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Supply Chain Relationships Lead Oxford International Overseas

Blackman Kallick Client Success Story

Blackman Kallick client Oxford International, Ltd., a supplier to the automotive industry, found itself pushed into expanding overseas in the 1980s as its customers became more serious about international business.

"We had to go along for the ride in the beginning," recalls Ben Carnevale, Oxford's former president. "As a first-tier supplier, we were forced to learn how to do business overseas simply to survive the supply chain relationship.

"One advantage of expanding overseas in response to a customer's need is that we had a defined path, which our larger customer had traveled," Carnevale explains. "We got a lot of help from our customer.

"Expanding internationally is a particularly daunting task for midsize businesses—and it's much more difficult if you're not already part of a supply chain," says Carnevale.

"Our challenges in the international space were more about how to structure the relationships and manage the supply line of materials," he recalls. "As a supplier, we had the same tasks as we did in the U.S., but we had to deal with cultural and language issues."

Oxford's international expansion followed the U.S. auto industry's expanding overseas presence. "We opened facilities in Ireland, Mexico and Brazil," says Carnevale.

"And, as customers to our suppliers, we went to Asia quite a bit and launched a joint venture in China," he recalls. "We also had many suppliers in Japan, Korea and Thailand and tried to build partnerships in those countries."

Recalling the pre-EU and pre-NAFTA era

"The dynamics years ago were a great opportunity for us," says Carnevale. "In Europe, we preceded the EU [European Union]. We were in Mexico before the NAFTA [North American Free Trade Agreement] rules. We were playing in an international space with sets of rules that don't exist anymore. Today, with the EU and NAFTA, it's much easier to understand the rules of the game."

China has a less-developed structure

"It's harder to build a business in China," he says. "There's not as much of a structure for supply chain management. You can't go into China and have the kind of suppliers you're used to finding; you have to grow them.

"As a manufacturing company, you have to be very watchful of where you put your locations in China," he advises. "What you build your products with has to be supported economically and competitively from as near to that location as you can get it.

"When we went into Europe, we had a vast variety of available sources of product, components and assemblies from supply chains that knew the automotive industry," Carnevale explains.

"In countries like China, the challenge is to develop the supply capabilities for the components and assemblies you need to put your product together. That takes time, a lot of money and is a direct factor in how easy—or not so easy—it is to be an international player."

ISO standards clarify the rules of the game

Another advantage of doing business overseas today is that "there are better, more mature quality programs and accepted standards now," says Carnevale. "In the '80s and '90s, we had to deal with the evolution of standards driven by independent customers. Chrysler, Ford and GM each had its own standards. Today, the consolidation of ISO standards gives manufacturers a clear road map as to the requirements and performance standards."

Carnevale notes the shortening automotive product-development cycles. "What used to take three or four years is now done in one-and-a-half to two years," he says. "You have to continually play faster, better and cheaper to withstand worldwide competition."

But Carnevale isn't complaining about doing business internationally. "There's so much to learn by listening to other people's way of doing business," he concludes. "Doing business internationally has expanded my horizons at a pace I never thought I could."
 

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.