When You Find You Can’t Compete On Price – Is It A Currency Issue, Or Are You Making The Wrong Product?
Machine shops and discrete parts manufacturers in mature industrial markets like the US often point out that they can’t possibly compete with low-cost countries.
Their complaints usually center on unfair currency manipulation & low material costs (China), high tax and regulatory burdens levied by their own government, or the low overhead that smaller (1- to 3-person) shops enjoy.
The answers for your business aren’t easy in situations like this, but ‘waiting’ isn’t one of them. The fact is, there always have been and there will always be low-cost production sources for your prospects and customers to choose from.
In business, loyalty is simply the lack of something better. And you’d better be better, or you’re beat.
There are 2 important questions you should be asking yourself if you’re a small- and mid-sized manufacturer and you’re seeing significant price pressures and competition from low-cost countries:
- What are you doing to communicate your value to customers beyond the price? There are and will always be Buyers that are hell-bent on price as the overriding factor when sourcing their products for production. Do you really want to work with these people? What are you doing to attract and engage Buyers that value quality and reliability? You must be communicating that value to the marketplace. Otherwise, how are they going to know about you?
- Have you considered that the products you make, the market you serve, the customers you covet, and the capabilities you possess have been commoditized? Could it be that technology and evolving markets have cut the value of what you do to a point that it’s no longer worth it? I know this is a tremendously difficult thing to consider, but it’s very possible that the market may be telling you that you should change. A strategy of “if I wait the work will come back to me” may equal suicide for your business.
Success is not random. Change is constant. Have you considered the possibility that your business needs to move in another direction?