The industrial world of Guadalajara has a concentration of firms known as contract manufacturers, and more arrive regularly in the busy Mexican city.
Typically, these firms have grown from origins as makers of circuit boards and other customized electronics for original equipment manufacturers, but the breadth of assignments is broadening.
OEMs seek to outsource part or all of their production on particular products, and that works into the hands of the contract manufacturers. The idea is to focus production resources on a region, perhaps the Americas, Asia or Europe, and drive down the costs.
Polymer processors feel the pull, too, as their customers want parts made nearer the final assembly point.
A number of contract manufacturers in Guadalajara have — or are building — ties to plastics processors.
SCI Systems Inc. of Huntsville, Ala., set the pace more than a decade ago in setting up a plant there.
Now, SCI's land-constrained contract-manufacturing operation is expanding to a second site south of the city's airport.
``We were the first one,'' Olin King, chairman and chief executive officer, said in a telephone interview. ``Now, 10 [companies] have followed us.'' Initially, SCI took a required Mexican partner but eventually bought out the other party.
``The Mexican market has been good,'' King said. ``We introduced our customers [to the area], and they encouraged our competition.'' Now, it has ``become a broad market.''
Having expanded its Guadalajara site five times, SCI now employs about 4,000 in more than 200,000 square feet of manufacturing space. That location will remain in operation.
``We are in the process of completing a new building'' of about 100,000 square feet on more than 20 acres, King said. Operations begin in November. The site can accommodate several new buildings as needs grow.
Customers ask SCI to ``import a fair amount of plastics,'' King said. ``Most is either molded locally or in the U.S. Customers have tools with U.S. suppliers and ship [them] down'' or, in other cases, tools are purchased locally. King declined to name SCI's molders or tool makers.
An SCI captive injection molding operation in Alabama has presses with clamping forces up to 400 tons. The molded parts meet Huntsville area-needs, but none is sent to Guadalajara.
Elsewhere in Mexico, SCI is pursuing a master plan on 20 acres in Apodaca near Monterrey and consolidating a recent acquisition in Mexico City.
``Shortly, we will have four plants in Mexico,'' King said.
SCI says it is ``the world's largest electronics contract manufacturer.''
The firm employed more than 22,000 and reported profit of $145.1 million on sales of $6.81 billion for the fiscal year ending June 30.
Jabil Circuit Inc. established a Guadalajara site in November 1997 and already is looking to expand its manufacturing of printed circuit boards for communications, personal computer and consumer applications.
For now, St. Petersburg, Fla.-based Jabil ships plastic parts from vendors in the United States, but the firm has visited four Guadalajara area molders, gathering samples, establishing contacts and arranging for end-user inspections.
Two existing customers use U.S.-sourced plastic parts, but at least one of those programs may buy local output beginning in 1999, said Sergio Veliz, purchasing manager for Jabil Circuit de Mexico SA de CV. Jabil employs 250 at a 150,000-square-foot facility on 24 acres.
Guadalajara contract manufacturers must meet quality expectations and gain ``customers' trust'' before it is possible to ``start transferring molds or designing and building molds here,'' he said.
Jabil employs 5,000 at eight sites and reported profit of $54.7 million on sales of $1.28 billion for the fiscal year ending Aug. 31.
Solectron Corp. of Milpitas, Calif., has a strategic partnership with injection molder Puget Plastics Corp. of Tualatin, Ore.
Puget is located near Solectron's low-cost, high-volume Guadalajara facility, which was established in late 1997. Solectron employs 1,600 there and operates 37 surface-mount-technology lines in 232,500 square feet of manufacturing space. Solectron's site qualified for ISO 9000 registration in early 1998.
In April 1997, Puget started operations at another Solectron site in Newark, Calif.