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Plastics Today, September 2015

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Mexico outlook Plasticstoday.coM Global Plastics RePoRt 2015 15 "The trend across almost all indus- tries is that manufacturing has become much more regional. They're producing in North America for the North Ameri- can markets, in Asia for Asian markets. Over the last couple of years we've seen regionalism take off. The transplants, which started in the United States, are now opening operations in Mexico, and everything they're producing is predomi- nantly for the North American market," Donahue noted. Molders are identifying more oppor- tunities to supply parts to a variety of industries, including the automotive, electronics, and recreational vehicle mar- kets, in Mexico. Evco Plastics, headquar- tered in DeForest, WI, is a multinational supplier with five molding plants in the United States (Wisconsin and Georgia), three in Mexico (Monterrey and Juarez) and one in Shenzhen, China. The com- pany operates a total of 150 molding machines across its various facilities. "We like relatively small plants close to customers," Dale M. Evans, President of Evco Plastics, told PlasticsToday. Evco has been in Monterrey for more than 15 years and has seen its business grow exponentially over that time. "January was a record month, and in February we beat that record," Evans said. To accommodate growth and the "monster" 2,500-ton Engel press the company recently installed in its M1 Monterrey facility, Evco has invested in the plant's infrastructure, which now includes a 40-ton crane and cooling tower and an upgraded air system to service the 2,500- ton press, and other large machines the company is planning to install in the years ahead. "We have room for three of them," Evans commented. "The big press work is automotive and automo- tive-type components, such as the all terrain vehicle (ATV) business, which is expanding." Additionally, the company also updated the fire sprinkler system to meet new codes and poured pads for two large silos, the first of which is being deliv- ered in September 2015. M1 was the company's first facility in Mexico; today it operates 250- to 2,500-ton presses at that plant. Forty of the plant's employees have been with Evco for the entire 15 years the company has been there. M2, Evco's second plant in Monter- rey, has also undergone a remodel. The facility had drive-in docks, which the company filled in to expand available space for machines. "We currently have 26 presses in this plant ranging from 25 to 220 tons, including the seven Mila- cron presses we recently added," said Evans, "but we have room for 34. We've updated the chiller systems, cranes and pneumatic systems. We also created a white room for some assembly processes. A RAM optical system was installed in the quality room." M3 is Evco's 77,000-square-foot molding facility in Juarez, which has undergone a "simple remodel" that included updating the warehouse with storage racks; adding a 10,000-square- foot space for returnable packaging, which the company uses in its "green" initiative; new chillers and towers; and energy efficient lighting. Evco oper- ates 20 presses, including a 3,000-ton machine, in the Juarez facility. Evans said that Humberto Garza, President of Evco Plastics de Mexico, is involved in the automotive cluster as President of the Tier 2 companies in that group, so he's active in the automotive side of things. "Evco, in general, is not into automotive, but we do quite a bit of auto- motive in Mexico," Evans noted. "Some of our smaller machines in our M2 facility, which has white rooms and filtered air, are used to mold products for the cosmetic industry. We started there with lighting products—the world is being relit with LEDs—fixtures and housings." The success that Evco has experienced in Mexico (business is up 10 to 12% this year, so far) has the company looking at a fourth plant in Mexico. "While it's always better to expand existing facilities, we've pretty much maxed out the space available to us in our plants," said Evans. "Eventu- ally we'll have to go to a fourth facility there. That's always a challenge with some risk involved. However, if you never take the risks, you never learn to succeed." MGS Mfg. Group has had an injec- tion molding facility in Chihuahua, Mexico, (MGS Plastics Chihuahua, S.A. de C.V.) since 2008, when the company purchased an existing custom molding operation (Sosa Plastics). "The combina- tion of a well-built and maintained struc- ture in a logistically placed and thriving industrial community, along with a solid work force as well as room for expan- sion, was a perfect fit for existing cus- tomer needs and our growth plans," said Michael Cummins, VP Operations. Manufacturing in Mexico: things to consider before Making the Move Thinking about establishing a manufacturing plant in Mexico? Plante Moran Automotive Perspectives offers key actions suppliers should take when looking to expand into a new geographic market: • Get the home office involved from the beginning. An overseas plant requires a major investment of money and management time. The CEO should be personally involved. • Aim for a two-year break-even point, if possible, with a planning horizon of three to five years. You should under- stand that this is a long-term invest- ment. • Make sure that you have a primary customer (or more) who can generate enough orders to support the plant. Avoid speculative projects based on a philosophy of "build-it-and-they-will- come." After the plant opens, work to diversify your customer portfolio as quickly as possible. • Put a high priority on management retention. In emerging markets, good plant managers are in high demand. Attractive salaries alone aren't sufficient; local managers need a long-term career path where they can see a future with you. • Seek outside expertise when you don't have strong knowledge in an area. MGS Plastics plans to add an additional 20 mold- ing machines to its current fleet of 60 molders at its Chihuahua plant.

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