Flextronics International Ltd. has invested heavily in plastics production to create low-cost manufacturing centers in Asia, North America and Europe.
Flextronics, based in San Jose, Calif., employs about 6,000 and provides contract manufacturing and engineering services for consumer and electronic products.
It is ``important for us to have low-cost operations in low-cost regions on those continents,'' said Michael McNamara, president of North American operations.
``We want to have influence over [processing] our own plastics,'' McNamara said in a telephone interview from his office in San Jose.
Flextronics is adding injection molding capability in Doumen, China, with its 40 percent-owned Fico Investment Holding Ltd.; building plastics processing facilities in Guadalajara, Mexico, in a strategic partnership with DTM Products Inc.; and moving toward ownership of molding operations in Hungary and Austria.
All those actions fall within McNamara's low-cost parameter and allow Flextronics to integrate molding, assembly and other on-site operations that take out or cut costs of distribution, freight and capital and shorten the supply chain.
In China, Flextronics acquired its stake in custom injection molder Fico in December. The Lay family is Fico's primary owner. Fico molds parts on 100 presses with clamping forces of 20-450 tons in its own Shenzhen plant, mainly for Asian electronics companies, including Flextronics' customers.
While retaining its original site, Fico will occupy 30,000 square feet and initially operate 20 machines with clamping forces of 250 tons in Flextronics' growing campus in Doumen. An expansion in mid-1997 added 224,000 square feet, bringing the campus to 393,000 square feet.
Another scenario is evolving in Mexico, where Flextronics purchased 32 acres.
In mid-October, DTM installed three injection presses in 15,000 square feet of a new, 100,000-square-foot Flextronics building in Guadalajara.
``We expect to have 15 machines by the second quarter of 1998,'' and about 40 presses by mid-1999, with plastics operations in a 40,000-square-foot building now under construction nearby, McNamara said.
Flextronics made a deliberate search before settling on the working relationship with DTM. Plastics News' 1997 survey of North American injection molders put DTM's 1996 injection molding sales at $16 million. DTM employs about 110 and operates 24 presses in Niwot, Colo.
Flextronics formed the maquiladora Flextronics Mexico and chose Guadalajara for its low costs, universities, work-force stability and easy access to users of its electronic manufacturing services. Units of IBM Corp., Lucent Technologies Inc. and Hewlett-Packard Co. are nearby.
``We didn't want to be near the border'' because of higher overhead and faster turnover of engineering and other labor resources, McNamara said. Flextronics uses trucks to transport raw materials and finished products, connecting through a facility in Richardson, Texas.
``We can compete on time and transportation logistics,'' he said.
Flextronics' Oct. 19 deal to buy 92 percent of injection molder Neutronics Electronic Industries AG of Althofen, Austria, is scheduled to close Nov. 30.
Neutronics operates 45 presses with clamping forces of 20-1,050 tons in central Europe as a part of its electronic contract manufacturing services.
Philips Electronics NV of the Netherlands was a founding owner in 1994 and intends to remain a key customer after Neutronics changes hands.