Two California custom injection molders are cautiously pursuing expansion plans in Tecate, Mexico, a small town 20 miles from Tijuana.
Microdyne Plastics Inc. is waiting for a firm commitment before expanding into production in Mexico, while Formula Plastics Inc. has renovated its facilities and gradually is modernizing.
In Tecate, ``only a few companies pick up work from others, and Formula Plastics is the biggest of these,'' said Formula President Alex Mora.
He said the Tecate area has about 20 captive molders, part of the big assembly plants or maquiladoras for toy makers, such as Mattel Inc. and Hasbro Inc.
``When they need extra capacity, we will maquila a specific product for them,'' he added in a telephone interview from the company's headquarters in Ontario, Calif. Two examples of regular production for Formula are housings for cordless drills and battery housings for Sanyo Electric Inc.
Mora added that Mexico's peso devaluation brought a ``temporary windfall'' to the maquiladora activity, as a low peso brought in more contracts. But as the effects of the recession and inflation hit in Mexico, the situation stabilized.
Formula has used the situation to grow, adding eight injection presses in early 1997 for a total of 34 presses at its two Tecate plants. Starting in 1998, the company aims to replace six presses per year, since most are 10-15 years old, Mora said.
Mora estimated that the company's total sales will increase more than 12 percent this year, reaching $12.5 million to $13.5 million. Injection molding sales are $9.2 million.
Formula began operations in Mexico in 1988, when the company was 4 years old. Its two plants in Tecate have a total of 80,000 square feet. Another plant in Ontario has 20,000 square feet and 12 presses. Of the firm's total 46 machines, eight are less than 100 tons, 31 are from 100-349 tons and seven are more than 350 tons.
The company focuses on thermoplastic injection and insert molding, and some secondary services like tool design and repair.
Coincidentally, the other company that soon may be competing more directly with Formula is also headquartered in Ontario — Microdyne Plastics. However, that company's vice president, Duane Brown, said in a telephone interview that expansion still depends on a contract coming through.
More than three years ago, Microdyne set up Primatec in Tecate, which assembles, ships and acts as warehouse. Since the beginning of the year, Microdyne has planned expansion there into injection molding and extrusion blow molding, plus secondary services such as decorating, pad printing and painting.
``The plan is to take machines and capacity currently installed in Ontario ... and ship it to the Tecate plant,'' Brown said.
The machines will be replaced with new equipment on the U.S. side as required.
Microdyne is in talks with original equipment manufacturers in the area that Brown declined to identify.
``We have requests to do molding, but we are being very careful since we saw competitors go in and chaos as a result,'' he said.
He believes the problems were caused by a lack of good technical staff, and Microdyne is taking time to hire people and ensure production quality.
How much the company actually invests to expand also depends on that elusive first contract — which equipment will be moved or bought, how many staff will be hired, and whether it takes place next week or in three months. The Tecate plant has 17,000 square feet of space and, if all goes well, ``we will look for another facility with a 99-year lease,'' Brown said.
Microdyne's facilities in Ontario offer engineering, mold making, and injection molding, with 46 presses ranging from a 75-ton Dugas to a 310-ton Cincinnati Milacron, he said. Another plant is nearby for extrusion blow molding and customized parts.
For the fiscal year ended Aug. 31, Microdyne's sales were $10 million; injection molding sales were $7.5 million.