Gerber Takes Global Path to Growth
Gerber Technology Inc. wrapped up its fiscal year on April 30 and posted $154 million in sales and $13.4 million in profits, a 27 percent improvement over its profits last year. The Tolland, Conn.–based company did better than many other businesses, which were hard hit during the post-recession year. Gerber’s strategy of following the bouncing ball to where the production is—China, Vietnam, India and Latin America— could be a model for other companies to follow.
While Gerber still believes in local production—in Southern California, the company supplies cutting machines, CAD systems and other production equipment to Los Angeles area manufacturers—it has shifted its emphasis.
California is home to about one-fourth of the nation’s apparel production and has about 80,000 apparel-production jobs, but those numbers continue to shrink. California had 5,700 fewer apparel-industry jobs in May than it had one year ago, according to figures released by the state’s Employment Development Department.
Gerber has been expanding into other industries, such as the homefurnishings and industrial markets. It has been selling CAD and cutting systems to furniture makers, auto-seat manufacturers and aerospace companies that make composite components.
Apparel now makes up only 30 percent of Gerber’s business for its Los Angeles market, company President James Arthurs said. Five years ago, apparel made up 50 percent of the company’s Los Angeles business, and 10 years ago, apparel accounted for 70 percent of its local business.
“Our job now is to help companies with their globalization efforts,” explained Arthurs, whom Gerber promoted to the position of president last fall to help the company with its global strategies.
One way Gerber is helping businesses globalize is through its WebPDM (product development management) software, which allows companies to communicate with remote suppliers about specs, designs and other details through the Internet.
Gerber is also assisting the apparel industry through education. Arthurs recently visited the Los Angeles Fashion Institute of Design & Merchandising, which uses Gerber products in its classrooms.
“Even now in schools, we emphasize that to get the jobs, you have to take a global outlook on things and use the tools that are found in the key production markets,” Arthurs said.
Indeed, thinking globally and acting locally has been Gerber’s strategy as of late. In China, where Arthurs said domestic production is now outpacing exports, Gerber has been opening offices and expanding into the mainland’s interior regions. The company now has 15 offices in the country.
“People are worrying about China, but the Chinese are so busy with the domestic business, they don’t have as much time to concentrate on exports,” he said.
The fact that many Chinese still cannot afford big-ticket items—along with the increasing availability of higher-quality apparel and footwear and a stronger household profile—has created more demand for local apparel in China, Arthurs said.
“They’ve learned from the export companies [that sell to the United States], so the quality level is already there,” he said. “The only difference is the fabric and styling.”
Asian CAD companies have also entered the picture by pricing complete CAD systems well below those of Gerber and its direct competitors. Ten years ago, there were no CAD systems produced in China. Only recently have digitizers and spreaders been produced in the country.
Gerber has maintained market share by emphasizing the fact that it has national networks across China. The company has also rolled out versions of its AccuMark CAD systems that companies can purchase for about $2,000 per copy. That is still 40 percent to 50 percent more than locally produced systems cost, but Arthurs said the Gerber brand holds a lot of value in China.
The company has also been expanding its agents and distributors network, which now represents 26 percent of the company’s sales. Sales through agents and distributors were most significant in Turkey, Japan, Spain, Scandinavia, India and Brazil.
In January 2003, the company opened an office in Ningbo, China, and a regional office in Bangalore, India, to serve as a liaison for agents and distributors in 20 countries throughout the Indian subcontinent, the Middle East and sub-Saharan Africa. Gerber sold as many systems in India last year as it has sold worldwide during the past 10 years.
Gerber also has seven offices in Mexico and recently opened a fullservice center in Honduras.
