Source: https://www.arborite.com/en
HPL
Market in Canada
The sales
of High- pressure laminates (HPL) in Canada went up 38.78 percent from 60
millions of square feet (mmSF) in 1982 to 98 mmSF in 1987 (Exhibit 2 in case).
However, the percentage HPL made in Canada decreased 17 percent that is equal
to the percentage HPL imported from US. Obviously, most customers start to buy
HPL made from US even though the average price of US imports is 1.1 dollars per
square foot, 0.13 dollar more than the price of Canadian-made.
Suggestion:
Arborite can set
up factories in US or transfer all the production to Toronto. The price of HPL
made from US is higher than Canadian- made and the sales of HPL made from US raised
17 percent. Arborite can analyze the costs manufacturing HPL in US including
shipping, manufacturing and a 4.8 percent
tariff. Another alterative is transferring all the production to Toronto because the cost in Toronto
is 23.3 percent lower than that in Montreal.
Transportation
Source: https://www.freeiconsweb.com/Vista_Style_Transport_Icon_Set.html
Profit
Arborite
manufactured HPL at two Canadian factories and the average cost is 62.2 cents
per square foot.
In 1986, 96 millions of square feet sold in Canada and the average price is 97
cents. Moreover, Arborite dominated 34
percent Canadian HPL market. As a result, the profit of Arborite in 1986 is
11,3558,720 dollars. We can forecast the demand in Canada will increase because
the sales increase in every year since 1982.
Suggestion:
Arborite can reduce the cost or increase the market share. The demand usually
comes from OEM and independent distributors. Arborite should build good
relationship with OEM and independent distributors.
OEM Cooperation Process
Source: https://www.gootchrc.com/service/oem.html
Substitutes
The substitutes
of HPL include LPL, Vinyl, Veneer, Paper and Foil. Architects and designers can
choose different materials instead of HPL according to different function. 1175
millions of square feet paper was used in custom-designed interiors for offices
but HPL only used 25 millions of square feet. Moreover, HPL only used 1300
millions of square feet, less than Paper, Vinyl and Veneer.
Suggestion:
HPL was used less in custom-designed interiors for offices so company can
develop and design HPL products using in this area. Furthermore, the price of
LPL is only half of the price of HPL. Although LPL is more vulnerable to wear
and not practical for countertops, LPL still will be used to reduce the cost.
Arborite can also consider entering LPL market or not.
Competitors
Buyers
rank the leading HPL manufacturers including Arborite, Formica and WilsonArt in
product performance, appearance, availability and service support, Arborite got
the lowest ranking in all criteria. Moreover, distributors and dealers preferred
to develop long-standing relationship with manufacturers that provided extra
service and support. OEM chose manufacturers with the speed of delivery.
Suggestion:
Arborite should invest in a company-owned fleet of truck instead of contract
carrier so the deliver time can be controlled in 2-3 days or 3-4 weeks. In
addition, Arborite should reinforce the customer service to provide more
support.
Costs
The
cost of Arborite is 5 cents per square foot more than Formica and the cost of
paper treating accounts for 3.3 cents. During the paper treating, cover paper
purchasing costs more 2.6 cents than Formica.
Suggestion:
Because volume discounts up to 50 percent on cover paper were available, Arbotite
should try to negotiate the price to reduce the costs.
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