Obtaining good results in a market dominated by a few large competitors is possible provided that the growth of production capacity and corporate structure is achieved step by step in a constant process. This is borne out by the example of GT Line, the Italian benchmark brand in the world of technical cases for professional use, which produces over 200,000 items per year, two-thirds of which are exported to the rest of Europe or to America and the Far East. It is the Explorer Cases line, first introduced more than a decade ago, that has really made the difference. These cases are designed for extreme applications in the industrial, broadcasting, photography, nautical and medical sectors and are now also supplied to Italy’s various law enforcement agencies.
The evolution of the product has gone hand in hand with that of the production technologies which, over time, have seen thermoforming joined by injection moulding, a technique that «Goes well with the automation systems introduced in our factories – remarks the General Manager Massimo Tonelli – giving us the chance to create a competitive product in a market that was once the sole prerogative of big international manufacturers».
Was the decision to update the range with the addition of Explorer Cases prompted by the identification of a gap in the market that still needed filling?
Thanks to our know-how built up over forty years in the business, together with our own particular mindset –we are careful not to pour all our efforts into a single product – we were able to see immediately the potential for development offered by a product that was not actually a new idea. When we embarked on the study phase of the Explorer Cases line, we had already evaluated the range of similar products already present on the market and this allowed us to create a range of products with features that would set them apart.
Our cases are slightly larger than those taken as the international standard, and they are provided with accessories to meet the most diverse requirements. In order to make this possible, we set up a department equipped with advanced machines that carry out water jet cutting, milling, die cutting and different types of laminating processes using adhesive substances to create preformed foams. In another department, six-axis machining centres and milling machines carry out ad hoc customisations such as grilles and slots to hold advanced accessories (analysis instrumentation, radio transmitters, etc.).
To what extent has this situation been determined by your willingness to invest, as opposed to the opportunities of the moment?
The global economy is a fact of life, not a mere concept, and it obliges us to reckon with the whole world and not just with small local companies. Accordingly, it is essential to invest in order to give shape to ideas and projects that others have not yet thought of. The important thing is not to expect a return on every single investment. Let me explain what I mean: we, for example, invested in the purchase of moulds well aware that these, by themselves, would not produce economic returns, and that their value would emerge only in the context of a broader strategy. Expecting every single investment to produce a return, without considering the contribution it can make from the perspective of the global growth of the company, is a kind of short-sightedness that can have serious consequences.
Problems like the economic crisis and raw material costs have made many companies unwilling to take on new risks…
Reasoning in a conservative fashion, disinvesting and cutting spending when the economic situation was at rock bottom was an irrational reaction that, in my view, worsened the effects of the 2009 crisis. Reducing operating costs makes sense as long as this does not affect a company’s basic assets, such as its staff and warehouse. When the market picked up, those who had slashed their workforce encountered enormous difficulties, even worse than those produced by the crisis itself, since the workforce is a crucial factor for coping with demand.
So what should be done in order to stay on course, in your view?
It is important not to panic. A while ago, a customer of ours, tempted by a low-cost solution in China, decided to stop using our services. This prompted us to review all the factors that made the Chinese offer more appealing than ours. These factors did not include the cost of the materials, which is higher in the Far East than in Europe, or transport, which we assumed to be a penalising factor for the Chinese competitor, and we therefore realised that we needed to turn these particular factors to our further advantage.
How did you do this?
Transport adds about three euros to the price of a case: the equivalent of ten minutes of machining. To recover competitiveness, all we needed to do was design a case that could be produced in ten minutes. In addition, considering the Eastern manufacturers’ intransigence over minimum order quantities, we also decided to allow customers to purchase in flexible quantities. In the end, the customer in question appreciated these factors more than the lower purchase price of the Chinese product.
GT Line uses more than 250 moulds, many of which are for the Explorer Cases line, for which the company also has four heavy injection moulding machines and seven featuring lower clamping forces, all supplied by the same manufacturer
Your range comprises around 1,500 models of cases. What is your approach to production and warehouse management?
I am a strong believer in the “theory of constraints”, developed by the Israeli Eliyahu Goldratt, according to which the performance of a system depends on its weakest link. For Goldratt, a company is a system, in other words a set of interdependent processes that move in a synchronised manner in pursuit of a common goal. Within any system there is always a very small number of factors that prevent it from growing and improving. These factors are the constraints, and they dictate the speed at which a company is able to achieve its goals. In the case of for-profit companies, the goal is to generate cash flow. In order to get the very best out of an organisation, it is necessary to identify the constraint and manage it: this makes it possible to focus on the speed at which the whole system creates value by concentrating on what is important and avoiding doing what is not important. In particular, the theory provides scientific, operational tools that help companies to manage material constraints and overcome cognitive ones. I refer, for example, to algorithms for the management of production priorities and for the dynamic management of warehouse targets, tools to support decision making, and innovative project management methods.
You mentioned the warehouse among the fundamental assets. What criteria do you follow in purchasing and managing your stocks?
Stocks are a fixed asset that is inversely proportional to the cash available for other operations. Therefore, in our warehouse we do not have fixed buffering targets, but rather targets that vary according to actual requirements. Thanks to this approach, our stocks fell by 30 per cent without impacting negatively on delivery times. Moreover, even though our production increased by 20 per cent, the warehouse performance remained unchanged.
Where does your brand currently stand on the international market?
Considering the GT Line products and the Explorer Cases range separately, with regard to the first we are the leading company at European level and have a hefty market share. The Explorer Cases range, on the other hand, has grown exponentially since its launch, achieving an important share of the European market and recording significant growth globally.
Seventy per cent of the turnover is generated abroad, in countries all over the world including China. The market is currently worth over 400 million dollars and we believe that there are still considerable shares to be won from our competitors.
What does the future hold in the short-medium term?
The fact that our competitors have raised the level of their ranges following the introduction of Explorer Cases is a demonstration that we have made the right choices. The current “road map” includes studies on product characteristics whose aim is to further improve the quality of our production.