European Allies Expand Company’s Reach
As Solid State Stamping’s European customer base started to grow, the electronic parts manufacturing firm was faced with a problem: Customers insisted that the company establish a production and engineering base nearby. Solid State had three choices for its overseas expansion: build, buy or ally. It chose the latter and has spent the last year working through a strategic alliance it made with two German sister companies. Alan Amico, vice president of corporate development, says the unique agreement has benefited both sides. He was interviewed by freelance writer Karen E. Klein.
Our customers are electronic component makers for the automotive industry. We analyzed, from a cost point of view, the ideas of building or buying a production facility in Europe, but being a small company we just couldn’t justify the cost inherent in running our own operation that far away and coping with the regulatory burdens and the high cost of doing business overseas.
That reality led us to do a search for a strategic alliance with a European company. We contacted our European customers, our suppliers overseas and the California Department of Trade and Commerce, which did a partner search for us. We narrowed down the field to six highly recommended firms and visited them. The most interested and best-qualified were two German sister companies, electronic parts manufacturers INODOR Prazisionsteile and INOVAN. The process of locating these companies and then negotiating a reciprocal, cross-licensing arrangement with them took about a year.
As part of the alliance agreement, we required each side to produce a formal sales and marketing plan for its partner’s technology by June 1999. That really forced the partners to study the market, learn who the key customers are, understand the size and potential for growth and devise a concrete approach for how and when to approach specific customers.
Studying their report gave us a better understanding of their sales approach and the cultural differences that exist. It also gave us crucial information on new customers and on who our competitors are. Both sides set sales goals for the first year in dollars, which we thought was important.
Our chief technical engineers have visited INODOR and INOVAN to learn their technology, see their manufacturing process and learn how to maintain their equipment. Their technology experts have done the same, visiting our facility. Right now, we’re doing sales and marketing for each other, but the plan is that all our European orders will eventually be produced at INOVAN and their North American orders will be produced here.
We’ve also exchanged sales staff and given each side training in how to market and sell the other’s technologies. Our VP of international sales visited our customers in Europe and INOVAN’s customers, traveling with our new German partners to introduce the alliance, introduce our technologies and seek new sales opportunities. On numerous joint sales trips over a six-month time frame, they covered the British Isles all the way across Europe.
By the same token, INOVAN had its senior sales manager visit with our salespeople and attend a trade show with us in Detroit. There, he met our best customers, introduced the INOVAN technology and made joint sales presentations with our staff. We also did a press release, mailing it in English and German to all our customers and their customers throughout North America and Europe. The goal is to solidify and build this alliance and let the world know it occurred.
So far, we’re very pleased with the results. We expect 15% growth in our company this year. It’s important to keep building this alliance, addressing issues that arise and make sure the relationship continues forward.
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
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At a Glance
Company: Solid State Stamping Inc.
Owner: Brad Adams
Nature of business: Produces electronic parts for automotive industry
Location: 43350 Business Park Drive, Temecula 92590
Founded: 1977
Employees: 110
Annual revenue: $15.6 million
