"Market and Manufacturing Diversification"
Contributor: John Foscato, President
Starting out as a small, one-person manufacturing business in
1989, I specialized in the fabrication of borosilicate (Pyrex) laboratory
glassware. Not to be confused with the
production of beakers, test tubes, and other molded or pressed products, our
work involved the artisan-like, labor-intensive process of glass blowing to
fabricate products for the scientific community. This is certainly a unique, specialty product
sector when you look at the glass market as a whole.
As the company’s viability began to strengthen from the
early years, so did our capabilities. We
began to reap some of the benefits of business 101, starting with location,
location and location. Several markets opened
up to us within smaller fields of the scientific community. Staying on the outer fringes of the main
stream, our focus was service, quality, and never backing down from a
challenge. Whether through arrogance or
ignorance, this approach carried us to new opportunities in the high tech sector
of fiber optics and semiconductors. The
new markets brought with them the necessity to produce a new product line
material: quartz glass. This was like
starting a business all over again, requiring additional labor skill sets,
manufacturing processes, and a new line of inventory. The adjustments were difficult and time-consuming
but worth the effort. Subsequently, we discovered
that the "demand to deliver" required additional automation in our machining
and laser cutting to integrate with our glass blowing capabilities. The investment provided immediate dividends
to us and value to our customers. These
capabilities became a core competence for us and the time saved by not having
to outsource the bulk of our automated parts and products became a huge benefit
in our ability to deliver. Best of all,
our customers recognized this and offered us new and exciting challenges,
fueling our further growth. This demonstrates
the value of one of our core beliefs: accept the challenges that opportunity
offers.
It was our ability to successfully deliver on difficult but
exciting challenges that drove the opportunity to diversity our served markets
and manufacturing processes. And today,
it is that diversification that continues to fuel our success, allowing us to
navigate the current economic times and periodical market shakedowns. No challenge was greater for us, for example,
than in 2002 when the fiber optic market collapsed. In only two weeks 50% of our sales came to a
complete halt. This occurred in spite of the fact that, even leading up to the crash,
analysts had continued to project a ten-year boom. Everyone in the industry was blindsided and
dazed by the event. It was an incredible
challenge for every business, yet our company endured and was able to pull
through without negatively impacting staff levels. This was a testament to our team as sacrifices
were shared by all…especially at the top where a lot of hard work and
creativity was required for us to adapt.
Again, a key element, diversification, was available to us and we took
advantage of it. Diversification offered
us options and these options gave us the ability to make the appropriate choices. And we needed to connect on every one of
these opportunities in order to redirect our focus and efforts back into our
other primary and secondary markets. Within
two years we were back to within 10% of our "pre-crash" annual sales, even thought the
fiber market continued to lie dormant.
The lesson learned regarding our need and ability to
successfully diversify is one of the cornerstones of our business. Our largest market is now only 25% of our
annual sales with the balance of our sales concentration encompassing no more
than 5 to 20%.
Our ability to diversify by quickly responding to needs in
"tangential" markets is exemplified by a situation that occurred with a customer’s
automated glass vial packaging system for medical doses. The problem was that vials were breaking
during the fire sealing process resulting in a product loss greater than
25%. Their overseas manufacturer could
not commit to a service call within a couple months (!) nor could they remedy the
problem over the phone. Being in a
related field and appreciating our technical expertise, our customer asked us
to observe the process. Within a few
hours we had identified the root cause of the breakage: the vials were being
slightly scored during the conveyer process so when heat was applied to create
the final seal some of the vials would crack.
With this information adjustments were made to the firing process, enabling
us to help our customer correct the problem and resume full production. They were extremely grateful for our help, allowing
us to grow our relationship and our product scope with a valued customer.