding Systems

• Jonathan Leonard

2
Fragmented Markets

• Different Customers and Products
• Differentiated Processes
• Geographically Fragmented

3
Sustainable Competitive Advantage?

• Ongoing Technology Loops Within Specialized
  Product Markets

4
Huskys Strategy

• Differentiate fast, rugged, high-performance
  machines
• Price Premium
• Advantage with Customers Weighing Total Lifecycle
  Costs rather than Upfront Acquisition Costs.

5
Huskys Tactics

• Product Focus PET Preforms, Thinwall Containers
• Narrow Customer Focus Massive multi-year product
  runs with high utilization, high reliability
• Combined Sales/Service

6
Vertical Integration Into Molds

• Integrated PET preform molds
• Mass co-production with complex product
  integration, avoids ex-post diffusion of
  responsibility

7
No Vertical Integration Into Components

• Lacks Efficient Scale.

8
Crowns STM
Developing Countries
Hard to Hold Containers
Market Selection
Growth Niches
Owner / Operator
Extra Can Forming Lines
Sales Engineers
Superior Quality Fast Response
Differentiation
Plant Co-Location
Applications Based RD
Lean Mean
Cost Reduction
Cut Overheads
9
WTP

• WTP doesnt necessarily equal price
• WTP driven by your customers economics, not by
  yours.
• Economists models of WTP mimic industrial buyers
  decision-making. Industrial buyers calculate in
  detail benefits and costs of options.
• We did it for typical customer, but can fill in
  different idiosyncratic details, or ask which
  types of customers will have greatest WTP.

10
Leaving Money on the Table

• Markets Output per dollar of capacity
  investment Rapid Output.
• But adds substantial value to customers over
  product lifecycle by reducing their costs for
  resin, electricity, floor space, scrap, process
  failures.

11
Competitor Analysis The View from Netstal

• Profitable PET Pre-form business is attractive.
• Netstal enjoys good engineering reputation, and
  lower costs through Mannesmann
• High Volume, low-variation, focus on lifecycle
  unit-costs- like Netstals CD niche.

12
Sustainable?

• Superior Returns for Differentiated Product
• WTP Driven by Customers Efficiency Gains and
  Cost Reductions
• Our success has not gone unnoticed by our
  rivals.
• Defend the Niche or Expand?

13
Husky Moves

• 500 million investment to transform company
• Expanded downmarket into other niches, less
  engineered, less costly.
• Expanded to span machine size classes
• Exited non-PET molds
• Drop Price

14
Husky Moves

• Cut some costs
• Cut 2 layers of hierarchy
• Decentralized decision-making
• Asian expansion (Shanghai)

15
Husky Net Income 1995-2005

16
Husky Post Schad

• COO John Galt directs disciplined rollout of new
  product platform, foundation for expansion into
  new markets
• September 2005 Robert Schad steps down (at age
  76)
• John Galt (age lt 76) takes over

17
Husky 2002-2006