Project 2 - Restructuring Paint MFG Biz

This project has been proposed and postponed since mid of last year, June, 2009.

The History of All Cause
My family has spent the past 20years in paint manufacturing business, and fortunately gained a lot of knowledge and experiences to know this industry from head to toe. In this 20years, I have to admit that there are times when our business was extremely good, and we are like monopoly a certain market in the region, but that has made us went into mismanagement.

The Cause
For the past 10years, there are no market expansion, no new product development, no new machinery investment, and in fact, no improvement in manufacturing method. Logical sense, we are going backward. Unfortunately, my dad is not aware of it, and for the past few years, I was fighting for my own career, and I too ignored it.

So, the outcome is, new competitors came into market, to make the situation worse, some of these competitors were actually our reselling-agents and they stole our method. Over the past 2years, 30% or more of our business has been stolen, and it is increasing. Some of them even outbeat us, and became leader in this region. And sadly, they spread rumours that our company is closing down, and took more of our clients.

The Story Begins
It was last June when I got to know about this. My dad was struggling with his employees problem. My dad wanted them to improve and become more systematic, but these people refuse to compromise. They are used to the old method, they are in their comfort zone and not willing to change. Worst, when my dad trying to implement new formulation and method, they sabotage the process. End up, some of them got fired and some of them quit their jobs.

Left only one worker and my dad in the factory, lead to unable to complete the orders in time, and result in losing more customers. It was the worst time for our factory, and all the while my father just being silent until he fell sick due to overload. After then only I found out that this situation is at critical stage. Only two way for us, we change or we fail.

My Decision
No matter how it is, this is my obligation as a son to help my father. I've decided to drop everything I have outside, and return to this downfalling business. I've spent all my time to study about the industry, the tech and etc, and frankly I couldn't get much information. This is an industry that very little percent of people in the world would ever step their foot in.

Still, I'd managed to digged some information from my father before I officially join him.
I've found that paint is merely an modified glue with colour. The properties of paint, to make it so called adhese/ stick on any surface are due to the type of 'glue' that you're using. The whole matter is about the colour properties. Then I understand why most of the manufacturers in this market are doing 'coatings' but not paint. Because, paint is difficult while coatings is merely a transparent layer of protection to surface. I finally see where is our stand and our advantage, as we've been dealing with colours ever since we started the business.

Potential
Come to my suprise is that, most of the coatings manufacturers outside do paint as well, but they don't produce the colour themselves. They bought something called 'colour-paste' from other producer. What they do is, the mix the colour into the glue they produced, and became paint.
It is not that they do not know how to produce colour, but is because it is complicated and difficult to control. Plus, the machines in the market are expensive, and high maintenance. It is more practical for them to buy the colours. In fact, all of our competitors now are buying the colours.

There I see the chance. There I know how we are going to strike back. I'm going to produce mainly colour paste.

Our Differences
Since there are so many others outside, how come we are able to produce colours without their hassles?
This is a little bit of history, my dad was a mechanical engineer, and he used to have a buyer from Japan who order large quantities of colour paste every month, and demanding for a fairly lower cost than ordinary market value. My dad invented his own machine during that time when he was fighting to get this client. He was head on with a few large company at that time, think of the paints in the market now, you name it, they are all in the same fight. End up, my dad won the contract.
Due to his low maintenance of machine, he is able to offer lower price. And that is why, he stopped progressing. He was too proud of himself.

My New Game Rules
So now, since the market has already developed into this new trend, "everyone can make paint".
I've planned a new strategy, I'll create more paint manufacturer instead of killing them off. I'm doing this for a win-win scenario.

To those who steal:
I'll sell the colour paste, indirectly pull certain % of profits from their business, as a compensation for us, also they are able to get cheaper and reliable source.

To those new comer:
I'm giving out technology, how to produce paint and technical support, as long they are buying colour paste from us. For this, we are able to capture larger market, plus back-fire those who stole from us. This is business.

Resulting
Through this, I can predict that instead of losing business, we are actually growing. Furthermore, matching colour for paint is actually a very difficult process. It consume a lot of time and need professional technique, plus there are high possibility of getting complaints from customers and needed to provide after sales service all the time.

So, by selling single-tone paste to professional manufacturers, we can reduce the hassle of services, we can reduce the works of matching colours, save more professional labours, save time. These 'saves' are the most critical point in business nowadays. You save, you win.

We can concentrate mainly in producing colour paste. The quantities are bulk, to sell and personal use, the delivery is limited. We do not have to travel the entire region just to send a few tins to several customers. The machine will be very simple to operate, even foreign workers can operate it according to instruction and formulation.

Re-start
This plan has been made around June-July 2009. But because I'm not yet ready to be in the factory, therefore it has been postpone for several months. One new machine has been built, and ready to perform testing since September 2009.

I finally join my father in March 2010, due to two reason. First, I find that I've delayed enough. Second, due to another project is about to launch.

Last 2 weeks, I've tested the new machine, and it resulted a success. There are only a few little minor problems to be modify then it will be fit to operation. With new formulation and new machinery, the paste produced are very fine compare to our previous production using old machines and methods. It is considered par quality with those selling in the market now, and yet we can have the same % of margins even if we market it with lower price.

We have decided to use these paste our own for 2months to see its result. If it is perfect, then we will start by selling basic black and white paste which the market consume the most. Yes, every colours you see, need to be tone by black or white. We will conquer the market with this 2 basic colours, then later introduce other basic colours such as red, blue, green, yellow, brown and maybe violet.

With this approach, I can see we are not only limited to regional business but capable to expand our market into northern and central region, capture the market of our competitors' origin suppliers.

As now, we are still in testing phase, more updates will be record here as results shown.