Latch­ing on to China’s po­ten­tial

Be­ing re­spon­sive to the de­mands of Chi­nese con­sumers and hav­ing a keen fo­cus on their peo­ple and in­no­va­tion have turned Southco, a man­u­fac­turer of fas­ten­ers and hinges, into an in­dus­try leader to be reck­oned with in China

China Daily (Canada) - - SHANGHAI - By YU RAN in Shang­hai

yu­ran@chi­nadaily.com.cn

When Brian M. McNeill was ap­pointed as the CEO of Southco in 2000, about 80 per­cent of the com­pany’s sales were from the United States, while Asia ac­counted for just 3 per­cent. To­day, thanks to his ef­forts in turn­ing the com­pany into a lead­ing global provider of latches and ac­cess hard­ware in China, sales of Southco’s prod­ucts in Asia have spiked to 20 per­cent.

Founded in 1899, Southco ini­tially only man­u­fac­tured pipes for the oil in­dus­try in Penn­syl­va­nia. It wasn’t un­til 1945 that the com­pany rolled out its spe­cialty fas­tener and latches.

“We had set a goal of man­u­fac­tur­ing close to the cus­tomer. That was the rea­son why we came to China and in­vested in man­power, fac­to­ries and equip­ments. We wanted to be­come a lo­cal leader,” said McNeill. “To make parts for the United States and Europe mar­kets is not the rea­son for us to come to China.”

One of the first steps that McNeill made to achieve this was done 10 years ago when he es­tab­lished Southco Man­u­fac­tur­ing and Tech­nol­ogy (Shang­hai) Co. Ltd, a small 45-staff out­fit to fo­cus on the pro­duc­tion of plas­tic prod­ucts for trans­porta­tion busi­nesses. To­day, the staff num­bers have more than tripled to 150 employees who boast ex­ten­sive net­works in

Brian M. McNeill, ar­eas such as sales, de­sign, man­u­fac­tur­ing, dis­tri­bu­tion, cus­tomer ser­vice and tech­ni­cal sup­port.

Like most for­eign com­pa­nies en­ter­ing the Chi­nese mar­ket, Southco had a lim­ited lo­cal net­work and first started sell­ing parts to Western brands man­u­fac­tured and trans­ported from the US. But McNeill soon re­al­ized that this was not a vi­able long-term so­lu­tion if the com­pany was to bet­ter understand the lo­cal mar­ket and build its rep­u­ta­tion. To do so, the team at Southco Shang­hai car­ried out a se­ries of re­search projects with po­ten­tial clients and even­tu­ally come to the con­clu­sion that Chi­nese cus­tomers de­mand qual­ity but at a low cost.

This find­ing led the team to ex­per­i­ment with all kinds of means to re­duce wastage, min­i­mize costs and trans­form their Chi­nese fac­to­ries into some of the most ad­vanced plants that Southco has in the world. The only way to achieve this was through in­no­va­tion, which was al­ready a core fo­cus in the com­pany.

Southco swiftly moved to up­grade their equip­ment and in­tro­duce new tech­nol­ogy to their man­u­fac­tur­ing process. In the near fu­ture, they will also be in­tro­duc­ing ro­bots to their fac­to­ries to keep up with their in­no­va­tion drive.

With the aid of tech­nol­ogy, Southco has been able to in­tro­duce hun­dreds of new prod­ucts to the mar­ket over the past year, boast­ing an im­pres­sive av­er­age out­put of one and a half prod­ucts per day. Half of th­ese new prod­ucts have come out of China.

“We have been forced to in­vest in tech­nolo­gies for the man­u­fac­tur­ing as­pect as this will en­able us to cre­ate our prod­ucts in the most cost ef­fec­tive way pos­si­ble as well as elim­i­nate un­nec­es­sary la­bor. This will in turn help raise the wages of the peo­ple who are needed to op­er­ate the equip­ment,” said McNeill.

This keen fo­cus on their employees has also been one of the key fac­tors to their suc­cess in China. McNeill de­scribes the com­pany cul­ture as one that is a blend of be­ing em­ployee-cen­tric and hav­ing the pas­sion to per­form.

To en­sure that they hired only the best tal­ents, the com­pany went to great lengths to es­tab­lish re­la­tion­ships with uni­ver­si­ties in or­der to at­tract grad­u­ates. It also pro­vides spe­cial classes for their newly-hired grad­u­ates to gain a holis­tic un­der­stand­ing of the busi­nesses, from the man­u­fac­tur­ing as­pect to de­sign and sales. Fol­low­ing the com­ple­tion of this two-year course, employees can choose to work in which­ever depart­ment they pre­fer.

“We need to hire more young en­gi­neers and give them hands-on ex­pe­ri­ence so that we can cre­ate a pipe­line of tal­ent for the com­pany,” ex­plained McNeill.

Fur­ther­more, the com­pany also con­stantly strives to treat their employees world­wide as equals by adopt­ing a global com­pen­sa­tion sys­tem where staff from any of their branches and sub­sidiaries share the same salary struc­tures. Ac­cord­ing to McNeill, who said that “the com­mit­ment to the com­pany is like a mar­riage”, tal­ent re­ten­tion is a very in­te­gral part of Southco’s cul­ture.

“We want ev­ery em­ployee to be a really good fit and en­sure that who­ever de­cides to come to Southco will be here for a long time,” he said.

With re­gard to the fu­ture, McNeill be­lieves that Southco still has much to of­fer to lo­cal con­sumers, es­pe­cially in this day and age when Chi­nese brands are slowly but steadily ris­ing in promi­nence to pose stiff com­pe­ti­tion to their Western coun­ter­parts.

“Made-in-China has a very dif­fer­ent mean­ing to­day than it had 10 to 20 years ago. Fif­teen years from now, I ex­pect that Chi­nese brands will be man­u­fac­tured in the US, Europe and many other parts of the world,” said McNeill.

“And this is where we help be­cause Southco is a global com­pany. We can as­sist cus­tomers with de­sign here in China or help ad­vise their fac­to­ries in coun­tries where we have a pres­ence as well.”

Made-in-China has a very dif­fer­ent mean­ing to­day than it had 10 to 20 years ago. Fif­teen years from now, I ex­pect that Chi­nese brands will be man­u­fac­tured in the US, Europe and many other parts of the world.”

Southco

CEO of

PRO­VIDED TO CHINA DAILY.

Southco's sales in Asia have grown sub­stan­tially over the past decade, thanks to the vi­sion of its CEO Brian M. McNeill.

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