THINKING BIG

19 minute read
George J. Church

SILVERWARE FROM BENEATH THE SEA To move offshore, a designer takes on pirates

IZABEL LAM INTERNATIONAL HEADQUARTERS Brooklyn, N.Y. 1996 REVENUES $2.5 million MARKETS All continents

Creative genius allowed Izabel Lam to produce sensational dinnerware and cutlery designs. But to sell them successfully worldwide, she had to develop other qualities: a tough skin, a readiness to fight legal battles in country after country and a willingness to subordinate her artistic tastes to production considerations, though of a special sort. Her problem was one that bedevils many other American exporters and overseas manufacturers, big and small: design piracy.

Lam arrived in the U.S. from Hong Kong in 1972 to study design. She stayed to work for Calvin Klein and Geoffrey Beene, then launched her own clothing line in the early 1980s. By 1988, however, she abandoned clothing design to concentrate on what seemed like an impossible artistic ambition: giving metal objects the look of some of the shifting and sinuous forms she saw in underwater visions while scuba diving. Somehow she brought it off: Lam can give steel the look of draped silk.

Aesthetically, the dinnerware and cutlery that her company, Izabel Lam International, began marketing in 1989 were an immediate success. Getting the line manufactured was a headache, however. Lam was then working in bronze, which had a beautiful soft luster, but American manufacturers could not seem to give it the special twist she wanted. The only factory that could was in Thailand.

But why were the Thais persistently unable to turn out knives, spoons and dishes in the quantities Lam ordered? And why was the money from sales in Europe so much less than might have been expected, given the glowing reports Lam’s aides got about buyer reaction? Tim McCarthy, then president of Izabel Lam International, visited Europe in the early 1990s and quickly solved the mystery. The Thais had not only pirated the designs but had also set up their own network of European agents who sold the cutlery and sent the money back to Thailand, not to Lam.

Lam decided to fight. She got injunctions in Germany, Italy and France to stop the sale of pirated designs. McCarthy flew to Thailand and hired Pinkerton detectives to find and close down the pirates. They could not do so completely because metal can be cast in too many places: somebody’s backyard or even an open field.

Eventually, Lam switched from bronze to stainless steel. She says she still prefers bronze, but stainless steel can be turned into satisfactorily sensuous shapes, and many customers prefer it because it does not need to be polished. Also, designing in steel gave her a much wider choice of manufacturers–honest ones. She chose Wing Sheng, a company in her old hometown, Hong Kong, which owns factories throughout China.

Still, Lam found that in Europe, “control was hard. You’re not the only moneymaker, and the distributors we were working with gravitated to whoever earned the most for them,” which mostly meant local firms. Some customers objected to buying cutlery made in China, because they thought the Chinese could not make quality merchandise. Lam switched some of her attention from art to distribution. To bypass the balky distributors, she set up a warehouse in Germany and contacted stores and boutiques directly to persuade them to buy the goods stockpiled there.

Lam also turned to that old panacea, diversification–both artistic and geographic. Her products these days include furniture, glassware, sculptures and jewelry as well as cutlery and dinnerware. About half of her production comes from U.S. manufacturers; she also has silver objects made in India in addition to the stainless steel in China. Prices are high–anywhere from $80 to $200 for a single place setting of cutlery–but the merchandise sells well in exclusive stores in New York City, Tokyo, London, Rome and Paris. Total sales run to about $2.5 million a year, and Lam also collects fees from manufacturers she licenses to use her designs. Art, it seems, conquers all–if accompanied by hardheaded business sense. –Reported by William Dowell/Brooklyn

HE ORGANIZES CLEARANCE SALES A company prospers by helping defuse a crisis

OMNITECH ROBOTICS HEADQUARTERS Englewood, Colo. 1996 REVENUES $4.4 million MARKETS Europe, Middle East, Far East

David Parish’s business could be described in ways that make him sound like a merchant of death. His company, Omnitech Robotics, makes equipment for tanks and other military vehicles. It has been used successfully on Bosnian battlefields, and lately Parish has been prowling arms bazaars in Thailand and the United Arab Emirates to woo foreign customers.

In fact, though, Parish, 36, is on the side of the angels–or at least of the late Princess Diana and the Nobel Peace Prize committee. Omnitech’s gadgetry aids in detecting and detonating buried land mines. If that is in one sense an exceptionally narrow market, in another it is a phenomenally broad one. About 110 million mines are thought to be scattered around 70 countries, from Angola to Cambodia. They kill or maim some 24,000 people a year. And only about 100,000 mines a year are being deactivated, vs. 2 million new ones planted.

Enter Omnitech. It makes a kit that converts a tank, humvee or even bulldozer to remote-controlled operation. Small boxlike compartments strapped onto the vehicle, each containing an assembly of wires, cables and machined steel parts, turn the steering wheel and work other controls. The “driver” sits up to a mile or so away in front of a panel with one or two joysticks or a steering wheel and a small TV screen, manipulating the vehicle like someone playing a video game. Light vehicles carry gear that pinpoints the location of the mines for later destruction. Alternatively, tanks push heavy rollers or a metal contraption called a flail that can destroy mines directly. If a big mine blows up the vehicle instead…well, no human is hurt.

Parish, a former engineer for Lockheed Martin and Motorola, put the first kit together in his basement. Since 1992 his company has outfitted 50 military vehicles and multiplied sales nearly 100 times, from $50,000 a year to $4.4 million. In Bosnia last May the kits enabled U.S. Army vehicles to find and destroy 71 antipersonnel mines in two days. Parish says he has contracts to strap the kits onto an additional several hundred vehicles over the next five years.

And that’s just from the U.S. military. Though no contracts have been signed yet, Omnitech’s exhibits at defense fairs in Bangkok and Abu Dhabi attracted Thai and Qatar representatives, who have opened active negotiations. In Canada and Norway the company has been invited to bid on outfitting vehicles with mine-clearing machinery. In Japan, Omnitech is angling to join a consortium that hopes to undertake a cleanup of unexploded World War II ordnance in China. For countries that need to clear minefields but lack the money to buy Omnitech’s kits, which cost $125,000 to $150,000, Parish hopes to arrange financing from the World Bank and the United Nations.

Looking beyond land mines, Parish foresees Omnitech technology being used in all sorts of repetitive and dangerous tasks–moving ore or tailings in a mine, hauling toxic wastes from an old dump, fighting oil-field fires. Omnitech is talking with Barbados and Jamaica about rigging vehicles used for dock transport in loading and unloading ships.

Altogether, Parish expects half his future volume to come from foreign sales. “Robotics is now where the computer industry was at the outset,” he enthuses. And for now there are enough land mines around to keep Omnitech busy for years, doing well by doing good. –Reported by Richard Woodbury/Denver

SPEEDING TO A NEW DESTINATION Detroit entrepreneurs go for a spin in Africa

BARDEN COMPANIES HEADQUARTERS Detroit 1996 REVENUES $93 million MARKET Namibia

Out of all the countries in the world, how does a U.S. entrepreneur choose the one offering the best entree to his business? For Don H. Barden and his wife Bella Marshall of Detroit, the answer began with a coincidence and a bit of government help and proceeded through years of study and negotiation to a major payoff.

When he started looking for international opportunities eight years ago, Barden had had a long career in the U.S. His holding company, Barden Companies, is involved in riverboat gambling (aboard a vessel operating out of Gary, Ind.) and owns radio stations in Illinois, a computer-assisted learning company in Tucson, Ariz., and a construction company building housing projects in Detroit. Last year these businesses racked up sales of $93 million. But Barden had no foreign contacts.

Until, that is, he and his wife were hosts of a lunch for Friends of African-American Art (Marshall, besides having been chief financial officer for the Detroit city government, had taught college courses in black studies). One of the guests was a man who became the Deputy Foreign Affairs Minister of Namibia when it emerged from South African control into full independence a year later; he and Barden hit it off. Says Marshall: “That one social interaction sparked our interest in Namibia.”

Barden and Marshall also consulted with a close friend: the late Secretary of Commerce Ron Brown, a strong advocate of U.S. investment in Africa. He encouraged their interest in Namibia, which was creating what Marshall, president of the newly formed Barden International, calls “an exciting climate” for business. She explains that Namibia had elected an administration “with sophisticated people in the right leadership positions. Namibia has the second strongest credit rating of any sub-Saharan African country and a stable government interested in doing business with us.”

Nonetheless, says Marshall, “we didn’t just dash forward. We proceed with the same caution and depth as a FORTUNE 500 company. We probably did two or three years in research”–during which time Barden was also studying proposals from other African countries, including South Africa. The negotiations had to be conducted across 7,753 miles and seven time zones, a strain that all multinational executives must be prepared to undergo. “It is not unusual for me or my staff to be on the phone beginning at midnight, or to have a business day that extends to 3 or 4 a.m.,” says Marshall. Flying to Namibia takes about 22 hours; she and other executives make the trip five or six times a year. “We have to understand that it’s part of doing business internationally,” she says.

Namibian President Sam Nujoma made it clear that Namibia wanted a manufacturing plant. His position, says Marshall, was that Namibians “must be producers and not just consumers.” Barden executives discussed building a plant to process fish or one to make concrete blocks. But Barden had contacts at General Motors, which was eager to get back into the area (it had shut down in South Africa in response to an international campaign against apartheid). After Nujoma visited the U.S. early this year, a deal was struck. Barden will become GM’s sole distributor in Namibia. GM will ship 818 cars, vans and trucks there. Barden is building a $19 million plant, expected to be running in January, to convert them from left-hand to right-hand drive, and later to do the same for other vehicles to be sold throughout Africa. The contract Barden International signed is for $30 million–a huge leap into the global market, but anything but a leap into the unknown. –Reported by Jacqueline Mitchell/Detroit

FERTILE MIND AND A SILKEN THUMB A gardener markets her artificial flower power

THE PLANTWORKS HEADQUARTERS Las Vegas 1996 REVENUES $1.75 million MARKETS Africa, Asia, Europe and South America

A gurgling stream cascades through lavish tropical undergrowth. Orchids twine among ferns; palm fronds weave a dense canopy. But those palms bend a trifle too symmetrically, and there is something mechanical about the way a monarch butterfly flutters its wings. In fact, “it’s all an illusion,” says Linda Lewis, creator of this ersatz jungle. She is in about as specialized a business as exists: creating artificial environments, including the synthetic palms at the Mirage in Las Vegas. It is a business, however, that has taken off worldwide in the past decade or so. As more and more states and localities have legalized gambling, casinos are sprouting from coast to coast in the U.S. and prospering enough to draw the interest of foreigners who want to copy the gaudy U.S. look.

Lewis began preparing for this career, quite unwittingly, 20 years ago. She was then a 26-year-old mail carrier living on a friend’s ranch near Reno. She had built a greenhouse so that after work she could pursue a lifelong passion for gardening. But she noticed that “everyone was starting to have plants in their houses and offices.” She convinced the owner of a Reno restaurant that decorating with some foliage would boost business. With only $1,000 to her name, she borrowed a friend’s Volkswagen bus, drove to San Francisco and bought pots of greenery, which she leased to the restaurant.

Job followed job, and by 1989 Lewis was on her way to Las Vegas, where she hoped to decorate the burgeoning casinos. Shortly after she arrived, the Mirage hired her to create the jungle. By that time she had begun using artificial plants because they were easier to work with and clients seemed to like them. She has since created everything from a replica of Arizona’s Sonoran Desert for an Atlantic City, N.J., casino to a European country garden inside the Sheraton in Lima, Peru.

By 1991 she found herself surfing on a worldwide wave. Many European casinos, which were traditionally modeled after private clubs, are remaking themselves in the flashy American style to attract a U.S.-type mass market. In Asia, Africa and South America many nations have deregulated gambling or privatized casinos that were once state run and now need a new look. And where better to get a feel for the Las Vegas style than in Las Vegas? So hordes of foreign gambling impresarios have trekked there to soak up the atmosphere and hire those creating it. “We’re just so much bigger, and we really know what we’re doing,” says Len Butcher, managing editor of the trade journal Gaming Today. “The rest of the world is taking their first baby steps.”

Lewis’ first step abroad was to Bophuthatswana, in South Africa. In 1991 Lewis, who by then had started a company named the Plantworks, was hired to decorate a new entertainment complex called Lost City. She produced an indoor mock version of the Serengeti plains of Tanzania. Since then she has created artificial environments for casinos in Switzerland, Peru, Aruba and the Philippines. Plantworks has grown into a company employing 21 workers and chalking up annual sales of $2 million, as much as 20% of that abroad; president Lewis thinks it may double sales every year for the next five years.

Despite such exuberance, Lewis has a knack for making her success sound accidental. “I didn’t have a business plan,” she says. “I just put one foot in front of the other.” And speaking of Las Vegas, “all you have to do to make money in this town is show up.”

But of course there is more to it than that. A perfectionist, she has turned herself into one of the best in her narrow field; her 20-ft. palms are almost impossible to distinguish from living vegetation. “Our goal is to make you stand up and touch it to find out if it is real,” says Lewis. She has allied herself with another globe-trotting expert: Paul Steelman, an interior architect who specializes in casinos. “Linda follows us around and helps create the casinos we want to create,” says he. In a world hungry not just for American style but for American expertise, they make a formidable team. –Reported by Laird Harrison/Las Vegas

ROUND-THE-WORLD SNACK ATTACK A small-town firm sells toothsome cowboy chic

LINK SNACKS HEADQUARTERS Minong, Wis. 1996 REVENUES Over $50 million MARKETS Asia, Europe and North and South America

By most measures, Minong, Wis., is anything but cosmopolitan. It is a town of 520 people in the north woods, too small to have a movie theater or even a stoplight. Yet it is the home of a genuine multinational: Link Snacks, Inc., which rings up export sales of as much as $12 million a year to more than a dozen countries and stations sales representatives in Tokyo, Moscow and Regina, Saskatchewan, as well as Minneapolis, Minn. Not bad, considering 1) the company was in Chapter 11 only 10 years ago; and 2) its products–meat snacks, especially beef jerky–are traditionally associated with 18-to-35-year-old American cowboys, both real and drugstore variety.

Ah, but that’s the point. Thanks to Hollywood westerns, cowboy chic has worldwide appeal; John Wayne is the very image of the American to many Asians and Europeans. And U.S. beef has a reputation in many overseas markets for premium quality. So overseas buyers went looking for Link, rather than Link for them.

That was in 1988, when Link had just emerged from bankruptcy. The company, founded about a century ago by an immigrant German sausagemaker, once had an export business in boneless beef as well as in tripe and hearts. But by the mid-1980s it was mainly a supplier to McDonald’s. Too many other companies were competing to supply the raw material of Big Macs, though; they forced prices so low that Link could no longer make a profit. It went into a Chapter 11 reorganization in 1986 and emerged two years later as a snackmaker. Its new selling point: a recipe for softer, yet still flavorful, beef jerky. “With traditional, dry jerky you can darn near rip the teeth out of your head trying to chew it,” says executive vice president Jay Link.

The company began showing off its products at trade shows that attracted foreign importers. Like many other American exporters, however, Link had to modify its products to sell overseas. Japanese regulators, for instance, require a different moisture-to-protein ratio in imported meats than is the rule in the U.S.

In the U.S. jerky fanciers are mostly blue-collar types, some of whom buy tube-shaped sausages 14 in. long and weighing half a pound. But in Japan the yuppies who regard jerky as a prestige snack prefer comparatively dainty 6-in. pieces. “The healthy Midwestern appetite doesn’t apply there,” says Jay Link. Russians are just beginning to encounter beef jerky. Link’s distributors in Russia take care to place the tubes on store racks next to potato chips and small cakes so that shoppers will know they are snack food. Link products sell for 10% to 15% more than competing snacks in foreign stores–partly because of import duties, but also because foreign snackers are willing to pay extra for what they imagine to be a taste of the American Wild West.

Link has been prospering domestically too. It says total sales will come close to $100 million this year. In 1994 it bought out Dakota Trail, Inc., adding a 50-worker plant in Alpena, S.D., to the Minong factory, which employs 325 workers. Export sales are growing faster, though, and the company is eyeing Costa Rica, Malaysia and Nicaragua as potential new markets. Within two years, it expects exports to account for 25% of total sales. All of which Jay Link sometimes finds hard to believe. Says he: “For us to come out of a town in the north woods and make it worldwide has been somewhat of an amazement to me.” –Reported by Marc Hequet/St. Paul

GETTING INFO-TECH OFF THE GROUND A Bethesda company finds a hard-wired niche

ISN HEADQUARTERS Bethesda, Md. 1996 REVENUES $75 million MARKETS Middle East, Southeast Asia and India8

Years ago, you only heard about a large company like General Electric going into the international marketplace,” says Roma Malkani. “But now I can stand up against a Lockheed Martin. [Foreign buyers] are looking for niche companies like us.”

“Us” is Information Systems & Networks Corp. (ISN), the Bethesda, Md., company Malkani set up in 1981, and has taken into overseas markets in the past three years. By many measures it is not exactly small: its sales have grown from $300,000 a year to nearly $87 million. But a niche company it certainly is. It engineers, sets up and maintains electronic communications systems of all kinds–video conferencing, for example. Its specialty is maintaining air-to-ground communications for airports on behalf of the Federal Aviation Administration. As Malkani describes it, “We go and we test. We say when the systems have to be upgraded, and with what equipment, and we buy it [for the FAA], and we put it in.”

ISN also has undertaken some 1,000 information-technology programs for 135 other U.S. government agencies. That has led, naturally enough, to contacts with foreign governments, including those of Saudi Arabia, Egypt and India. Malkani personally took on much of the job of turning contacts into contracts. She brags that the company has $500 million of contracts signed or under negotiation in the Middle East, involving telecommunications for governments; possibilities for as much as $2 billion of work in India, some of it building, owning and operating a power plant; and air-traffic-control projects in China, Malaysia and other Asian countries. And she unabashedly credits “a combination of myself and our expertise.”

That’s less boastful than it might sound. ISN’s medium size, Malkani thinks, is an advantage in international negotiations. Foreign buyers, she says, “open up more to a company like us.” One reason: “They like the feeling that the ceo comes calling. [They know] the total company is behind her. A CEO is better than any vice president” of a multinational giant.

One aspect of her success, however, surprises even the assertive Malkani: the men she negotiated with in the Middle East, though hardly accustomed to dealing with women as equals, “were very, very welcoming. It was amazing.” An explanation might have been the sheer novelty of meeting an American female chief executive with Malkani’s technical training: she has degrees in mathematics, computer science and electrical engineering, and worked in telecommunications before founding her own company. Says Malkani: “It was so unusual to be a lady [with that] expertise.” Novelty of course is not enough; ISN’s credentials as a U.S. government contractor also intrigued foreign officials. But novelty can assist in opening some doors. –Reported by Julie Grace/Chicago

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