Repositioning of Husky

1
Repositioning of Husky

• Aging of Injection Molder Manufacturing industry
• Consolidation
• Commoditization
• Use of Global Strategies
• Implications for Husky
• Short term
• Long term
• Necessary for Husky to adapt to maturing industry

2
Major Shifts in Strategy

• To retain market position, Husky must
• Utilize Economies of Scale
• Husky must grow scale of business
• Generously Fund RD
• Drive down cost of products
• Proliferate product lines
• Utilize Economies of Scope
• New products, new markets

3
1. Economies of Scale

• Husky is currently a minor player
• Must grow the scale of their business to compete
  in the future
• Unit costs tended to fall until a company
  achieved an annual output of 500 machines or
  more
• Husky should target this optimal volume Constant
  Returns to Scale
• Target Developing Countries

4
Current Manufacturing Locations
5
Support Centers
6
Main Revenue Regions (1994)
Canada, North America, and Europe 96.2 of sales
7
Asia Revenue (1994)
Asia 3.8
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Asian Opportunity

• Large potential for growth in Asia
• Region has yet to transfer from glass to PET
• Annual Husky Sales in Asia
• 1994 14.6 million
• 1995 52.0 million
• 265 growth in the past year

9
South American Potential
South America also yet to transfer from glass to
PET bottling
10
Proposed New Manufacturing Centers
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Funding for Growth in Scale

• As of 1995, Husky Total Assets 443.1 million
• Proposal
• Husky should go public to generate capital
• Capital Income from IPO will vary
• IPO should generate at least 200 million

12
New Plant Costs

• Early 1990s Husky built the Advanced
  Manufacturing Center
• Cost 25 million
• Difficult to estimate exact capital requirements
• Heavy Machinery Plants Typically 60-180 million

13
2. Generous Funding of RD

• Husky must utilize their technological prowess
• Goals of Research and Design
• Decrease purchase and operating costs
• Decrease floor space
• Increase cycle speeds
• Develop new product lines

14
3. Economies of Scope

• Husky must broaden product offerings
• Goals of product proliferation
• Support growth in scale
• Challenge competitors on their own grounds
• Other Opportunities for growth
• Mold making
• Services

15
Unique Asian Opportunities

• Developing Asian market unique opportunities
• Lack of local mold makers with expertise
• Husky should exploit their knowledge
• Mold Manufacturing
• Mold Refurbishment
• Factory Planning Services

16
Razor and Blades Opportunity

• Nestal is current major threat
• Large portion of income from CD stamping
• Easy to manufacture molds
• Low tonnage machines
• High mold turnover rate
• Razor and Blades approach to market niche
• Razor Small tonnage machine
• Blades Proprietary Molds

17
Summary

• Past
• Husky was very small player in the 60s and 70s
• RD funding positioned Husky for exploitation of
  PET market niche
• Present
• Industry maturing
• Consolidation, commoditization
• Husky challenged on price

18
Summary

• Future
• Husky will be challenged on price and technology
• Husky will not be able to compete
• Implications for Husky
• Grow scale of business
• Invest in RD
• Expand scope of business

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Questions