Small companies in technically mature industries still have a place in the United States, says Schilling, if they're efficient and offer well-engineered products.
Design News--What future do you see for 'smokestack' manufacturing industries?
Schilling: How well manufacturing does in the United States depends on several factors, such as currency exchange rates, the productivity of the America worker, government intervention in the affairs of industry, and the types of industries involved. Industries that have a high labor content tend to flow to areas with low-cost labor. Industries that have a high degree of technical expertise and low labor content stay where manufacturers can find the technical expertise. As a national defense policy, I do not see how the U.S. government can allow the United States to not maintain its high level of manufacturing expertise.
Q: How can companies like yours continue to manufacture in the U.S., given the pressure of offshore competition?
A: Horton is in a very niche business. Our products are sold on performance more than price. The availability and ability to meet local customers' needs have been important to our customers. In a niche market, many times it is hard for foreign competitors to really understand and service U.S. customers. Just as it is hard for U.S. manufacturers to understand foreign markets, it is hard for foreign manufacturers to understand the U.S. market.
Q: How important is teamwork to success? Doesn't intense internal competition produce superior results?
A: Without teamwork a company wouldn't go very far. In the case of Horton, we look at our products as a joint effort between engineering, manufacturing, sales, marketing, and top management as well as working with customers to help them solve their problem. We try to only make products that solve problems for many different manufacturing processes in many different industries. Thus our customers have a better product at a cheaper price to offer their customers. Does internal competition produce superior results? Yes and no. If the competition is controlled in a way that doesn't cause a loss of focus on the end results, then internal competition is healthy. If not controlled, it can be a big negative to a company.
Q: What innovations can engineers expect to see from Horton over the next five years?
A: Horton is fast becoming a systems provider rather than a component provider. You will see us offering a system to solve a problem or do a job function. This is a different tact than before, where we offered a component and the customer had to figure out the system.
Q: How important are R&D and design engineering to a 'mature' product line?
A: Many of Horton's products are considered mature; but we consider ongoing R&D and design engineering very important in making our products state-of-the-art. We are always testing and refining existing products. Outside they may look the same, but the quality and reliability of the products are continually improving.
Q: How have today's small computers and engineering software affected Horton's design engineers?
A: It used to be that our engineers and designers all had a drafting table and drafting instruments at their work stations. All design work was a very manual process. Now we don't have a drafting table in the engineer department.
Every engineer and designer is a proficient CAD operator, and all our designs are generated electronically. This use of CAD has allowed us to reduce the cycle time from concept to finished product.
Q: How has the movement by large companies to reduce their number of vendors affected Horton?
A: I can't say it hasn't affected us, but we sell engineered products for specific job functions. This being the case, most companies are still concerned about keeping their factories running efficiently rather than saving paperwork on vendors. Sometimes the purchasing and accounting departments prevail at the expense of the operating people. Is this a wise policy? It has been tried many times with limited success. The advent of integrated supply contracts is changing the way our distributors do business and promotes consolidation.