How to Stay Competitive in a Global Market

We are truly in a global market these days, and the cost of production in the United States makes cheaper overseas production much more attractive to a lot of buyers. Despite the push to “Buy American” and other campaigns, overseas manufacturers are slashing costs and paying their workers a less-than-optimal wage. That makes it a lot harder for American manufacturers to stay competitive in a global market.

But there are a few ways you can stay competitive without relying on slashing salaries or cutting corners so drastically that your product quality suffers.

The best way to stay competitive in a global market is to make sure you do not offer a commodity product. That is, don’t offer things priced by the ton or things that can be produced anywhere by anyone. Offer things that are differentiated and solve the needs of the customer. Find a niche because if you can occupy a niche, you can charge more.

For example, in my years at Robroy, we focused on making fiberglass inserts that went inside stainless steel tubulars in the oil and gas industry. So we worked with a lot of different manufacturers and got to know their products pretty well.

One thing we learned is that 1.5-inch 2 3/8-inch pipes were a commodity. Everyone was making them because it was pretty easy. But in steel making, if you’re making 4, 5, 6, or even 8-inch pipes, you would have something that most of your competitors didn’t. After all, the bigger the hole, the more volume you can flow through it.

The same is true with the fiberglass liners we made. There were plenty of manufacturers of 1.5-inch and 2 3/8-inch liners, but we also made 4, 5, 6, and 8-inch liners, which made us a specialty item that could compete with the commodity people. If people could get all of their liners in one place, why would they split up between two or more suppliers? By offering the specialty items, we made it as convenient as possible for our customers to order everything from us, not just our specialty sizes.

We also made sure our products actually complimented some of the specialty connectors that the steel manufacturers developed by helping seal the tubulars when they were joined together. The idea is you don’t want to have to weld pipes together because welds leak. Our product didn’t guarantee a seal, but we guaranteed they wouldn’t deteriorate from the connector seal of the host pipe.

I remember in one oil field in offshore Ghana, there were 18 welds in the tubulars, and the customers found that 12 of them leaked. After a very expensive and extensive study, they found the problem wasn’t our products inside the pipe, it was the quality control of the connector manufacturer.

They had started up a new facility, and this was their initial production run, except they hadn’t got their quality exactly right. But when you have two-thirds of your weld fail, the user will want to gather up everybody involved and blame them all.

We were found to not be a part of the problem, but the tubular and connector manufacturers were, which means they had to compensate for everything. After all, it costs a shitload of money to dismantle the tubulars and ship them from Ghana to Houston to see what was wrong.

But by offering a specialty product, and doing it very well, we strengthened our relationship as someone who built high-quality products that were well worth the price. We didn’t have to compete on price once. Rather, our closest competition was forced to compete on quality, especially for those specialty sizes, and they just weren’t able to do it.

So when the customer replaced all the steel pipe in the operation, they called us to line more of it.

If you want to stay competitive in a global market, focus on quality, not price. Do the things that no one else is doing, and you’ll be able to charge whatever you want. Let everyone else chase after the low-hanging fruit; fewer people want the fruit on the top branches, but they’re willing to pay more to get it.

I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business, including pivoting within their industry. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.

Photo credit: U.S. Department of Energy, Public Domain)