Like It Or Not Youre International
And, in the Magna Donnelly executive's view, two types of firms are involved in international business: those who are gamblers and those who are risk-takers.
O'Brien, Magna Donnelly vice president for corporate development and global marketing, made these summations in a crisp 30-minute address recently at the Muskegon Area Chamber of Commerce Early Bird Breakfast.
The business text author, who speaks German and Japanese and has spent major parts of his marketing career in both countries, stressed to his audience, "There's a big difference between gambling and risk-taking.
"Gambling is doing nothing and hoping nothing bad happens," he explained.
By contrast, he defined risk-taking as assessing whether one's company faces a competitive threat, and acting to forestall it, which might mean acquiring plants overseas, engaging in joint ventures overseas, or licensing the manufacture of one's product in another country.
He asked his audience a dozen questions, ranging from whether they employ foreign nationals or do financing through overseas banks, to whether they protect their intellectual property or sell to companies in the United States that are headquartered abroad.
"The bottom line," he said after asking for a show of hands of people answering in the affirmative, "is that all businesses — or very nearly all businesses — are engaged in international business. There's no longer a choice."
O'Brien's question about protecting intellectual property led to an aside about being certain to secure patent rights to one's proprietary products in Brazil.
"Your product design and patent will be recognized in the U.S. and the EU," he said, "but not in Brazil.
"Right now," he said dryly, "we're in a legal battle in Brazil. We're on defense, trying to get back our rights to one of our own products."
He explained that a group in Brazil had disassembled a Magna Donnelly product, sketched it out and secured the rights to it in Brazil.
"They have the rights, but they can't produce it. But we can't sell or make it in Brazil while they have the rights."
And it's necessary for upper tier automotive suppliers to do business in Brazil because that's where the OEMs are.
O'Brien defended his view that business is now implicitly international by noting that Ford and General Motors now produce less than 50 percent of the cars sold in this country.
"All the rest are from companies with headquarters in Stuttgart, Yokohama and Tokyo."
Illustrating the way business has become international, O'Brien sketched a four-part history of Donnelly and what now is Magna Donnelly.
- 1905 to 1968 — "Donnelly sold anywhere as long as it was in Michigan," he said.
- 1968 to 1987 — Donnelly's domestic sales rise to $120 million, and its new plant in Ireland rises to $50 million, all in export business. More than 60 percent of Donnelly profits came from the Irish operation and those profits financed Donnelly's domestic expansion.
- 1987 to 1995 — Donnelly's domestic sales soar to $390 million and overseas sales to $190 million. But the biggest growth is in licensed production in Japan and Europe, which funded domestic product R&D, product improvements and six years of expansion.
- 1995 to 2002 — Domestic sales rise to $1.2 billion, overseas to $600 million, now with three joint ventures in China, one in Malaysia and the operation in Brazil.
"Today, we make more from our non-U.S. production than from U.S. operations," he said. "And we wouldn't have been able to do it if we had not learned how to do business in Japan and Germany."
Learning to do business in Japan was a struggle, he said, but one of the biggest obstacles to doing business in Japan, O'Brien added, was in Holland, Mich.
"People were so antagonistic," he said.
"All we made were black mirrors that were mounted on the windows, and the Japanese wanted a lot of different things. The Japanese wanted mirrors to be the same color as the car and wanted them mounted on the headers. And the attitude in Holland was, 'The Japs should learn to do things our way.'
"Well, now it's totally different," he said, laughing. "We now do things the way the Japanese originally wanted."
He said that Phases II through IV in Magna Donnelly's evolution actually overlapped to a degree in part due to Japan's development as one of the world's major economic powers, the rapid change of Europe into another United States, and the rapid swing of China's economy to capitalism.
What's driving China now, he said, is a force that was missing in eastern Europe when the Iron Curtain fell.
"There's a big Internet input in the rapid capitalization of China that just wasn't there in eastern Europe. People in China today are shopping on eBay."