Bolivian Company Plots Its Globalization Strategy — Part 2

By Tom Dossenbach

 

     
 
This Mabet factory in La Paz houses cutting, gluing and fingerjointing operations.  
     

The globalization of your company is something worth contemplating and can be the key to your future prosperity. Companies are engaged heavily in it all over the world.

This is the second in a two-part series showcasing — with permission — what one company in Bolivia is doing to insure its future in the globalization of the wood products industry. It is presented to stimulate your thinking and to give you a successful example to help you formulate your own strategies.

Last month we began deep in the northern rain forest of Bolivia to look at Mabet — a company that has formed its own plan for globalization and is working toward long-term success. We looked at how the company had purchased and obtained concessions (or logging rights) for hundreds of thousands of acres of virgin rain forest. We looked at the process of forest certification and how the company is leveraging that strategy as part of its long-range plan.

We then looked briefly at the sawmill operations at Los Indios and Riberalta in northern Bolivia. We ended the discussion as lumber, not yet kiln dried, was ready for shipment to the company headquarters and manufacturing plants in La Paz, the capital of Bolivia.

The Trip to La Paz

As mentioned last month, the operations at Riberalta do not have kiln-drying facilities at present. However, at this very moment a wood scrap burning boiler, kilns and dry storage facilities are under construction at the Northern Bolivian complex. The various species of lumber that have been cut at the company sawmills are loaded on trucks for the 400-mile journey south over often muddy lowland and curvy mountain roads, climbing to almost 14,000 feet from the rainforest. Depending on the time of year — rainy season or not — the trip can take three to six days.

La Paz is located on a main road into Chile and the ports there. Thus, there is a lot of industry in this unlikely location. Labor is abundant and wages range from 50 cents to $1 an hour. A visitor to this city at this elevation soon learns to take it easy in the thin air. Of course, the locals are used to the altitude and have a good work ethic.

Mabet Manufacturing Operations

Mabet manufacturing operations are located within a large compound high on the plateau above La Paz. When the lumber arrives, it is unloaded and stacked much the way it is done in the United States and elsewhere for further air drying and eventual kiln drying. However, the lumber is usually placed in the company’s kilns within a week or so after arriving from Riberalta. The lumber has already been cut to lengths that give the best yield for the products made by Mabet. For example, high-quality logs are cut slightly longer than seven feet and the boards have been ripped according to the widths used for solid door stiles, so no edge gluing is required.

 

   
Door components are sent to this staging area before being assembled.

The lumber is dried in state-of-the-art conventional package dry kilns that have computerized scheduling controls that monitor and provide continual input from remote probes in the lumber within each kiln. Unlike some exporters of wood products around the world, this company places a premium on the proper kiln drying and sorting of its lumber to assure a quality product that will give trouble-free service. This high altitude location with its year-round low humidity, is a good one to prevent any gain in moisture content of the kiln-dried lumber during storage or during machining.

The best way to describe Mabet is that it is a vertically integrated millwork company. The company processes its certified lumber into several product categories, and each has its own manufacturing center within the La Paz compound. Solid (white) mahogany exterior doors are a major product category manufactured at this location. The specifications call for no glue joints in the rails and stiles of these doors, which are of excellent workmanship and quality.

The second category of products manufactured are mouldings including the door casings and mouldings that are used in the installation of the exterior doors. Since the doors are high-end, the mouldings are made from the same species and are shipped to the customer in the same container.

The company is rapidly expanding its product offerings and recently added a flooring line. There are several attractive species being cut at Los Indios that are also well suited for flooring due to their excellent appearance and wearability. It is a good strategy for the company to make as many value-added products as it can from its own certified forest resources. However, as any company must do, it has made sure it does not stray far from its core competencies.

The company utilizes its fingerjointing line to produce interior door parts that have heavy veneers applied over the rails and stiles to mask the glue lines. Thus, the company has a good offering of doors and mouldings for its chosen market – U.S. residential and commercial buildings — and is looking at additional opportunities.

The machinery used throughout Mabet consists of a mixture of older machines and new state-of-the-art equipment. For example, a new moulder, double-end tenoner, gang ripsaw and other machines are awaiting the completion of a plant addition now underway.

Dedicated to Continuous Improvement

An interesting characteristic of the company is its dedication to continually evaluate and improve its operations from marketing strategies to manufacturing. The company’s president leads this effort. Each day departmental employees gather for team meetings to discuss production challenges and ways to solve them. They are moving toward a formal continuous improvement program, which will include the principals of lean manufacturing. Thus, they are preparing now for competition yet unseen.

 

   
Mabet workers proudly display a certified white mahogany exterior door bound for a home in the U.S.

A Look at Globalization Strategies

Over the past eight years Mabet has been shipping its production into the U.S. to distributors all over the country. Where it has no representation — as in a major east coast market — the company has its own wholesale operation poised to sell directly to retailers or builders.

Thus, the company has extended its vertical integration forward to the customer through many different distribution channels. All of its millwork will be certified. You can make up your own mind on the value of this, but I think you know mine from the comments of the past two months.

When most U.S. manufacturers look at globalization they restrict their vision to “importing.” This may be the best strategy for some, but many others need to look for a strategic partner that they can team up with. It is not easy and takes a lot of work because there is no easy way to adjust to today’s challenges.

I suggest you budget funds to travel abroad to trade shows. Once there, look at what is happening that may affect your market. You already have a ready-made distribution channel for your products here in the States.

Could it be that there is a partner out there that can help you expand your line with less expensive alternatives to your current offerings? Is it possible that you can give him reason not to establish his own distribution in this country?

 

Exporting Is Part of Globalization

We have focused on a company in South America that is exporting to the United States. There are mature and emerging markets all over the world that you might be able to sell to. When you look at your strategies, look for trade both ways. Exporting may come later – but you need to “plow the sea” and sew seeds now for the future. Those that look at globalization as an opportunity instead of a threat will find a way to thrive during the rest of this decade.

Mabet, and hundreds like them, are working on their strategies. Are you?

                                                             

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