HUSKY INJECTION MOLDING SYSTEMS

Introduction:
Husky Injection Molding Ltd. is a Canadian supplier of injection molding systems to the global plastics industry.
The company serves customers in over 100 countries from approximately 41 sales and service offices around the
world. The three major manufacturing facilities are located in Bolton, Ontario; Dudelange, Luxemburg; and
Milton, Vermont and main markets for Husky are the USA, Europe, Latin America and Asia.
Husky has been working as a good corporate citizen since its inception in 1953 and the company refers to its CSR
activities as living out the companys Purpose and Values.

Plastics Sector

Petrochemical producers

Resin Makers

Processorsmanufacturers
Downstream
Equipment manufacturers

Business Context:
Robert Schad, Husky's President and Chief Executive Officer commented, "Fiscal 2002 was another year of
widespread economic turmoil and uncertainty, with demand for plastic injection molding equipment reaching
historic lows in some areas. This economic downturn was compounded by the fact that Husky began the year
with weak backlog order levels and had a significant decline in orders during the first quarter. The decrease in
sales for Husky was noted primarily in PET applications, which is believed to reflect slower growth in carbonated
soft drinks and water applications in the second half of the previous fiscal year and the first quarter of fiscal 2002.

Economies of Scale.
Lack of product patents.
Brand loyalty issues

Forward
Integration by
suppliers.
Customer
fragmentation

High switching
cost

Pricing issues.
Product
differentiation.
Increased
Competition

Lower cost alternatives.

More machines available
(Husky's limited production)
Less Specialized companies

SWOT Analysis

Strengths

Wide variety of products with top quality.

Up-to-date technology
Great customer service and great management.

Weakness

Hefty premium for their products and services.

Husky falls short in the local markets compared to other competitors.

Opportunities
An opportunity arises from above weaknesses.

Expanding into the small tonnage machine market

More opportunities come from the local market.
Scope for joint-ventures or a buyout with the Austrian company, Engel.

Threats

Low cost competitors could be a huge threat.

What is Huskys strategy? Why has the company been so successful prior to the recent problems? What
has caused Huskys difficulties?
Solution:
Strategy of Husky Injection Molding Systems

Husky positions itself as a company providing its plastic industry customers with the complete and
comprehensive manufacturing solutions.
This strategy is implemented by producing machines based upon technological innovation, durability,
reliability and efficiency on one hand and by providing its customers with a professional, reliable and
quick service, based on highly trained technician on the other hand.
The delivery of high technologic machines with both characters of speed and efficiency positioned Husky
as the leader of this niche.

Reasons for companies success:

The primary reason for Huskys success, since the end of the 1970s until 1995, is the polyethylene
terephthalate (PET) industry to which the company focused itself at that time.
The focus on the PET technology was accompanied with a shift of the soft drink makers to the plastic
bottles usage.
This was actually achieved by placing high obstacle for competitors to get into this niche with compatible
products
By eliminating the bargaining ability of the customers, due to the top performance of its products
relatively to the competitive ones and the worldwide professional service.

Main reasons for the difficulties Husky were facing:

The first one might be related to the failure of Husky to regard the economic of scope, namely to adopt a
wide view of the plastic industry.
The shortage of resin needed for the PET resin makers, caught Husky by a surprise.
This shortage severely damaged the processor sector of the industry and thus, it heavily effected the
equipment manufacturing companies.
The implication of the crisis above was highly severe for Husky, since the PET production accounts for
the highest contribution for Huskys profitability.
Adopting a wider scope of the industry might lead Husky to take actions for preventing this shortage by
warning the industry in advance.
The second reason for the difficulties Husky was facing was the entry of competitors to the PET business
that launched substitute products with significant lower cost.
Those new products increased the bargaining abilities of the customers or, in other words, decreased the
willingness of the customers to pay for the more expensive Huskys product.

2. Are Husky injection holding systems worth the premium price the company charge? Be precise in
calculating the premium it is charging

Solution:
Husky Injection systems charged a hefty premium for its products.

Comparison of Perform Systems

Husky
Major Competitor
unit

System
Operatin
g Hours
per day
Cycle
time
Weight
of
perform
Floor
Space
Electricit
y
Approx
price

System produces
48 performs per
second

System produces 48
performs per second

hours

22.3

18.9

seconds

10.4

11.8

grams

24.39

24.42

sq ft

343.1

351.8

Husky uses 0.137 KWh lesser electricity.

Cost= 8 cents / KWh
millions

1.2

Daily output at Husky = 22.3*3600/(10.4*48)

= 3,70,523 units

For competitor = 18.19*3600/(11.8*48)

= 2,76,772.8 units

Husky compared to competitor = 370523/276772 = 1.34

1.34* 1 million $ = 1.34 million $

So, based on output

Husky is 0.14 million $ (1.34-1.2) cheaper compared to competitor.

Raw Material Cost:

Weight of Preform required = 24.42 - 24.39 = 0.03gm
For 370523 units 0.03 * 370523 * 365 = 4057226
Amount saved by Husky on raw materials(Resins) compared to competitors: 4057226*0.70
= $2840.05

Electricity cost:
Weight of preform per year = quantities * weight of preform * 365
= 370523 * 24.39 * 365 = 3298525785gm
Saving on electricity =
=

3298525785 * 0.137 * 0.08 /1000

$ 36,151

Saving on floor space:

Annual saving on rent = 8.7 *12 * X
= 104.4 * X

For Consumer:
1.
2.
3.
4.

Saves 0.14 million on purchase of Husky

36151 + 2840 = $ 38991 on other variable costs per year
104.4 * x on floor space, where x is cost of rental space
The quality of product by Husky is better than that of competitor

Thinwall Systems

Units/Batch

Husky

Competitor

16

16

Cycle time (sec) 6

Cost of Resin
per Kg ($)

0.7

0.7

Resin used per

12
unit (g)
Saving In a
Batch ($)

22.4

Cost of the
Machine($)

400000

Difference ($)

50000

No of units to
be produced to
justify premium 35,714
price

14

350000

can be produced in 4 Hrs