This Canadian success story is part of this week’s automotive sector series.
To learn more about export opportunities for companies in this sector, please read Canada’s automotive sector is “bursting at the seams”.
When husband and wife team Claude Houle and Francine Guay founded M.I. Integration in 1984, they were the only two employees on the payroll. Today, the company employs more than 260 and annual revenues have jumped from $15 million to $30 million in the last five years, with plans to get to $60 million by 2020.
It all began because Houle, an industrial wood modeller by profession, decided to also become an entrepreneur, making moulds for the automotive sector with his company originally dubbed Modelage Mécanique Inc. Soon after, however, technology evolved to make moulds out of steel and Houle and Guay had to adapt. So, in 1989, adapt they did.
Today, the company has several business divisions, including Moules Industriels, which makes moulds for both rubber (known as EPDM) and thermoplastic injection.
“We sell these moulds to our customers — tier-one suppliers to original equipment manufacturers (OEMs) — so they can produce their finished goods to send to the car manufacturers such as GM and Ford,” said Vincent Houle, son of the founders and their VP of strategy and client relations. “We’re a tier-two supplier in the supply chain. We sell the moulds, but we also develop injected moulded parts for which we also build the moulds.”
Houle said some customers buy the parts and others just want the moulds.
In 1998, they began seeing more demand for thermoplastic parts, which are lighter and recyclable, and in 2002, they renamed the injection division Plastech.
“For injection moulding, the growth was not easy in the beginning as we needed to establish good bases in term of management systems for the automotive industry, but we always saw the potential,” Houle said. “The automotive crisis in 2008 to 2010 affected us a little bit, but it did not prevent us from preparing ourselves for expansion to Mexico in 2011.”
The company started exporting to the U.S. in early 2000 and over the past 16 years, it has expanded business to Mexico, Brazil and China. When it established that mould-injection plant in Mexico, under the name SLP M.I. Integracion, Export Development Canada (EDC) supplied some financing.
“Now EDC is helping us expand our services,” Houle said. “We are now expanding our 25,000-square-foot plant to launch a tooling service centre, which will be named SLP MI Moldes.”
Houle said traditional banks don’t readily help finance companies for export.
“Since the beginning, EDC’s representatives have listened to our needs and offered us a financing solution for our expansion projects,” he said. “When we launched our plant in Mexico, EDC financed our equipment and remained present and active to help with our working capital. When we implemented SLP MI Moldes, EDC is our partner for the same purposes.”
Companies on M.I. Integration’s customer roster includes Toyoda Gosei Co. Ltd., Cooper Standard, Magna International Inc., Henniges Automotive, Hutchinson, Exo-S and Sogefi Group.
“Exporting is hard and it requires time, but in the end, it’s worth it”: Five questions with Vincent Houle, M.I. Integration’s Vice-President of Strategy and Client Relations
1. What was your first export sale?
It was in early 2000 to the U.S. The company was called TGASK, a division of Toyoda Gosei Group, based in Kentucky.
2. How did that first export opportunity arise?
It is important to serve all customers, but especially global customers, as they can be an important source of developing new customers within the same group. This is what happened with TGASK — it had the confidence to give us work after knowing about our reputation from Waterville TG Inc. in Quebec.
3. When it comes to exports, what do you know now that you wish you knew then?
It takes a long time to get the value-added tax reimbursed from other countries. Also, exporters need to be conservative on their return-on-investment estimates. Mexican banks do not take any warranties on inventory and receivables, they only finance equity. Culture, expertise, autonomy and the integrity of the manpower need to be deeply evaluated. To create a good loyal team takes time. China is newer, so we will see what happens there.
4. How has the trading world changed since you started in business?
Barriers have opened up. The world is getting smaller and access to it is easier, even if there isn’t a lot of help for companies to finance growth. Exporting is still considered as high risk for financial people, so interest is established accordingly, which limits companies’ ability to move fast on expansion opportunities.
5. What is the #1 thing new SMEs need to know about export and trade?
It’s important to share your growth strategy with your partners, including your clients, suppliers and financial institutions. Also, take the time to produce a good market analysis; build a strong executive team to manage export and expansion projects and always validate the information received from third parties. Finally, it’s been important for us to have Canadians managing our plants in other countries. Exporting is hard and it requires time, but in the end, it’s worth it.