Hypertherm, Asia - Industrial Products

I N T E R F A C E
Hypertherm has steadily increased their
business presence since entering Asian
markets in 1997. In this e-interview,
Mr. Soo Kam Tatt, Director, elaborates on
the company's future business prospects, the
impact of latest technology trends on
Hypertherm business, and a general outlook
on the growth of metal cutting industry in Asia.
Soo Kam Tatt
Director, Asia, Hypertherm
Hypertherm, Asia
…Will strive for innovations that will continue to
place us in the forefront of
technological leadership
Q & A
Since Hypertherm set foot in Asia in 1997, how has the business grown
Hypertherm first entered Asia in 1991 by setting up a Singapore subsidiary. Since then,
we’ve expanded across the region and now have a business presence in five Asian
countries, namely China, India, Japan, Korea and Singapore.
In 1997, Hypertherm made a beachhead into the China market, with the appointment of
distributors. Since then, the business grew, and in 2004, we set up a Chinese trading office
to better support our customers. A warehouse was established a year later in 2005. At the
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same time, the company continued to develop our presence in the other Asian markets. In
2000, we appointed a Japanese sales manager to expand the business in Japan. In 2006,
Hypertherm appointed a Korean sales manager, and a technical support engineer was added
about a year later. In 2007, we hired local representatives in India to better support this
market with local language technical capabilities, and close proximity to customers.
Business in Asia advanced steadily as we increased our presence in the region. Sales
from the region contributed a mere 4% to our global revenue in 2001. The percentage has
now multiplied almost sevenfold to a sizeable 27%. This, however, is not unexpected since
two of the world’s largest developing economies – China and India – and some large
industrial economies, are located in Asia.
We are constantly on the lookout for expansion opportunities, and have plans to set up
more offices in Asia. For one, we will have a physical office and training centre in Delhi,
India, later this year or in early 2012. This will reinforce our presence and improve our
support offering to customers.
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Where did Hypertherm see the greatest growth in the region, and what were some notable trends there
I think what’s notable is the growth that we have seen in China. The shipbuilding boom
prior to 2008 was a period of large expansion as the country strived to conquer that
industry, with sights set on being the top shipbuilding nation in the world. This aspiration set
up the rivalry amongst the three largest shipbuilding countries in the world (China, Japan
and Korea), and fueled the development of shipbuilding in other Asian economies as well.
Subsequently, the Chinese government’s stimulus for infrastructure development to
counter the global crisis raised the demand for construction equipment. This resulted in an
expansionary growth in Asia’s construction equipment industry, with China leading the pack.
Apart from these large movers, growth in other segments of the business contributed
significantly to the overall growth as well. Amongst them are mining, railway, structural
steel, and so on.
How would you say the metal cutting industry fared in 2011, globally and regionally
I think the metal cutting industry fared generally well on both fronts. Regionally,
economies were buoyant until Q3, and the segments that were flourishing needed metal
cutting equipment. So the metal cutting industry as a whole should have done well. But of
course, there were varying degrees of growth, and some companies did better than others.
With a global situation where Asia has led the growth path for most of the year, there is
definitely more competition entering the region, all of whom are seeking their share of this
pie. For the remainder of the year, the situation is unpredictable as indications of a potential
slowdown seem imminent.
Which industries have impacted the metal cutting business the most this past year, and how
In 2011, China’s government-sponsored infrastructure development has definitely
influenced the metal cutting industry positively. The heightened demand for construction
equipment, including structural steel for infrastructure development, pushed manufacturers
to increase output, improve productivity and enhance quality, which in turn raised the
demand for high technology cutting equipment.
Elsewhere in the region, some resurgence in shipbuilding occurred with demand from
oil and gas sector for platforms and gas carriers. Lastly, the mining sector has also
witnessed growth with demand for commodities rising in-line with worldwide expansion.
Where did Hypertherm see the greatest growth in India this year, and what were some factors that led to this
We saw growth across various industries, and it wasn’t concentrated within any one
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particular sector. Most seemed to be associated with productivity growth, where there is
now a drive for businesses to be more efficient, and they have started to adopt higher
technology in order to achieve their goals.
This push for greater productivity originated from the private sector, MNCs and local
companies alike, where there was an upward spike for more to be accomplished within the
same period of time. Some of these were export-driven, and others were the result of the
infrastructural development and growth within the country. As demand increased,
manufacturers recognized the need to produce goods faster, without compromising quality,
in order to match the changing requirements. As a result, companies in India began their
search to increase productivity gains, and maybe in many instances, to achieve this
productivity gain within the confines of the space that they currently have. Therefore,
technology adoption was an answer to these needs. And so began an era of plasma
technology adoption where more companies embraced our cutting systems in order to
increase productivity.
What are some of the recent and larger challenges that Hypertherm has faced in India, and what was done
to overcome or mitigate these issues
As our install base grows and the number of channel partners increases, one of the
challenges we have is “reach” because the country is large, and the supporting
infrastructure is a constant challenge for us. Travelling to a channel partner or an end-user’s
facility can require quite a bit of time and effort as these are located throughout the country
with some in remote areas. The Indian government has addressed this in recent years, and
has started to pursue various means to overcome problems posed by the lack of
infrastructure, so this is a good start for us.
On our part, we have started to spread our sales and technical service engineer locations
in Chennai, Delhi and Pune, to allow us to be closer to our customers. In this way, we can
respond quickly to their support requests. Even with these separately located offices, we are
sometimes still overwhelmed by support requests as they are normally varied. So, travelling
will still be an issue to deal with. Apart from transportation, customs bureaucracy, although
improved, still present some challenges to navigate through. It is the procedure of India, and
we will need to respect and abide with these, as goods are imported into the country.
What have been some demands that are unique to Hypertherm’s Indian customers, with regards to their
cutting needs, and to available technologies on the market
Amongst Indian companies, there is a general expectation
that assistance is readily available from the supplier to assist
them with problems arising on their systems. As such, it is
important for Hypertherm to provide constant and timely
support in the form of training, phone and site support to our
channel partners. This will ensure that they are well-equipped
and capable to attend to the needs of the end-users.
What significant technological advances did the industry see this year
Manufacturers of various cutting technologies are in
constant pursuit of producing systems that enhance
productivity and cut quality, and the top two thermal cutting
choices are plasma and laser. Laser cutting has gained
popularity in recent years with customers pursuing higher cut
quality, even for thicker materials. With lasers, there was
greater exposure to the newer fiber laser systems apart from
CO2 lasers. Comparatively, the former is less cumbersome in
beam delivery without the mirrors and lenses, and is easier to
maintain. But at the same time, plasma remains a popular choice because of its versatility, in
terms of the materials and range of thicknesses that it can handle.
The metal cutting industry will continue to be dominated by these two cutting
technologies, at least in the foreseeable future. But the question of how much market share
laser and plasma will take from each other remains. There will no doubt be advances in both
technologies over the years, so the competition will continue to be based on needs versus
capital cost. As laser becomes more widely accepted, economies of scale will drive
production costs down, so that gap between the initial capital costs of laser and plasma will
be narrowed. And when buyers’ thresholds are reached, it is likely that laser will dominate a
larger spectrum of the cutting market than they do today.
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What impact will this trend in technology advancement have on Hypertherm’s
business
Plasma is more established in the field of metal cutting because of
its ability to cut a greater range of material thicknesses. So, if more
adopt this technology, there is a potential benefit for us. On the other
hand, if more users lean towards laser cutting, there’s likely to be a
positive impact in the long run for Hypertherm too.
Besides our business in plasma, we have recently developed fiber
laser cutting systems. Traditional CO2 laser is better established, and
fiber laser has not reached the level of thickness that the former is able
to cut. Because fiber laser is a new technology that is easy to install
and operate, it has become well-accepted. But the technology is
currently limited by the thickness it is able to cut. Further development
will increase its ability and, we believe, will widen the scope of applications in which fiber
laser can be used.
Why did your company decide to manufacture laser cutting systems in addition to plasma
Hypertherm produces thermal cutting technologies with a single-minded pursuit to cut
the cost of cutting metal. Today, with the different thermal cutting technologies available,
there is almost a defined range where each type is applied successfully, according to the
capability of the cutting technology and the needs and expectations of customers. This
range will continue to overlap each other as the technologies advance.
At Hypertherm, we feel that both plasma and laser complement each other as they serve
different end-user needs and expectations. At the same time, both allow us to pursue
technological advances to fulfill our mission to reduce the cost of cutting metal.
The world in general is experiencing economic troubles – how do you think this will affect the metal cutting
industry
With the economic problems occurring in Europe and US, there will be an influence on
the business operations worldwide as we are more connected globally today.
Earlier in the year, Asia was running almost autonomously with many feeling that the
region is “decoupled” from the rest of the world. Strangely as it seems, financial and
economic matters do cross borders and will affect sovereign countries in the form of foreign
exchange or inflation, etc. In turn, these will impact businesses and industries in the form of
available credit, costs, and so on. Most important of all, the confidence in decision-making
for investments will be affected. It is difficult to gauge the extent of the impact on the metal
cutting industry. But we are fortunate, in some sense, that Asia is the largest steel
consuming region in the world and a good proportion of the Asian countries have sufficient
reserves that can be used, if necessary, to help stimulate the economy. This would be
helpful as witnessed in the 2008 downturn where China came forward with a stimulus
package that propelled the Chinese economy till today.
What are the company’s plans for your business in India for 2012, and beyond
Later this year or in early 2012, we will be setting up a demonstration and training centre
in Delhi. This will allow us to improve our service support to our channel partners by way of
training, to improve their technical skills and sales techniques. Organizationally, we will
review the need for more support personnel in India as Hypertherm gets more entrenched
in the India cutting market.
What can metal cutting users expect from industry suppliers like Hypertherm in the next few years
We will continually produce cutting systems that meet our customers’ needs and
expectations. Whether in plasma or laser, Hypertherm will strive for innovations that will
continue to place us in the forefront of technological leadership. With continued advancements
in technologies, and with our own targeted research & development efforts, we are confident
of producing systems that will meet a variety of industry needs in the future.
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