Sophisticated injection molders find value locating in northern California's heartland. ``We offer access to California markets without paying San Francisco or Los Angeles prices of operations,'' said Barbara Hayes of the Sacramento Area Commerce and Trade Organization. ``We are 8-20 percent cheaper in labor, we have land, our utility costs are among the lowest in the state and we have rail, which is needed in three pending deals.''
She touts two existing trophies:
In May, highly automated California Precision Molding hit full stride molding compact disc jewel cases in a new, 88,000-square-foot plant in an El Dorado County development. CPM is an independent sales and profit center as a division of Atlanta Precision Molding Co. Ltd.
Next April, JVC Disc America Co. will begin molding DVDs, formerly known as digital versatile discs, and other formats in a Sacramento County facility that is the first dedicated to DVD technology. In the future, DVD may begin to challenge the VHS videotape and CD-ROM formats.
Molders ``need reliable electric service, sites that allow operations 24 hours a day, seven days a week, and engineering types to work on the equipment,'' said Hayes, who has learned about this ``clean industry'' as she sells the advantages of Sacramento, El Dorado, Placer, Yolo and Sutter counties.
Hayes is the trade group's director of economic development and deputy director.
``Plastics is big,'' she said, ``and needs location [close] to market and seismically stable sites. We've got the components that make it a natural fit for the region.''
Hayes began working on CPM in May 1994, when a van load of four selectors from Atlanta Precision Molding in Georgia toured potential California, Oregon and Washington sites. APM, a subsidiary of Tokyo's Mitsubishi Corp., produces more than 580 million jewel cases a year in Atlanta and holds a 50-55 percent share of the U.S. market.
``Sacramento was one of several jurisdictions'' under consideration, Hayes said. ``They came back once a month for the next six months'' and narrowed their search to the Highway 50 corridor.
Folsom, the first choice, failed because the landowner would not option additional land. By December 1994, the team picked the back-up site in unincorporated El Dorado Hills, agreeing to buy 20 acres and option 16 as the first occupant of a 130-acre planned development.
The site's general partner, Mansour Co., worked with El Dorado County to process a final plan prior to development.
``The county granted CPM every incentive possible,'' said Patricia Inman, vice president of Mansour, ``and this in a state people say is unfriendly to business in general and manufacturing in particular.''
CPM began site development in the former pasture in September 1995 and, two months later, started construction of a 65,000-square-foot building with tilt-up concrete walls. Work on an additional 23,000 square feet followed in early 1996.
Andrew Falcon, CPM vice president, arrived from Europe in December 1995 to assume duties as plant manager.
``Installation of our machinery and equipment began in March,'' he said. ``We went to 24-hour continuous operation of our first lines on April 18 and to full production in May.''
In his European assignment with another Mitsubishi unit, Falcon dealt with the same macro issues—closer proximity to customers, lower freight costs and intense competition — that drove APM to establish the U.S. West Coast facility.
Customers ``find a big difference in our being able to respond with next-day service out of El Dorado Hills,'' Falcon said. ``Our group wasn't able to offer that option previously.'' Large customers include Sony Disc Manufacturing Northwest in Spring- field, Ore., and WEA Manufacturing Commerce in Commerce, Calif.
In addition, Sacramento positions CPM to mold CD-ROM containers for same-day delivery to Silicon Valley customers.
``They have smaller-volume operations and don't want to carry large inventories,'' Falcon said, ``so same-day response time becomes a must.''
CPM exports through the Port of Oakland.
``We are the first U.S. manufacturer of jewel cases to successfully export to Japan,'' he said. ``We may export 30 percent of our production to Japan to leading music companies.''
CPM's initial installation, now being completed, involves an annual production level of 200 million jewel cases and the potential to increase that volume.
``Based on our history in Atlanta and Europe, we design all of our facilities with the possibility to expand,'' Falcon said. ``We can double the size of our facility in a very short time. Land is there, and the design is done.''
CPM employs 32 in an environment that is automated ``from pellet to pallet,'' Falcon said. Employees need a minimum of a two-year technical degree. No operator function exists.
Mitsubishi sees DVDs ``coming down the pike, similar to the way compact discs replaced audio tape,'' Falcon said. ``It looks like the leading Japanese electronics manufacturers may come out with DVD hardware in early 1997.'' Some say the DVD market potential could quintuple the existing market for standard CDs.
``No one is exactly sure when and how fast DVD products might take off, but we're all interested,'' Falcon said. ``Our relationships as a jewel case supplier with Japanese CD producers help us watch the potential market developments of the DVD as well.''
Another firm is on top of the DVD trend.
In 1987, Victor Co. of Japan Ltd.
opened a Tuscaloosa, Ala., plant that has grown from 40,000 square feet to more than 200,000 square feet and produces more than 9 million computer and music compact discs monthly.
Customer needs drove expansion, and the JVC Disc America unit, under close supervision, completed an 18-month multi-state search for a West Coast site in October 1995.
A mixed-use master plan development, known as Laguna West, won the intense competition. JVC bought 20 acres and optioned 35 more in the 1,045-acre tract south of Sacramento.
``We are betting $35 million that the market will continue to grow,'' Kaz Hosono, president of JVC Disc America, said at the December 1995 ground breaking.
The management team is scheduled to move in this month. By March, JVC expects to employ 100 in the new 100,000-square-foot facility.
``Due to the current interest in DVD, we are very excited about bringing the Sacramento facility on line in April 1997,'' said Dave Rodgers, manager of external affairs for JVC America Inc. in Tuscaloosa.
Initially on a monthly basis, JVC will produce 3 million compact discs, of which 600,000 will be the new DVDs. The other output will serve CD-audio, CD-ROM and CD-graphic user markets.
JVC will make the DVDs with its existing basic manufacturing process. The difference: a DVD can hold a full-length movie on the basis of advanced data compression technology.
Meanwhile, the Sacramento area looks for more.
``Those two came quickly,'' Hayes said, referring to CPM and JVC. ``We are working with three or four injection molding companies now.''