Matteo Gonzato, President of Indital US Ltd joins us in the studio to talk about what he’s learned from shipping decorative steel components internationally.
Please excuse any typos in this hasty transcript.
Matt Register: And welcome back to the show. Texas Business Radio. Texasbusinessradio.com is the website. 844-814-8144 is our 24-hour call-in line. As always, use that, get your questions in. We also monitor hashtag tbr on Twitter, T-B-R, Texas Business Radio. Or go to the website, texasbusinessradio.com and get your question in. We’re gonna get experts in here to get those questions answered. I’m your host, Matt Register. Jay Curry’s the one sitting over there in the co-host chair.
We got a lot to cover today. We have a very interesting guest in here. We’re gonna talk a little bit about international business, and how do you expand internationally. It’s easier said than done. There’s a lot of lessons to learn, and it’s not something you need to do without a lot of thought into. What do you think about it, Jay?
Jay W. Curry: I agree with you. What’s exciting about this is they started in Italy, they came to America, very successful, and now they’ve branched out, they’re all over the world. It’s a great story, and a lot to learn about how to do business overseas.
Matt Register: No, that’s right. We have Matteo Gonzato in the studio. He’s the president of Indital U.S., which is the U.S., I guess, version, or U.S. affiliate of an Italian company that makes ornamental metal stair parts. Matteo, go ahead and tell us about it.
Matteo Gonzato: We do ornamental iron components for the construction industry, so any kind of metal, like from stainless steel, aluminum, wrought iron …
Matt Register: Staircases, things like that?
Matteo Gonzato: We do all the parts that a fabricator will need to do a staircase, a gate, fencing, or anything that goes with that.
Matt Register: Interesting. Interesting business. Now, talk to us a little bit about the international component, because you guys are all over the world manufacturing this stuff.
Matteo Gonzato: We are. My dad started in my grandpa’s garage, actually, in 1971, okay, back in 1971, and from there on, slowly but surely it’s been growing in Italy and everything else. During the ’80s, he realized that there was a very strong need to start exporting outside of Italy, okay? And there was a lack of knowledge of our product around the world, so we started evolving. The first company we opened was in Spain, actually.
Right after that came the United States, and that was the first learning curve. Pick your market and pick your place very well, because the first location we opened in the United States was actually Louisville, Kentucky. Beautiful town, great for the Derby, but not very good if you need to import in a port heavy, heavy material, because there’s no port in Louisville.
Matt Register: And there’s no easy way to get heavy stuff into Louisville, is there?
Matteo Gonzato: There’s no easy way, so under a logistic point of view, it was a disastrous choice, okay? So there was one of the first learning curves, right there. Very fast we learned that. We shut down in Louisville and only three years later we actually moved down here to Houston. From there on, it’s been a constant story of growth in different locations a little bit all over the world. Right now we have 19 locations around the world, and we are looking actually to open a twentieth.
Matt Register: Now, these are 19 manufacturing locations or sales locations?
Matteo Gonzato: Not all of them are manufacturing locations, because not every country is prone to manufacturing. For example, here in the U.S., the location in Houston, which is our headquarters, has a manufacturing facility connected. The other location that we have that is down in Miami, Florida, that one is only distribution.
Matt Register: I got ya. We were talking during the break. This is an interesting business with some interesting challenges, not the least of which is the ability for somebody like China, for somebody like a very low-cost manufacturing facility, to absolutely kill you on the ability to make it cheap, right?
Matteo Gonzato: Absolutely.
Matt Register: And how do you compete against that in a business like this that, I mean, clearly you have, you’ve got a thousand employees all over the world. I mean, you’ve done remarkable at doing it. But how in the world do you take a product that is easy for China to copy, and how do you go ahead and win the market on that?
Matteo Gonzato: Well, there’s two factors to that. First factor is, we are in China and manufacturing some of the components ourselves, so we are in a Chinese position ourself, when needed. But more than that is constant research and evolution of a product. We are lucky enough that our product is a taste product. It’s kind of like fashion, although it’s metal. It moves a lot like fashion, so it’s much more connected to taste of a lady, what she likes in her house, what the architect wants in his construction. What is going to be the next trend. So we try to stay ahead of the curve, and we try to actually influence the curve by guiding the direction of the market, by investing, constantly, marketing and research.
Matt Register: Well, and that allows you to keep new products out there, which, you know, there’s a time lag between when other people can do it.
How much is transportation a big deal, because you’re making this stuff all over the world. I can’t imagine loading up a container full of just steel, right, is gonna be very economical to ship, because that’s heavy stuff.
Matteo Gonzato: For us, logistics is fundamental. Moving material around is craziness for us, so we have, especially for heavy product, to maximize … minimize, I’m sorry, the amount of movement that is going to happen for the material. So, in fact, most of the very heavy components we manufacture locally, like here in the U.S.
Matt Register: As close as you can to it, right?
Matteo Gonzato: As close as you can to your customer, because, otherwise, it can impact up to 25 percent of the value of a product, which is a killer right there.
Matt Register: Well, and in a commodity product, you don’t have that much margin built in.
Matteo Gonzato: I wish I had that much margin. That would be fantastic.
Jay W. Curry: One of the things that you mentioned was that every country has … It’s kind of like following fashion. Every country kind of has their own look and feel, which kind of relates, then. You don’t manufacture something for America over there, you can do it right here. But every country has to be unique.
Matt Register: Yeah, how different are these, country to country?
Matteo Gonzato: Completely different. It’s amazing. It would be shocking once you go into that detail to realize … And that goes back to one of the things you’ve gotta do when you want to go international: Know your market. Study very well what the market is gonna ask you. Because you might think that your product that you have here in the U.S. is successful is gonna be great for Brazil. It might not.
Matt Register: Yeah, they may just not like it, right?
Matteo Gonzato: They might just not like it. It might just not work for them. Their economy might not be ready for it yet. It could a thousand of variables. It could be local regulations that limits them from using certain products, which is a problem that we tend not to think about when we have something good in our head.
Matt Register: Yeah, no doubt. Now, you guys, how much of your business is custom stuff? Because, I know, there’s some companies, you know, that just want all their own stuff, right? And you guys handle that?
Matteo Gonzato: We do a lot of custom stuff. We do a lot of OEM accounts, where we actually even do a lot of exclusive stuff for some of our customers, where they want their own signature design, their own signature product. We will provide that, and we’ll have a contract signed, no problem with that. And that is a big part of what we are. We are probably the last metal manufacturer, world-wide, with the capability of doing pretty much anything that comes to your mind in the ornamental side.
Matt Register: Interesting. Now, for our listeners, for the CEO of a company that’s contemplating going to a separate country for the first time, what is the easiest way they screw that up, right? I mean, what are the things they need to watch for, walking into a new country, to set up a location that they don’t know to ask about right now?
Matteo Gonzato: The worst mistake you can do is trust the first guy you meet. It’s so easy to screw it up. You’ve gotta find good people, you’ve gotta find trustworthy people. You’ve gotta do your research on the people you think are trustworthy, because you never know. Because, unluckily, there’s a lot of thieves out there, and you have to anticipate that being a problem, potentially.
Matt Register: And not knowing the country looks like an easy mark. How do you go find those trustworthy people? What’s the easiest way to do that?
Matteo Gonzato: You know, for us, we’ve found over the years that going to a little bit more expensive route, like, it could be an international accounting corporation, international lawing firm, is the best call. I know it’s hard to pull out that extra five grand for a good lawyer, but it’ll pay off in the long term. Okay? It’s not, you know, it’s a good call.
Matt Register: Well, I tell you what, we’ve learned, you know, the only thing more expensive than an expensive lawyer is a cheap lawyer, right?
Matteo Gonzato: There you go, exactly, you know. And it’s so easy to find the cheap one, and get dry by them, you know. You don’t realize it.
Matt Register: Sure. Well, you know, evidently, you guys are doing a lot of right things, right? Like I said, a thousand employees all over the world, 19, 20 locations. A family business. We’re gonna have to have you back, Matteo, when we have a family business, because you have how many siblings involved in the business?
Matteo Gonzato: I have two younger brothers and an older sister involved in the business, plus, my mom and dad both still work in the business.
Matt Register: Yeah, we’re gonna have to have him back when we talk about family businesses, because that’s always a challenge, right, on how do you transition that? Interesting stuff.
Matteo Gonzato is the president of Indital U.S., which is a division of an Italian company that makes ornamental metal stuff. Indital, I-N-D-I-T-A-L dot com is the website.
Matteo, thank you very much for joining us.
Matteo Gonzato: Thank you guys for having me here.
Matt Register: Very interesting. And as always, we’re going to have that linked right there from texasbusinessradio.com. If you’re driving and can’t take notes, just go to the website, we’ll have a link right there.
Interesting, interesting stuff. We didn’t even get into a lot of distribution models and things like that. We’re gonna have to have this guy back.
Matteo Gonzato: We’ll do it again.
Matt Register: It’s fascinating. That’s right.
Guys, unfortunately, we’ve gotta go pay some of our own bills. We’re gonna be back right on the other side of the break with a whole lot more Texas Business Radio. Don’t go anywhere. You don’t have time to go anywhere. We’ll be back quicker than that. We’ll see you right on the other side of the break
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.