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Husky Injection Molding Systems. Essay

1604 words - 6 pages

Husky injection Molding Systems: Shift in StrategyHusky Injection Molding Systems is a global supplier of injection molding systems for the plastic industry serving customers in over 70 countries from 33 service and sales offices in 25 countries. (1) Husky announced a shift in its business strategy, in which they plan to quit production of closure molds and close their industrial mold shop located in Auburn, Massachusetts. (2) They intend to focus on their core businesses of making machines and molds for the production of PET (polyethylene terephthalate) preforms. (3) They also plan to add bottle development services to further take advantage of the growing PET market. (4)A Short History of Husky Leading to the Shift in Strategy.Robert Schad who emigrated from southwestern Germany in 1951 to Canada founded Husky in 1953. As an engineer he started the business designing and manufacturing snowmobiles and one of his first models the "Huskymobile" was a complete failure. To remain in business he was forced to perform machining jobs for other customers, which eventually led him into the injection mold business. Schad was able to enter the highly competitive injection mold manufacturing business by under bidding the competition by more than 50% on his first job, in which he lost money, but it gave him the start he needed. "By the late 1950's Schad and Husky had established a reputation as a high quality maker of plastic injection molds." (5)"In 1961, Husky produced its first injection molding machine which was a highly specialized, high speed system to produce thin wall containers." (6) Sales started off slow nearly sending Husky into bankruptcy, but by the mid 1960s sales picked up because customers liked the fully integrated system of thinwall mold, injection molding machine, and product handing equipment that was offered.In 1973-74 Husky once again found that they were on the brink of bankruptcy, which was fueled by the global oil shortage that caused the price of plastic resin to soar. This time they were saved by Owens-Illinois, a major container manufacturer, that asked Husky to work with them on PET packaging. "A new line of molding systems, tailored for production of PET bottle preforms pulled Husky out of its crisis by the end of the 1970s. Husky introduced machines and molds to produce PET preforms, just as the soft drink companies began to start using plastic bottles." (7) Husky established itself as a leading firm in the preform niche and by 1995 their molds and injection molding machines were responsible for approximately 60% of the total world's supply of preforms. "Profits from this area allowed Husky to expand into other product lines and additional countries during the 1980s and early 1990s." (8)In the first half of the 1990s Husky experienced explosive growth where revenues grew from $250 million in 1992 to more than $600 million in 1995 and the company had a return on equity approaching 40%. Then suddenly in late 1995 their success...

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