A steady flow of injection molding capability is working its way toward Guadalajara, Mexico, to meet the rapidly growing needs of contract manufacturers mainly supplying original equipment manufacturers for the electronics industry.
``For our electronics-type industry, Guadalajara is the city'' and serves as ``the alternative to Asia,'' said Bert Vermuelen, who oversees plants in Mexico and Colorado for Trend Technologies Inc. of San Jose, Calif. He likened Guadalajara to other manufacturing centers with low labor costs, noting that ``Europeans chose Scotland and Ireland,'' and the location in Asia is Singapore.
Mexico is structured in two economies, Vermuelen observed. He contrasted the business activities along the Mexico-U.S. border and with those in Mexico's central interior region.
Guadalajara is emerging as a major low-cost-labor hub for the Americas, he said, with a more-stable work environment than along the more transient border.
Though Guadalajara is about 600 miles from the nearest points of entry with Texas, it is not difficult to transport cargo, Vermuelen said. OEMs encourage Guadalajara investment.
Those OEMs include Hewlett-Packard Co., IBM Corp. and Philips Electronics NV — which, in late 1997, acquired Lucent Technologies Inc.'s operations, including in-house molding with about 60 low-tonnage presses.
Eastman Kodak Co. is another OEM with in-house molding capability in Guadalajara.
Generally, Hewlett-Packard and IBM outsource their plastic parts.
Hewlett-Packard, a longtime fixture in Guadalajara, has opted to have a developer create an industrial park rather than exist in an older facility. The Palo Alto, Calif.-based firm will be the park's lead occupant.
``H-P has been one of the main promoters of relocation of the plastics industry,'' said Sergio Veliz, purchasing manager with the Guadalajara plant of contract-manufacturer Jabil Circuit Inc.
Hewlett-Packard and others previously had encouraged injection molders to establish plastics processing sites in the Pacific Northwest. Now, some of those molders are moving their presses to Guadalajara, buying more equipment, hiring and training talent and seeking to ride through yet another OEM redirection.
One result: excess molding capacity in some Washington, Oregon and northern California shops.
While electronics activity forms a ``major stronghold'' in central Mexico, John Reading foresees an influx of automotive business that will form ``the next horizon to hit the Guadalajara area.''
Reading, who is Toshiba Machine Co.'s sales manager for Mexico and the mid-United States, hears now about a shortage of technical talent to handle growing industry demands and a related housing shortage in Guadalajara.
``Growth is starting to be affected by quantity and quality of people,'' said Reading, who noted he is seeing a lot of movement of employees between companies.
``Companies in Guadalajara need all the help they can get,'' agreed Duane Brown, vice president of molder Microdyne Plastics Inc. in Ontario, Calif.
``Guadalajara is the next hot spot [and] an outstanding area to get many of the cost benefits that people had looked to from Asian suppliers,'' Brown said. He cited the outstanding engineers from Guadalajara's universities, a great work ethic and a location with a workable North American time zone. The benefits are available ``without having to send everything over water'' to Asia, he said.