Industry needs to get behind innovation

At Trexel Inc., where our mission has been to change the way manufacturers think about molding plastics components and systems, we have had a unique vantage point from which to view the innovative tendencies of plastics producers globally for the past 10 years.

We have witnessed firsthand differences in corporate and national cultures, and differences in corporate relations strategies toward suppliers and partners — all of which have enormous impact on the ability of the industry to innovate.

We’ve all seen that North American industry has not fared well in comparison to other regions in the world. As for our own business, global adoption rates for the MuCell process prove that point clearly, with the U.S. representing by far the lowest rate of adoption in the world.

There’s really no kind way to put it. The North American industry has dug itself into a large hole. Isn’t it time to stop digging?

Over the course of the past two decades, many North American companies ... embraced investment strategies that have foregone real technological innovation in favor of conservative payback scenarios that have delivered, at best, incremental progress. Put another way, our customers stopped investing in innovation and instead embraced what amounted to glorified sourcing strategies as a cost-effective substitute.

While this initially made operational sense, this concept has now been extended to technology innovation, where its application is not just foolish and short-sighted but massively self-destructive, distorting the behavior of the most talented employees and forcing timid decisions with long-term consequences, depriving all of us the opportunity for advantage. How many of us have heard the wail: “If it doesn’t pay back for us in six months, we’re not interested.”

Let’s be clear: Six-month payback strategies on new technology do not deliver innovation or long-term sustainable growth. They instead guarantee the lowest common denominator of technological progress.

Let’s say you give me $50 to invest. I can make a short-term change and pay you back your $50 with $10 interest in six months. Or, I can bring in a new approach and offer you $25 per year for life.

The first option meets the six-month payback hurdle; the second has a two-year payback. We all know which option makes the most sense — yet we all know which option will be rejected.

One could reasonably argue that the North American industrial base has never been in worse shape, but paradoxically, we’ve now reached a time where a real opportunity has emerged to change the investment paradigm that has brought us to the point of ruin.

Emerging in the wake of recent restructuring are new, re-capitalized companies with clean balance sheets, ready access to cash and one last chance to succeed in the global business environment.

Let’s have customer and technology suppliers change the discussion to one of return-on-investment, with shared risks and shared rewards for delivering true innovation.

The stakes have never been higher. True innovation is a prov-en winning strategy, and its cost is a lot less than you think.

Invest in the plastics industry. Give your technology suppliers the time to succeed on your behalf. Hold them accountable to clearly defined measurements and make their profit dependent on your success.

If the technology is good, there will be enough reward to share.

Bernstein is president and CEO of Woburn, Mass.-based Trexel Inc., which develops MuCell microcellular foam technology.

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