Turning the high-tech tables on Japanese
| Carpinteria, Calif.
The Japanese are well known for their ability to adapt United States technology to the world's markets. An entrepreneur headquartered here has turned the tables, however, adapting and displacing some Japanese high technology in the US marketplace. William B. Spargur, president and cofounder of the Templock Corporation, has taken Japanese advances in the packaging business and used them to help some US ''brick and mortar businesses'' improve their productivity. So far, Templock has helped to increase production of companies in the battery business and in the cosmetics industry.
Perhaps the most dramatic example comes in batteries. Manufacturers of 9 -volt alkaline dry-cell batteries have been able to increase their production rate 500 percent. And Templock has since developed the machinery to increase production speeds even more.
The story begins in late 1973, when Mr. Spargur sold Flexion, an instrumentation company, to the industrial products division of Hughes Aircraft. Then, he recalls, he tried to figure out what his next business move would be. His only guideline was finding a high-technology process that could be adapted ''to brick and mortar markets.''
Mr. Spargur and Grant Ehrlich, Templock's chairman, who had been in the plastics business, focused on Japanese companies that had developed a new process for producing thin-walled, heat-shrinkable plastic tubing, which was used in industrial markets. One of the major applications, Templock noticed, was as an insulating sleeve in making 9-volt dry-cell batteries. These alkaline batteries were the fastest-growing part of the business.
Previously, when battery manufacturers made dry-cell batteries, they used kraft paper as an insulation and liner. The Japanese, however, found plastics did a better job of resisting the chemical action in batteries and was a better insulator. In addition, using heat-shrinking technology, batterymakers could speed up the production lines dramatically. Duracell, a major maker, was the first to start importing the thin-walled plastic from Japan.
Not all the battery companies have shifted over to plastics. One executive at a major company said that ''in many places we still use paper.'' Generally speaking, he noted, plastic sleeves have a cost advantage, but he added, ''There are other ways to go as well.''
Enter Mr. Spargur. First, he went to Japan and tried putting his ''ear to the ground.'' He used to visit Japan regularly when he was in the instrumentation business and he knew the Japanese were secretive about divulging technology. Even so, he recalls, ''If you sit and listen, you would be surprised at the things people say. When you go to Japan, you must be a good listener.''
Thus Spargur, who had an engineering and marketing background, hired both a consultant in plastic technology to help with the work and an Allied Corporation engineer with experience in plastic films. They lined up about $500,000 of venture capital financing from Institutional Venture Associates, in Menlo Park, Calif.
It took four years for him to develop the current process and the machinery which takes powdered PVC (polyvinyl chloride) compound and turns it into thin-walled, heat-shrinkable plastic tubing. To compete with the Japanese, Templock had to have a process and machine that would allow the batterymakers to increase their production rate by 500 percent.
US manufacturers, interested in diversifying their supply sources, helped to develop the business. Eventually Templock was able to wrest away the lion's share of the business from the Japanese. The Japanese responded with price cuts. ''This was their main ploy,'' Spargur says, and Templock met the lower prices, even though it was a new company. And he made a concerted effort to provide better service and higher-quality plastics to the customer. ''We had to do that, '' he says, ''because we have higher direct and indirect costs.'' To cut its expenses more, Spargur says that when the company expands it will set up its next facility in Knoxville, Tenn., where labor and real estate costs are lower than California.
''We are closer to our customers'' than are the Japanese, Spargur points out, ''which means we can respond quicker to their specific needs. If they need a specific color or size, they only have to call California, not Japan. And we manufacture the machinery used in the process as well as the tubing itself. This gives us a better understanding of the customer's needs.''
Thus, when a customer dropped a wrench in a high-speed machine on a Friday afternoon, Templock had a technician on a plane that weekend to get the machine working again by the following Wednesday.
Once battery manufacturers began to buy his machinery, Spargur began to diversify his customers. Machinery was sold to makers of decorative items, such as Christmas and Easter ornaments.
Templock's sales should reach $4 million to $5 million this year and the company expects to be profitable. At this point, Spargur has no plans to take the company public.
Currently, Templock is discussing possible uses of its technology with cosmetic, food, and drug companies that want tamper-proof packaging for their products. ''In Japan this technology is used much more extensively,'' Spargur says. When he makes one of his quarterly trips to Japan, he spends a day walking through Japanese stores looking for new uses of the technology. ''We're not close to where we should be,'' he says. ''In this business, it's possible to expand sales 40 percent per year, across the board.''