Original Date: 07/14/1997
Revision Date: 01/18/2007
Best Practice : International Competitiveness
Although Thermacore started product operations in 1981, most of the company’s focus was on research and development through the early 1990s. In 1993, increasing inquiries from electronic companies alerted Thermacore to the possibility that new chips, being developed by the semiconductor companies, might require the unique cooling properties of heat pipes. Intel Corporation recognized the superior thermal performance of Thermacore’s sintered powder metal wick technology and designs, and passed this information on to its customers. As a result, computer manufacturers all over the world became greatly interested in Thermacore’s products for Pentium chip cooling applications. At about the same time, improvements in high power transistors led to an increased need in heat pipes for cooling the large devices that control the power flow to large electric motors in rail locomotives and stationary installations (e.g., steel rolling mills).
Thermacore recognized these market opportunities and proceeded quickly to capitalize on them. The company adopted a policy and philosophy that it would never turn down an order for lack of capacity. In short order, Thermacore raised the necessary funds through a venture capital investment. The company built a factory and designed its products, manufacturing processes, and equipment. Orders began pouring in, particularly for notebook- based computer applications. Production increased from 2,500 units per month in June 1995 to 10,000 units per day by October 1996. As production rates increased, Thermacore refined its processes and methods so that scrap rates, which were initially nearly 30%, are now well under 1%. Thermacore’s commitment to quality and never shipping a defective device is so strong that most of the company’s customers do not even perform an incoming inspection.
From the start of this great production surge, Thermacore was an international competitor. One of the primary uses of Thermacore’s products is in laptop computers, and more than 40% of the world’s laptop computers are manufactured in Taiwan. Thermacore has steadily been taking market share from its competitors and has captured more than half of the heat pipe market in Taiwan. The company’s market share continues to grow due in part to several factors. First is the technological edge on the competition that Thermacore has built up over its long history as a government research and development contractor. This edge is maintained primarily by the fact that the company designs and develops its own manufacturing processes and production equipment, and can continually refine and control these manufacturing processes to a high degree. Second is its commitment to quality and meeting customer requirements, no matter how demanding. Each customer’s product and application is unique. The ability to be flexible and respond quickly to production ramp-ups with 100% quality help make Thermacore a leader in the market. Another factor is cost competitiveness. Thermacore’s products are directly cost competitive with its Japanese and Taiwanese competitors. The company has even been successful in capturing business from Japanese competitors who sell to Japanese companies.
Thermacore’s success demonstrates how a small, high tech, U.S. company can be an effective global competitor by maintaining a strong emphasis on technology, and applying it to meet market-driven needs. Management facilitated the adoption of a culture which supports rapid growth and continuous improvements in productivity and quality. These qualities have given Thermacore the capability to respond rapidly to market forces with products that its customers can depend on for superior performance at competitive prices.
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