Reigel hopes united companies can win overseas
The Oct. 31 acquisition of the West Bend Co. by Regal Ware Inc. was intended to create a consolidated, stronger company better able to stand up to foreign competition.
However, Regal president Jeff Reigle says the combined company plans to do a lot more than hold its own here in the states.
He’s taking the fight to the competition.
Reigle plans to increase the distribution of the high-end products manufactured by both West Bend and Kewaskum-based Regal Ware overseas.
Regal Ware’s line of cookware has long been perceived as a premium product and was distributed through traditional retail channels, as well as direct sales through in-home demonstrations, until recent years.
"Back in 1999, Regal divested itself of all of its retail channels of distribution," Reigle said. "It was becoming virtually impossible to compete with products coming from offshore. Our prices are too high."
Meanwhile, the West Bend Co. chose to stay in retail distribution, opting to meet the aggressive pricing strategies of big-box retailers by shipping its manufacturing offshore. That proved to be an adequate strategy for survival, but not for growth.
According to Reigle, the transfer of manufacturing to foreign shores — mostly to plants in China — is still in process.
"West Bend is still in the small appliance business, but they are at 30% of where they were at their peak," Reigle said. "But as of February 2003, every one of these small appliances are going to be coming from offshore. We have totally migrated to offshore because they just can’t compete."
The combined company plans to continue ramping up its production of West Bend appliances overseas, while its Regal Ware products will be manufactured in the states and will be sold overseas with a "Made in the USA" label as premium items.
"We have two companies here that were really quite large for our industry, but foreign competition has taken both of these companies to a fraction of what they were at their peak," Reigle said.
"We can continue to beat up on each other, but someone from offshore is chewing around at the edges of our business. This move doubles the size of the business overnight," Reigle said. "We are now big enough in the marketplace that we can stand up to these people and start to take them on in their own markets. Both companies have a fair amount of distribution overseas, but it needs to further developed."
Regal’s system of independent distributors who manage teams of in-home sales people will be expanded in the offshore markets Reigle plans to target.
"Normally what we do is find distributors in foreign markets and set up direct sales channel of distribution," Reigle said. "It is a very common method of distribution throughout Latin America and throughout Asia. In all honesty, anything you can buy in a retail location, you can buy in your home, including cars. In Japan, it is not uncommon to have a salesman assigned to an apartment building. They could go through to each resident selling cars."
Even as the economy languishes in the Americas and Europe, investment in the production capacity of Pacific Rim countries and the associated increase in living standards there are creating what could become a thriving consumer economy.
The Asian Development Bank (ADB) has forecast that the combined economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand, South Korea and China are expected to grow by 6.2% in 2003.
India is another growth market, according to the Wisconsin Department of Commerce (DOC). As the manufacturing and computer programing industries grow in India, exports have grown as well. Wisconsin companies’ exports to India grew 75% in 2002, according to the DOC.
According to Reigle, the "Made in the USA" label still means something overseas — more than it does here in the States.
Even as Americans clamor for low-dollar imported consumer products, consumers overseas are looking for a level of quality they cannot find elsewhere.
"A lot of it has to do with how the product is marketed," Reigle said of Regal Ware’s premium position in the market. "But for this product, ‘Made in USA’ does have a value, particularly in Asia on very high-end products. The quality of product we are making is superior to anything we find in Asia and the best stuff made in Europe."
Because of the need to maintain a position as a high-end product, Reigle doesn’t plan to position the West Bend and Regal products as a single product line in a "good, better and best" configuration overseas.
The in-home demonstrations also help position a product as superior to items sold in stores.
"In the direct-sales environment, you have someone who is demonstrating the product, explaining the benefits of the product. And when people have questions, they can always get back to us, which is very hard to do with a lot of products you buy at retail," Reigle said.
"While this personalized attention makes it easier to get the higher price point, it has to be the finest quality product, or it will not work in a one-to-one environment," he said. "If you can walk into a retail environment and find something similar, there will not be that appeal."
Regal generally sells a full package of cookware through its in-home dinner parties, in which a demonstrator actually cooks dinner for two or three families at a time.
However, some Regal items can be bought separately, including a $200 wok.
"Woks are very popular, and we do have a high-quality wok," Reigle said, adding that some variations are made to the product to make it more attractive to Asian buyers. "The difference starts coming in the way people in different countries cook. In the East, they use a much higher heat. We may use a different technology to construct the bottom to diffuse the heat faster."
In the long run, the Regal wok could be a common-sense alternative – even at 10 times the price — to a low-dollar wok manufactured in China for export to the United States.
"You can walk into a Wal-Mart and buy a wok for $20, but you’ll be walking in again in another two years," Reigle said. "Our wok — you are probably going to pay a couple hundred bucks for it, but it is a lifetime investment."
Another product line that may have potential for enormous growth overseas is the West Bend line of commercial coffee makers, which are still and will likely continue to be manufactured domestically.
Regal also has products that could be sold to institutional clients, Reigle said.
Most of what "needs to be done" with the combined company will not be immediately visible to consumers or the channels of distribution, according to Reigle.
"Most of what we have to do is internal," he said. "We need to develop the staff and develop marketing plans that work in foreign markets. We also need to find relationships with people in those markets, whether they are manufacturers or distributors, that we can work through.
Jan. 10, 2003 Small Business Times, Milwaukee
