CORONADO, CALIF. — Sanyo Manufacturing Corp. wants quality production, proximity and partnering capability from suppliers to its Mexican operations, Manuel Celis said during a panel discussion at the SPI Western Section conference May 14-16 in Coronado.
Celis said most large Asian firms bring in Asian suppliers, while many U.S.-based molders have invested in Mexican plants to be near customers.
Celis is vice president of Sanyo's operations in Tijuana, Mexico. Parent Sanyo Electric Co. Ltd. is based in Osaka, Japan.
Plants in the Mexican state of Baja California, mostly in Tijuana, Tecate and Mexicali, make 14 million television sets per year. Those in the state of Chihuahua, including Ciudad Ju rez, make 10 million to 11 million sets, Celis said. The U.S. market consumes 23 million TV sets a year, he said.
Provisions of the 1994 North American Free Trade Agreement affect operations. Sanyo, for example, procures 70-75 percent of materials in its TV sets from NAFTA suppliers, Celis said. About 20-25 percent comes from Asia, usually involving small, high-volume resistors, capacitors and some integrated circuits.
Celis said NAFTA requires at least 62.5 percent of content from Mexico, the United States and Canada. NAFTA ended Mexican tariffs on numerous U.S. resins and began phasing out duties for some plastics commodities.
Celis said Sanyo operates with a team of Mexican, U.S. and Japanese managers with a ``basic U.S. [style], with elements of Japanese continuous improvement'' and recognition of ``Mexican cultural differences.''
Prominent TV cabinet molder Mulay Plastics Inc. uses ``Mexican nationals from general manager to entry-level'' in its Tijuana plant, said Craig Harman, western region operations director.
As the skill sets go up, ``our turnover in indirect [labor] is very low,'' said Harman, who oversees plants in Tijuana and Casa Grande, Ariz., and will handle a facility being built in Ciudad Juarez.
SPM's maquiladora has experienced high turnover at the entry level, finding workers will ``switch for 50 cents a day'' and seeing the potential for ``a bidding war developing,'' said Michael Chastain, regional manager for Dynacast Co.'s SPM plants in Anaheim, Calif., and El Paso, Texas. He recognizes a need for employee orientation to deal with ``severe cultural differences, especially with [those from] mid-Mexico.''
Original equipment manufacturers encourage suppliers to locate nearby, but molders take the investment risk.
``We assume [we will] not get a heavy, front-loaded commitment'' for upgrading operations to meet customer needs, said Tom Plein, owner of El Cajon, Calif.-based AMS Plastics Inc., which operates plants in Tijuana and Mexicali. OEMs need world-class suppliers and rely on molders who ``have faith in the process,'' he said.
As to resin supplies, some molders in Mexico think the materials should cost the same as in the United States, said Alejandro Ruiz Pedrero, sales manager for Bayer de Mexico SA de CV in Mexico City. Brokerage and transportation, however, add costs.
Plastic injection molding is Baja California's second-largest economic activity behind electronics, said Manuel Garcia Lepe, alliances director for the state economic development unit in Tijuana.