Grote's business management as a successful famlily-owned company

Gasgoo.com: Please give us a brief introduction to Grote Industries' development plan in China, especially on Chinese domestic customer base development and development in aftermarket.

Dave D.Poppell: Well, many have said that we are late entering China, though we view the market in China over the long term. Many of our competitors got into China early and big; maybe too much so. Unfortunately, many of them are suffering now. Grote’s focus remains - to offer value for those customers who need better than what they currently pay for. We’ll continue to focus on the domestic Aftermarket and some OEM businesses here. Grote has developed a very good reputation over the last 100 years in North America. Now with operations in Europe and Asia, in addition, we can further develop our brand and reputation in the rest of the world. We are now offering a small mix of incandescent and LED products to a maturing and value seeking market, both domestically and in the region.

Gasgoo.com: I know that many family owned firms have been developing better than the short-term oriented listed companies. How has Grote Industries benefited from being a family owned firm？

Dave D.Poppell: Grote was hit by the tough times as well as everyone else. The benefit of the family owned and run organization is that our board of directors has the wisdom, depth and history to know how to calmly, yet firmly, adjust our direction and plans to meet the immediate economic changes and our customer’s continuing needs. Grote was founded during the “Panic of 1901” and has successfully made headway through 14 major economic downturns in our history. The family is able to look back a generation or two for advice and look ahead and make clear, unified, decisions.

Gasgoo.com: What do you think of your Chinese domestic competitors (i.e. the auto parts suppliers to commercial vehicles)?

Dave D.Poppell: Everyone in manufacturing finds it difficult to compete with the local suppliers, for a variety of well known reasons. The businesses that are able to satisfy customers, equally, in a global market will hold a better share of that marketplace in the long term. Cost is one important factor. Customer satisfaction is made up of more than just cost though. Understanding and selling that value can help Grote to compete better locally. Customers in China are becoming more mature and can see the value in maintenance and replacement cost reduction. This is where Grote can play a large role as we have done in other markets globally. Reaching those domestic customers seems to be a challenge for all of our competitors.

Gasgoo.com: How can you balance the relationship between cost and quality?

Dave D.Poppell: The low-cost aspect of manufacturing in China has to do with materials. Primarily in how much attention is given to the assembly process. So the more we can refine our processes, the more we can control those materials and the better we can maitain the low cost approach.But one of the issues come up is the quality. Some people don’t care about quality levels, they only care about price. But as the Chinese market is maturing, people will realize it cost more and more money for the poor quality products. So they want a product cost a little bit more but last much longer. This is the value of the product overall. This is how we look to balance.

Gasgoo.com: What do you think of the increasing volatility in Chinese commercial vehicle market and its impact on your company’ supply chain management?

Dave D.Poppell: The market unpredictability took some of us by surprise. With stimulus packages being introduced, this made a short term effort towards steadying the market. Eventually there will be those who can survive and those who will not. Mergers and Acquisitions are already on the rise and we may see more commercial vehicle suppliers become absorbed into larger firms for a better share of the local marketplace. We are removing links out of our supply chain as well to improve our position. As we have seen in other markets, there will be firmer competition in the coming years in a plan to compete better on price, overall customer satisfaction and market share.