R&D is the foundation of Meco, Mecanica Comercial. Its credo involves permanently inventing and seeking new challenges. Without this spirit, the company would probably have never embarked on the adventure of participating in the Metav of Düsseldorf, Germany, back in 2008, “with an unknown brand and a completely different product from anything available at the time”. This trade fair was followed by many more and from each and every one of them “we learn something”, explains Juan Jose Peiron, manager of the company, who thanks to his experience also explains the steps to be followed and those which companies contemplating internationalization will face along the way. 

To start with, could you explain when and how Meco embarked on its internationalisation process?

We must first explain that our slotting machine, for the manufacturing of keyways, was developed between 1999 and 2000 for covering our own need for manufacturing keyways for internal consumption in a fast and precise manner, on an easy-to-use machine. After testing the prototype, we presented the result at a trade fair in Barcelona and then in 2008 we started a Spanish tour, during which we sold a considerable number of machines. Over those eight years, the slotting machine matured, we included a series of improvements, innovations, etc.

 In 2008, we considered that the machine had reached a suffi-cient level of maturity for it to be presented abroad. Thus, in March 2008 we attended the Metav trade fair in Dusseldorf, Germany, with a model which included a certain degree of automation and thanks to which we reaped great success. The negative side is that in September of this same year, the crisis took a turn for the worse. However, these months were used to improve the product even more. One must take into account that Meco attended a German trade fair as an unknown brand and with a slotting machine which was completely different from anything which had ever been seen before. This was not exactly the best possible presen-tation letter. However, this did not intimidate us at all. The fact is that venturing outside opens the doors to a much larger market. On the other hand, it also enables you to view the offer with which you are aiming to compete and allows for you to critically analyse your own product. Thanks to which you can then value the machine’s design, the impro-vable aspects, assess the machine’s technological level and get to know the sector’s needs depending on the different countries, as these don’t necessarily have to coincide with those of Spanish clients. Thus, internationalisation allows us to see the improvements we can still make to the product. This is why I say that exporting doesn’t only entail seeking clients, but if you exercise humility and you observe, this also enables you to learn a great deal and incorporate or develop new features within your product.

The proof of this is that since 2008 up until now, we have evolved a great deal and our current machine has little to do with the one we presented five years ago at Metav-2008. We can now confidently state that our machine range, from the most simple model to the most complex one which already includes a latest generation CNC (global numerical control) which allows for executing tasks which only a few years ago would have been impossible, despite the mechanical basis of the machine which is the cornerstone of our system’s success still remaining practically the same as in the early days. But we didn’t stop there. Specifically for this year’s edition of the EMO in Hannover, we presented a larger model, which synchronises the 3 shafts but also incorpora-ting the possibility of making helical slots, both on the inside and outside of the piece. This machine will also allow us to perform gears, improving the most comprehensive model 

we had up until now which already allowed for this, but with certain limitations on the outer part in so far as dimensions, diameters, etc. With the new model, we obtain superb preci-sion, enabling us to work in demanding sectors such as the automotive industry. The aim is to reach a type of client which produces gears in medium/short series, companies which are not only dedicated to this production and that, therefore, don’t invest in specific machines for this, which are much more costly. 

With all this experience, how do you feel Spanish technology is valued throughout the world?

In general, the Spanish machine-tool sector is well known and well valued. This has entailed an advantage for us, new to this sector, that we were able to make the most of the doors which were opened years ago by leading companies within the international market. These companies made sure the Spanish industry is respected. Therefore, despite presenting an unknown system under an unknown brand, the fact of being Spanish machine-tool provides us with a privileged position thanks to Spanish technology being highly respected. Even in countries such as India or Canada, in which the Spanish machine-tool sector is highly valued, but without comparing ourselves to German machinery, which sells itself simply by being presented as machinery made in Germany. 

But there is also a less positive side, and that is the current economic situation which Spain is enduring. There is a certain degree of mistrust, especially among European countries which are in better situations in so far as economic matters. So, in my opinion, at the moment the best opportunities are to be found outside of Europe, like in India, where we have sold our first machine. In general, these countries value our technology as well as our interest for presenting ourselves and participating in national trade fairs. However, our commitment to the European market remains strong, as we detect that our machine covers a market niche 

which has not yet been fully resolved, a fact which also fore-sees an interesting growth potential. 

Thus, if the Spanish industry can hold its held up high, what is preventing many companies from expanding internationally?

 In my own personal opinion, historically there has been no awareness in Spain regarding exports. I would like to state that I’m referring to a general level, including all sectors, given that in the machine-tool sector this has not been the case and it has been exporting for many years.

On the other hand, for years domestic consumption and the national market in full development were sufficient to main-tain the companies and the industrial sector in general. Neither have languages been granted their true importance and now we are paying the price, as it is evident that in order to sell the first thing we need to do is communicate with the other party. Unfortunately in Spain, there has been no serious commitment to making languages a top priority. In addition to this, in the 1990s we hosted the Olympic Games, a Universal Exhibition, the construction ‘boom’… giving way to years of economic growth during which many companies had sufficient and saw no need for internationalisation. Thus, in my opinion, during this period companies had no need to venture outside, get their act together, and it could be said that selling was ‘easy’. Exporting entails a significant sacrifice, knowing English at least and making an economic investment, It also involves a change in quality control, which must now become much stricter, simply because a claim made in Spain can be resolved much faster and easier than one made thousands of kilometres away. This is why we now find many Spanish companies which do not make the deci-sion because they know they need to improve these aspects.

Also, many of these are small, family-run companies, with great professionals and highly capable staff but who are not mentally prepared for facing the challenge of exporting. Exporting requires many things, promoting R&D, being more competitive, analysing the foreign market, etc… but for me the most important thing is to introduce a team work mentality in the people working within the company and understanding that the company is not the ‘boss’, the company is not a building or a brand or a series of machines, we must understand that the company belongs to everyone and, that everyone is a group of people in perfect synchro-nism while performing a task or job, aiming for excellence while performing it… Anything which does not follow this line is deemed to failure.

Due to which, in my point of view, in many cases being able to export or not is a matter of changing our mentality, not just a matter of capability. On the other hand, in Europe we come across countries with an exporting tradition, such as Italy or Germany. 

I understand that large European companies can find good machinery manufacturers in Spain… 

Yes, but there is another factor which slows sales in Europe, the market is highly saturated. We ourselves are a perfect example, we are a company which is more or less working and despite this, we already have our machinery equipment and we won’t be rushing into buying any new machinery. Despite machinery still being bought in Europe, these sales are not taking place at the same pace as a few years ago. We must also take into account that if we consider Germany, for example, a country with top quality own manufacturers, they will first focus on their national market. So, at present, the opportunities lie in emerging countries. I believe that at the moment China on its own consumes more machinery-tools than the rest of the world. Some figure, right? 

What danger does Asian competition represent for Spanish manufacturers?

It is true that the competition is there, but Spanish technology is superior. Our experience is that on a global level, European quality is at a higher level. Another factor would be the economic matters, which can represent a sales limit, which provides foreign manufacturers with a new challenge which is price competition, without taking into account experience in exporting. The fact is that the global economic situation is very different from what we encountered in 2008 and I am unsure whether we starting exporting today as we did back then. These five years of experience encourage us to continue, but without them things would prove much harder.

In any case, we must pay special attention to Asian compe-tition, as their quality standards have risen and this always represents a higher risk, given that they maintain very low price while providing higher quality. However, I would like to believe that we continue to maintain higher levels of creativity and inventiveness than they do and I might even dare to say that higher than many other countries. The best example of this is the extent to which our engineers are headhunted, and the good thing is that these values cannot be copied. 

When Meco decided to go to Metav, was the company ready to face this factors you mention?

Definitely not. For us the important factor was to be present with the most perfected machinery we could provide. Expe-rience has taught us that this is impossible, given that we are constantly improving and evolving. If we used today the model from five years ago, we wouldn’t move forward.

In 2008, the only factor we took into account was the need for the English language, and we chose Germany because I personally consider it to be a benchmark in the metal-mechanical sector. Germany became industrialised in a very short space of time in order to be equipped for the Second World War, this enabled them to develop a very strong based industry at all levels and maybe even more so within the mechanical sector.

Once we were at Metav, we realised that we couldn’t go to just one trade fair, we had to continue and go further, much further, maintaining our presence within the sector and generating confidence, a fact we were unaware of up until then. Trade fairs are a place at which a company can see what it must improve on. We must be self-critical and demand more for ourselves, because this is exactly what the clients will do. Being present at a trade fair and comparing ourselves to the competition is precisely what leads to this self-demand in so far as the machine’s operation and its design and impeccable presentation, which becomes much more visible at a trade fair than in the workshop and we could even say this represents a reflection of its interior. If a machine has a good design and structure, the client auto-matically interprets that it is probably well manufactured on the inside. These details are the ones which also allow us to maintain a technological distance with Asian manufacturers, as we cannot compete with the salaries paid in these coun-tries and there is always someone who is willing to work for very little. Although they should probably follow Henry Ford’s advice. He had no interest in relocating, he preferred to have employees who earned sufficient salary for them to buy his cars, which in turn generated internal growth caused partly by this own feedback. A very simple concept which the large corporation forgot and despite some of them having retur-ned, the truth is that part of the technology has not returned. And this leads to a significant loss of knowledge. 

Subcontracting and team work, does this represent an opportunity for Spanish companies?

Actually it does and some trade fair have already dedicated monographic spaces for subcontracting companies. But once again, in this sense foreign companies have much more experience. For example, at a trade fair we recently attended, there was an area for these companies. In the area there were several German companies, a few French ones and only one Spanish company. This should not be this way. 

Public entities such as Icex organise joint participations… Do the administrations provide any aid?

We were with Icex in India and they supported us a great deal. Being part of a group, especially for small companies, facilitates participation in certain countries and I feel this should be promoted.

On the other hand, I would like to see more support for R&D for companies which, such as our own, are pure R&D. And this is not lack of knowledge. At Meco we are fully aware of the lines of credit focused on this and how to present the projects, but there’s no funding available. So, when they decide a project is interesting, they grant a line of funding, not a subsidy, because non-refundable subsidies have prac-tically disappeared, and this represents a problem for a company which contributes its know-how and work but has insufficient funds of its own to cover everything. What happens then? Without non-refundable subsidies, we come across funding which used to be at 0% interest, but now are only released at the Euribor rate plus a markup. They also require a guarantee, which happens to be personal in the case of SMEs. This represents yet another difficulty for small companies such as our own, which can only obtain bank guarantees, with the risk this entails if the project, which is a proposal, does not prosper on a technical level or doesn’t make good sales. That is, in Spain, SMEs dedicated to R&D must put their assets at risk in order to develop projects which will definitely have a positive repercussion on society, wellbeing and creation of jobs. This does not occur in coun-tries like Germany or France.

I can’t seem to understand that State budget provisions for R&D are being reduced. I won’t accept that there is no money as an excuse, this has no logic.

All investments entail a risk, but they are also an investment in the future. A modern and developed state must include a strong and solvent technological support policy and must also have sufficient patience in order for the seeds which are planted via R&D to grow, but for this the companies must receive help to ‘plant’ these seeds and when they ‘grow’ then the company will then deal with maintaining their growth. On the other hand, the option of collaborating with a tech-nological centre requires the company to become associated to this centre and lose part of the project’s intellectual property, when in fact the company is capable of developing the entire project on its own. This is the reality of R&D in Spanish SMEs, which are the ones which create the most jobs in Spain. 

In light of this situation, how is Meco contemplating its new projects? How do new ideas arise? 

The truth is that once again I must mention that trade fairs are a good starting point. At these trade fairs, the visitors always pose new possibilities for the machine which we may have not thought of. On the other hand, in our specific case, I particularly like to think of what can be done which has not yet been done. 

Inventor’s soul… 

Yes, without ceasing to analyse whether the idea makes sense, its use, because some inventions have no use and maybe some things haven’t been invented because they aren’t necessary. You can also pose solutions which, without being strictly necessary, can be attractive enough for the market. This is the case of introducing the possibility of incorporating helical slots into our machine. At present, our client may not need to perform spirals, but he may like to know that someday, if he needs it, there is already a machine which has been prepared for this purpose. And there is always room for innovating in the design and aesthetics of the machines. 

We also find that direct contact we maintain with our clients thanks to our engineering work and industrial maintenance helps us a great deal. Talking and sharing information is the cornerstone for developing improvements in the processes, creating synergies between companies and promoting collaboration…something which isn’t very common in Spain and that in countries like the US it is seen on day-to-day basis. 

To conclude, with all your experience, what message would you send to companies which want to venture out to the international machinery-tool market? 

Always referring to small and medium-sized companies which want to venture into exporting without having any prior experience, I would tell them that the first thing they must do is seek government support. Fortunately, they are mechanisms which work, and for example the PIPE, a programme for supporting exports which is related to the Icex and ACC1O in Catalonia. We started in the same way and I am very happy we made the decision when we did. From PIPE, they visit the company and study the product which is to be exported, analysing certain markets, etc., and deciding whether it is viable or not. In general, the visits are carried out by people with plenty of experience in exports and who know how to provide guidance on the steps which are to be carried out. Conversely, I would mention that it is unadvisable to attend an industrial trade fair without having performed a prior study, given that one must have a good knowledge on the target market. Also, in order to gain experience one must start with countries which are close-by, closer to us on mental and industrial levels, not aiming for emerging countries. At Meco, it has taken us 5 years to venture into India. And they should dust off their English, Russian and French books; we may even need the Chinese ones also.

15/07/2013