MEXICO CITY - Rubbermaid Inc. is investing heavily to upgrade its plant in Mexico, which it plans to use as a manufacturing base for all of Latin America. Rubbermaid, based in Wooster, Ohio, is investing $6 million this year in its molding plant in Tultitl n, near Mexico City. The investment is part of the company's plan to expand its business outside of the United States to 30 percent of total sales within the next five years.
The recent peso devaluation and overall uncertainty surrounding the Mexican economy have not shaken Rubbermaid's confidence in the country's importance as a market or manufacturing site, said Fred S. Grunewald, president and general manager of Rubbermaid's Home Products Division.
``We're not putting our heads in the sand,'' he said. ``We're very bullish on growth.''
Grunewald outlined Rubbermaid's plans for Mexico in a Feb. 21 press conference in Mexico City. Ricardo Tochijara, director general of Rubbermaid de Mexico SA de CV, also discussed the company's strategy with reporters.
Rubbermaid's plant in Tultitl n, its only manufacturing operation in Latin America, was included in its 1992 acquisition of Cipsa, a Mexico City manufacturer of household goods. Rubbermaid employs 400 at the Tultitl n plant.
Rubbermaid expects production at the plant to increase by 30 percent this year, in part because the cost of doing business in Mexico has become relatively cheap with the devalued peso, and exports should surge.
The Mexican market, although hit hard by the weak peso, is still very important to Rubbermaid. Last year, domestic sales totaled $80 million and have been growing at a rate faster than overall economic growth for the past five years, Tochijara said.
He said Rubbermaid will double its total current investment in Mexico within the next five years. Tochijara declined to disclose how much the company had invested in Mexico since its acquisition of Cipsa.
Because Rubbermaid is still developing the Mexican market, and introducing a wider arrray of its products, the expectations for future growth are good, Grunewald said.
The recent devaluation of the Mexican peso, and Rubbermaid's response to the rapid economic changes that followed, illustrates how the company's global strategy is likely to play out in future years.
Immediately after the devaluation, Rubbermaid decided to move some production to Mexico to take advantage of relatively cheap operating costs.
``We shifted the molds in a week,'' Grunewald said.
The actual transfer of production took longer than expected because of some logistical problems, such as having the proper labels and packaging on hand. That, too, will change. Beginning this year, Rubbermaid is adopting a label with English, French and Spanish.
Moreover, Rubbermaid is working toward a common mold design that will allow the company to shift production on short notice or move molds by schedule into different markets to spread out the cost of tooling. For example, the company could move a mold for an ice chest from the United States to a South American country as summer wanes in the north and the warm season begins in the south.
``The more we standardize the mold design, the easier that migration becomes,'' Grunewald said. ``It's really the beginnings of a global thrust.''
In Mexico, Rubbermaid has 26 injection presses with clamping forces of 165-1,500 tons, said Max Voss, manager of the Tultitl n plant. Since the Cipsa acquisition, Rubbermaid gradually has been upgrading its presses with new computer controls and replacing older models.
Within the last year, Rubbermaid also acquired a double-head blow molding machine that can produce two 32-gallon containers in a single shot. It now has six blow molding machines in Tultitl n.
Rubbermaid does not yet use any custom molders in Mexico or local mold makers, Voss said.
He said the company's plan for adding more machines is indefinite. The focus in Tultitl n has been to get more out of the plant and replace outdated machinery.
``Our first goal is to increase productivity,'' Voss said.
