SEMA News - October 2010

Growing New Markets

By Kristin DeBates

As the automotive industry emerges from the economic downturn, it’s clear that the iconic American industry needs to spread its global wings to thrive again—and to help drive the U.S. economic recovery overall. Automotive products are America’s largest manufactured goods export category, accounting for 6% of U.S. exports. So if automotive manufacturers increase exports with international customers, the overall health of the nation’s exports ultimately improves, too.  For SEMA members, new geographic markets offer opportunities to create new revenue streams and reach new customers. And with the new National Export Initiative—President Obama’s plan to double U.S. exports in five years—there has never been a better time for auto businesses to export. But it can be daunting to determine where to begin for those companies that haven’t spread their global wings. That is why UPS is partnering with SEMA to provide the tools to help members grow in new markets. At the 2010 SEMA Show, UPS will host two seminars that will show companies what supply-chain tools and technologies are available to foster an exporting program. Here are a few things SEMA members should consider as they start to grow beyond U.S. borders.

Know Before You Go

The most successful businesses know that solid partnerships are essential to mitigate risk and build strong businesses. That is especially true to grow a business globally, as new layers of complexity require additional skilled partners. At SEMA’s “Growth Through Global Trade” seminar, exporting experts Jim Beach and Chris Hanks will identify numerous organizations and resources, such as the U.S. Commercial Service and U.S. Chamber of Commerce, that can help U.S.-based companies find potential business partners overseas.

Put the Right Pricing Strategy in Place

	The most successful businesses know that solid partnerships are essential to mitigate risk and build strong businesses. That is especially true to grow a business globally, as new layers of complexity require additional skilled partners.

For new entrants into growing markets, it’s important to realize that the price that products can fetch might vary from market to market. The latest forecast from J.D. Power and Associates projects that demand in emerging markets, such as Brazil, Russia, India and China are expected to account for one-third of global light automobile sales this year. J.D. Power research has also shown that the average transaction price for a new car in the United States last year was $27,500; it was only $17,500 in China. That’s why U.S. automotive businesses need to examine their pricing strategies carefully in order to make a profit without pricing themselves out of the market.

When establishing a pricing model, companies have to consider “landed costs,” which include the duties, taxes and fees a country charges when goods arrive. These can vary enormously by market, so it’s important to work with a partner such as UPS that can help demystify these costs in advance.

Use Visibility as an Advantage

When shipping high-value automotive parts and components or even finished vehicles across the globe, exporters must know exactly where products are in the supply chain at all times and keep customers informed. Wisconsin-based Monroe Trucks knows this well. The company outfits stock commercial vehicles for specific purposes, including armored vehicles, fire trucks and snow/ice trucks. It used to take Monroe Trucks between six weeks and three months to deliver its finished vehicles. In addition, Monroe’s former shipping provider couldn’t ensure visibility into its supply chain, so when customers asked where their orders were, Monroe couldn’t tell them. UPS stepped in and overhauled Monroe’s logistics model, improving visibility and service. Today, the company delivers trucks in just 10 days, and customers can track their orders any time. The company also saved a total of 22% in transportation costs.

Demystify CustomsComplexities

Customs can seem scary because they are so complex. In fact, the exam to become a customs broker—the agent who makes sure that a company’s imports and exports comply with many complex regulations and tariffs—is considered to be harder to pass than the bar exam. That’s why SEMA members should consider working with a third-party logistics partner who understands how to navigate trade complexities and can make exporting and importing even easier for businesses in the process. UPS has an army of more than 800 customs brokers who know how to move goods across borders quickly. UPS is also the first package carrier to offer a paperless international shipping option, which transforms lengthy customs documents into simple electronic data. This virtually eliminates the number-one reason why shipments are delayed at customs: incomplete forms.

Automate Shipping and Inventory Platforms

Certain technology investments can make a company’s global supply chain more flexible and cost-effective, which ultimately can ensure that it can increase exports and profits. Auto parts giant Mopar, which ships hundreds of thousands of orders to global customers each month, recently decided to automate its outdated inventory management and shipping processes. Using a special barcode on each part, Mopar employees can scan and automatically populate shipment data into the system without manual entry, providing a one-click process for multiple shipping methods that saves time, reduces errors and produces more efficient invoicing. The tracking capability also allows dealers to get status updates on orders rapidly and accurately.

Global growth will help the industry rebuild, reenergize and revitalize. With incentives from the National Export Initiative; help from knowledgeable partners, such as UPS; and effective use of supply-chain technologies, now is the time for the American auto industry to advance its presence in international markets.

SEMA Show Seminars

Learn how your business can use global trade to grow sales or leverage technology to improve efficiency and rise above the competition at these UPS-sponsored SEMA seminars.

Growth Through Global Trade

Date/Time: Monday, November 1, 1:00 p.m.–2:00 p.m.
Location: Las Vegas Convention Center, N252
Presenters: Chris Hanks, director of UGA’s Entrepreneurship Program; Jim Beach, TheEntrepreneurSchool.com
Description: Do you know what to consider when exporting internationally? These two experts help explain the trends in growing markets and how to build your international business. They also discuss supply-chain tools and capabilities that help manufacturers and distributors compete in today’s ever-changing global marketplace.

Shipping Technology as a Competitive Advantage

Date/Time: Monday, November 1, 3:00-4:00 p.m.
Location: Las Vegas Convention Center, N252
Presenter: Jeff Enyart, director of UPS customer technology
Description: Technology can help your company improve operational efficiency and create a competitive advantage. Learn how technology can help you process orders and shipments more effectively, cut fulfillment time and keep customers informed. Enyart gives real-life examples of how technology has helped automotive companies save time and money while creating a more efficient supply chain.

Kristin DeBates, marketing manager with UPS, works with UPS customers in the automotive industry. Through her understanding of current industry trends and challenges, DeBates has been instrumental in implementing strategies that address UPS customer needs in the automotive sector, such as reducing transportation costs, improving delivery speed and maintaining a lean inventory.