Since 1918, Atlas has manufactured devices that gauge the damaging effects of light, water and temperature on goods ranging from textiles to steering wheels. Atlas’ devices and the chemicals used in them have been the basis of a profitable and growing–albeit unglamorous–business for several generations.

ATLAS MATERIAL TESTING SOLUTIONS Challenges: Needed to overcome an anticompetitive regulatory climate in Europe and the threat of competition from low-cost manufacturers in Asia.

John W. Lane bought Atlas in 1946, and his son Bill took over in 1975. Today their story proves that a relentless focus on international business and the ability to adapt and partner with foreign firms can enable even a niche company to grow into a global leader. Atlas was already exporting their products to more than 15 countries in the 1940s, but for years remained shut out of most of Europe because material test specifications were written by each nation’s industry organizations. Atlas, however, found a clever way around–or through–these regulations.

"When we established a European headquarters, we were able to get our local organization to work with top chemists to change the European national standards so we could become competitive," says Bill, 69, who is passing company control to his three adult children. With trade pathways open, his father made it a point to establish personal relationships on the Continent, traveling often to visit Atlas’ independent sales reps. "He saw other companies getting into this area," Bill recalls, "and felt that he had to be proactive in order to control our destiny."

TOP VIEW: Globalization is often portrayed as an inimical encroachment threatening family-run businesses. But it is a fact of life for any enterprise seeking to expand beyond a narrow, parochial domestic market–indeed, overseas competition is forcing even small, local firms to evolve. The worries articulated by many family business owners may be overdone; these companies may be particularly suited to operating in the international arena. Families can often react quickly to overseas developments and invest the time and capital necessary to truly understand foreign markets, which are the keys to success.

In the Netherlands, Bill met the Voelman brothers–who were in the same business–and in 1982 formed a joint venture that solidified Atlas’ foothold in Europe. Atlas also established companies in France, Germany, Switzerland and the UK, and eventually sacked independent reps in favor of Atlas salespeople. To date, Atlas’ strategy has proven successful. Sales have grown 10 percent per year for the past 12 years, and its return on equity currently exceeds 20 percent. In 1995, Atlas acquired one of its primary European competitors from a larger German firm. More recently, one of the Voelmans retired, opening the way for Atlas to gain control of the Dutch joint venture.

The core business is still owned by the Lane family. Bill’s three children–Gigi, Russell and Chuck, plus son-in-law Jim–hold executive positions. The company comprises a textile division, with 240 employees, and a weathering group, with 350, on three continents. But Atlas’ global expansion rests on finding foreign partners, installing local managers (the company has never moved an American manager to Europe) and aggressively buying competitors. Its European companies are run with operating committees that include Europeans, Bill says.

As in the 1940s, Atlas handles overseas issues with a level of tact some Americans might find extraordinary. Russell, Bill’s older son, earned a master’s degree from Garvin School for International Management in Glendale, Ariz., and now runs U.S. operations for Atlas’ weathering division. "In Europe, if you want to make a structural change, the walls and regulations are amazing," he says. "We are told, ‘You can’t do this, you can’t do that, or you face big fines or jail.’ It really limits our flexibility."

The Lanes have also worked to overcome the cultural gap that often exists when Americans deal with their foreign counterparts. "There are issues, making sure that you approach a customer or employee in a way that isn’t offensive," Russell says. "We Americans tend to be very direct, but a lot of cultures don’t like that." Bill remembers an embarrassing moment during a business dinner in Germany. A Frenchman casually asked him if he spoke any languages. "I said some Spanish, which I had taken in high school–and he began to speak to me in fluent Spanish," Bill says. "I learned my lesson. I do make it a point to read up on a country before I go there, and even to make a feeble attempt to learn a few phrases, which is appreciated and helps in relationship building. The good news is that the business world is becoming more Anglicized in many ways with international trade growing."

In Europe, if you want to make a structural change, the walls and regulations are amazing. –Russell Lane

With the company well established in Europe, Atlas faced the challenge of expanding into China. "The textile business was moving to the Far East, and our manufacturing was in the U.S., Germany and the UK, three of the most expensive countries in the world," says Chuck, Bill’s younger son. "We were then shipping it around the world to Asia to compete against their own low-cost manufacturing. It was crazy." Atlas executives knew they could not compete in a marketplace as quickly evolving as China’s without a dedicated presence there. They began by broaching the idea to their Chinese representative, a division of a public company headquartered in the UK, which was establishing a new factory. "It was easy to set up a joint venture with them, as they were used to Western governance," Chuck says. "With [the partnership], we brought them an immediate line of products for their new production facility."

THE ATLAS family. From left: Gigi Lane Johnson, Russell Lane, Chuck Lane, Pam Lane and Bill Lane.

Atlas’ strategy in China has not been without problems. "Obviously, the positive is that it is inexpensive, and that is a challenge to our other facilities," notes Chuck, who moved to Hong Kong with his family to oversee operations. "When you want to get something done, it happens very fast. Labor is cheap, and once you give people direction, they have a can-do attitude." But Atlas’ executives sometimes struggle to understand this environment. "The Chinese mindset is very tough to deal with for Westerners," he adds. "It is even different from Hong Kong, and we are just learning to work with our Chinese managers. I understand that I’ll never totally understand their culture, and I can’t put an American culture into our Chinese division. I have local managers whom I can give direction to, and I let them use the local culture to get it implemented. If I were to say how it should be done, chances are it wouldn’t work."

ILLYCAFFE Challenge: Expand the company’s existing global reach by moving into countries where consumers do not yet fully appreciate the family’s core coffee products.

Atlas uses numerous prefabricated metal components, and at the Chinese plant, Chuck has wrestled with his vendors over quality-control issues. "We need to work on accountability through our supply chain," he explains. "It is sometimes tough to get someone who is willing to take responsibility and make a decision, so top management has to give a lot of direction and make many decisions."

Chuck often speaks with his father, sister and brother in Chicago. Atlas manufactures weathering division products in the United States and Germany, and the company may ponder moving more of that production to China. But the family will not gamble on that until they have resolved the quality-control issues and are more comfortable with their operation. Still, additional investment in Asia seems to be in Atlas’ long-term future if the company aims to become dominant in these lower-cost markets.

"Does this take away from what we are doing here? Perhaps," Bill admits. "Have we lost jobs for the U.S., the UK and Europe? Probably. On the other hand, we have increased our potential revenues because we have become more cost-competitive in our fastest-growing market, Asia. If we double sales–and we are on track to do that–we will make a significant shift in our bottom line, and that will create a stronger company, which should be good for the entire organization." –Dennis T. Jaffe

Andrea Illy, the third generation of family behind Illycaffè, sees his efforts to bring Italian espresso drinking to Asia as "sort of missionary work." With his Brioni suit and Bulgari cuff links, the understated 41-year-old looks more like a movie star than a missionary. But coffee has been something of a divine calling for the Illys since Andrea’s grandfather, Francesco, founded the company in Trieste in 1933 and became the first Italian coffee purveyor to sell his brand throughout the country.

Andrea’s father, Ernesto, who stepped down as CEO in 1994, dons a lapel pin of interlocking espresso cups signifying his belief that espresso is meant to be shared. He also carries a silver tasting spoon designed by another son, Riccardo. The Illys make a single roast, 100 percent Arabica-bean espresso now sold through retailers and Illy cafes in 130 countries. But, for his family’s success, Andrea intends to take the company to another level in Asia.

In Illycaffè’s most ambitious expansion to date, Andrea is making an especially concerted effort in India. Although the company has long bought coffee beans from Indian growers, this is a nation that consumes 200,000 tons of tea a year and a mere 15,000 tons of coffee, according to estimates from Euromonitor International. Andrea hopes to boost Indian consumption of his family’s product over the next five years from its current 30 tons a year to as much as 1,000 tons by exporting a very continental European sense of coffee. Illycaffè and its Indian partner, Fresh & Honest Café (F&H), will invest $20 million to add 120 coffee bars to the existing 130 that F&H operates under the name Barista, and to install 6,000 Illy espresso machines in India’s leading hotels and restaurants.

Andrea is aware that to succeed he might have to refine the coffee experience so that it fits another culture’s expectations in some thus-far-unknown way. "We have to understand all cultures for the sake of customer satisfaction. We cannot do everything the Italian way," he says.

You need to study chemistry to understand the complexity of life and of the world. –Ernesto Illy

The adjustment might include adding products that cater to local tastes. Starbucks, which has not yet made its way into India but has more than 200 stores in China, has taken traditional Chinese mooncakes–a type of pastry made of duck eggs and bean paste–and injected coffee flavors. First, however, Andrea is grappling with the larger hurdle of import duties, which currently run about 108 percent on roasted coffee. He has been vocal about his wish to see the Indian government work to improve the living conditions of local growers rather than use tariffs as protectionism. Even with the present costs, however, Andrea believes the tens of millions of Indian consumers who have disposable income and like the status of Western products will help boost the privately held company’s revenues, which were about $270 million last year, by an annual average of 10 percent over the next five years.

This impressive growth rests, inevitably, on strategic decisions of Asian partners. He has a nonfamily partner with ambitions at least equal to his in V. Srinivasan, the head of F&H, who has told the local media about how important the partnership is to his company’s desires to "offer the complete range of coffee experience to our customers and realize our aggressive growth plans."

THE ILLY family. From left: Anna Illy, Ernesto Illy, Anna Illy Blechi, Andrea Illy and Riccardo Illy.

It has been a decade since Andrea and his father recognized a need to bring on independent board members and pry some of the operations of Illycaffè from family hands in order to expand into new regions. Ernesto, a chemist by training, saw globalization as akin to a newly discovered element; Andrea, the youngest of four siblings, was his most likely successor because, in addition to having an MBA from Milan’s Bocconi University, he too studied chemistry.

"You need to study chemistry to understand the complexity of life and of the world," says Ernesto, a spry octogenarian who will happily expound for hours on the scientific properties of the perfect espresso. It was under his reign that Illy cracked the U.S. market. "I had this conviction that if you wanted to be global, you had to be in the United States," Ernesto adds. "In the beginning, I had some difficulty convincing my family."

Today the entire family sits on the board, but Andrea also depends for expertise on several outside directors, including a prominent Italian banker, a business professor and the CEO of Lloyd Adriatico insurance. He maintains that ideas from outsiders can be as stimulating as a jolt of espresso itself. Already, he says, "I think we’re less Italian and more global than when my grandfather led the company." –Jackie Cooperman

Russell Lewis knew that he had an innovative product when he founded Rhino Linings in 1988. But he was also aware that he needed to create a network to distribute and support his product, and that if he wanted to expand, he would need a global reach.

We must continue to analyze the differences in each global environment and adapt to these differences. –Russell Lewis

Lewis’ advance was a spray-on polyurethane liner. The liner’s most obvious use is found in truck beds, where drivers need a protective, watertight covering. The liner could also be applied to many other surfaces to protect them from impact and corrosion–but only if Lewis opened new markets for the product. Today Rhino Linings sells to the automotive, military and industrial sectors through 1,400 independently owned dealerships in more than 50 countries. The company’s annual sales have reached more than $100 million in less than 10 years.

Rhino Linings manufactures equipment and products in San Diego and Louisiana and sells them to its dealers around the world. The company and its dealers are almost wholly symbiotic.

RUSSELL LEWIS, founder of San Diego—based Rhino Linings, realized the value of overseas expansion.

When he began to formulate a plan for expanding internationally, Lewis found that he already had some insight. He worked in various countries during his summer breaks from school, and even that limited exposure led him to develop a familiarity with business and cultural issues.

But when Lewis initially ventured overseas with Rhino Linings, he stumbled out of the gate. He first tried to export a traditional dealer-distributor model, he says. "This did not work. They would sell one product, but not really support it and get the follow-up business. We found it was not enough to sell [them equipment] without providing ongoing support."

Lewis had to shift his American way of thinking about how products and services are marketed to empower his overseas dealers. "We learned that the U.S. is very transactional; people don’t need to know us to buy our product," he explains. "In other countries, sales are more relationship driven; they don’t buy until they know you. We had to learn how to build relationships in these countries. It has taken a while for us to learn how to do this, but we are stronger for it now."

RHINO LININGS USA Challenges: To expand a polyurethane liner business and create a network of independent dealers who can address marketing and product needs in many nations.

To build the Rhino Linings brand, Lewis works with his foreign dealers to incorporate local advertising methods. Without access to American-style mass media in smaller countries, Lewis and his executives work carefully to tailor the marketing messages used for each locality. "The United States has many large pickup trucks, but this market does not exist in some countries in Europe," Lewis explains. "There we have to focus on larger commercial vehicles. Our partners help us become known in each area, and help us select a strategy that works. Now that we have learned how to do this, we can accelerate the process as we move into new countries."

Indeed, Lewis’ globalization strategy rests not in exploiting cheaper capital costs overseas, but in creating collaborative partnerships in which both the parent company and the dealer, no matter how far flung, benefit. Today Rhino Linings’ trademark is registered in some 120 nations, and Lewis devotes the money and time to bolster his dealers’ efforts. "It is hard to service a dealer in another country," Lewis admits. "Our global environment is very much like a family business, with incredible loyalty and commitment to each other. We provide support, and they help us build the Rhino Linings brand on the local level."

Lewis plans to continue to invest heavily in his overseas dealers, in terms of capital, time and expertise. He knows all too well that international business is not a one-size-fits-all venture. "We must have employees and dealers that believe in our products," he says. "We must continue to analyze the differences in each global environment and adapt to these differences. Running a business is not just about selling a product; we must be able to support our dealers. This is what makes Rhino Linings successful." –Dennis T. Jaffe

Art by Eric Tucker.