Magnetics Business & Technology - Winter 2015 - (Page 30)
a Column by Dr. Stan Trout
Small Ball is a managerial strategy used in the
game of baseball. Fundamentally, it concedes
that in some circumstances big plays, such as
home runs are unlikely, and instead focuses on
taking a series of smaller steps in an effort to
score just a few runs and ultimately win the game. In Small Ball,
singles, walks, sacrifice flies, bunts, etc. are the main ingredients for
success. Maybe one run scores in an inning, maybe not. However,
under the right circumstances, this strategy can be very effective. In
short, Small Ball relies on skill, finesse and resourcefulness, rather
than brute force to be successful.
How could Small Ball apply to the rare earth industry?
Here are at least four things a rare earth company could do employing the Small Ball strategy.
There is also a similar strategy by the same name now in use in basketball. It relies on smaller players that are faster outside shooters
to outscore an opposing team with bigger players. So why bring up
this topic here?
Recently we saw one large failure in the rare earth industry, as my
former client, supplier and employer, Molycorp declared Chapter
11 bankruptcy at the end of June. While not quite in the same predicament, other rare earth companies are clearly struggling these
days, either to establish profitable business or to finish their projects, in the face of low rare earth prices from China. Before we add
to the list of rare earth bankruptcies, I would like to suggest that
the time has come for a paradigm shift toward applying the ideas
of Small Ball to the rare earth industry.
Selling into niche markets. To the major Chinese players,
small rare earth customers are not so interesting and they
leave them alone. There is steady business to be enjoyed
supplying smaller users of rare earths.
Collaborating with key customers. Many major rare earth
customers would enjoy evaluating and qualifying better
products. Better how, you might ask? It is often beneficial
to users of rare earths if their supplier could remove certain impurities, adjust the physical properties, or tweak some
other salient material characteristic, to optimize a material
specifically for a customer's application. Someone supplying
rare earths as a commodity cannot look at their product
that way. However, a Small Ball rare earth company can, and
would likely have many successes in doing so.
Being an opportunistic supplier. Given what we have seen
in the past, it seems realistic to think that we will have sporadic supply interruptions or price spikes in the future, with
little or no warning. A well-prepared Small Ball supplier, who
has already qualified its material with several customers, can
step in immediately to fill in a future disruption, at least
partially. The keys to success are being organized to move
quickly and realizing that the increased business will likely
not last long.
Recycling. There are many recycling opportunities in the rare
earth business. The main challenge is to identify and develop
the opportunities that can actually make a little money. They
need to make sense as a viable business.
The third and fourth steps would remove some of the volatility
from the rare earth marketplace, so they have both commercial
and strategic importance for anyone operating in the rare earth
business outside of China.
So what is wrong with this approach? The first thing people will say
is that it is too modest. I will readily accept this criticism. However,
after watching the industry repeatedly and unsuccessfully swing for
the fences, it might be an appropriate time to try a different approach, and Small Ball seems like it is worth a try.
Just as a reminder, a lively micro-brewing industry has sprung up
in the US in recent years, bucking the trend toward large centralized production and global distribution of beer. Clearly, some beer
drinkers favor quality over quantity, and are willing to pay for it.
This model may serve as an inspiration to those of us in the rare
earth business, as well.
About the Author - Dr. Stan Trout has more than 40 years' experience in the permanent magnet and rare earth industries. Dr. Trout has
a B.S. in Physics from Lafayette College and a Ph.D. in Metallurgy and
Materials Science from the University of Pennsylvania. Stan is a contributing columnist for Magnetics Business & Technology magazine.
Spontaneous Materials, his consultancy, provides practical solutions in
magnetic materials, the rare earths, technical training and technical
writing. He can be reached at firstname.lastname@example.org.
Magnetics Business & Technology * Winter 2015
Table of Contents for the Digital Edition of Magnetics Business & Technology - Winter 2015
What the Heck Happened to the Magnet Industry?
An Introduction to Resonant Inductive Power Transfer
Research & Development
Magnetics 2016: Preview
2016 Resource Guide
Marketplace / Advertising Index
Spontaneous Thoughts: Small Ball
Magnetics Business & Technology - Winter 2015