MEXICO CITY — InteSys Technologies Inc. is ramping up molding capabilities at its assembly-oriented maquiladora plant in northwestern Mexico and setting its sights more aggressively on that country's growing automotive market.
Separately, the custom injection molder and contract manufacturer this month sold its Gilbert, Ariz., headquarters facility for $22.5 million and immediately leased back the premises for up to 60 years.
``We made a decision [to invest] in what makes money rather than real estate,'' said Greg Layne, InteSys president and chief executive officer. ``We are trying to create a situation with a lot of liquidity [and a] different way of financing expansions,'' he said.
Some of that expansion is occurring now at the company's 3-year-old plant in Empalme, on Mexico's Pacific coast, about 275 miles due south of Tucson.
``At the beginning of 1999 we were running two presses, now we're running 10,'' Ian Alsop, the firm's Mexico operations director, said Feb. 12 at the Plastimagen show.
The Empalme plant currently houses 15 molding machines — most of which InteSys transferred from its Gilbert and Costa Mesa, Calif., plants. Those presses have clamp tonnages ranging from 40-400 tons, and some have been sitting idle for months.
The 220-employee Mexican plant now is ``validating four to five new molds per week — mostly for Chamberlain, but also for Motorola and soon for Nokia,'' said Alsop. The new molding business should boost employment at Empalme to between 300 and 350 by mid-1999, he said.
Chamberlain Group Inc. of Elmhurst, Ill., is a leading maker of garage-door openers, with a maquiladora plant in Nogales, Mexico, about 60 miles from Tucson, and currently represents the Empalme plant's biggest contract, according to Alsop. The InteSys maquila facility already holds some 90 Chamberlain molds, nearly all of which were transferred recently from the injection molder's headquarters plant in Gilbert. The Empalme plant will mold Chamberlain gear-box casings, lids, lenses, control panels, beeper controls and more, using nylon, ABS/SAN blends, and some polystyrene.
He said InteSys is guaranteed that business for the next six to seven years.
InteSys also has been doing some molding in Gilbert for longtime telecommunications customer Motorola Inc., but the Mexican facility is starting to take on some of that work, too. Workers at the Empalme plant are validating injection molds for Motorola cellular-phone cradles, and soon will add production of some cell-phone components for Finland's Nokia, as well.
Alsop said his firm's production of painted cellular phones for Nokia will remain in Gilbert, since Empalme currently does not have painting facilities.
Alsop said InteSys also recently secured a significant new contract to mold computer-chip retention modules for IBM Corp.
``We will start running two molds in Empalme within two weeks. We've got orders.'' He said the molds — an eight-cavity and a four-cavity — will need to be running nearly 80 percent of the time to fulfill that contract.
Such telecommunications and computer component work will continue to be InteSys' bread-and-butter work, but Alsop also has aggressive designs on another key industry.
``We're anticipating a lot more automotive work in Mexico. We're going for QS-9000 registration this year,'' he said.
InteSys — whose 1997 sales of $156 million placed it at No. 30 on Plastics News' 1998 ranking of North American injection molders — received a harsh lesson 15 months ago in the value of further broadening its customer base. Intel Inc., the Santa Clara, Calif.-based computer chip maker pulled a major molding program that sent the firm reeling. It had to cut staff and defend itself from rumors of bankruptcy.
Alsop said InteSys decided in early February to transfer from Gilbert to Empalme some existing molding work it does for a unit of Delphi Automotive Systems.
One reason InteSys exhibited at Plastimagen also was to raise its local profile as a molder. ``We want to open up the market here in Mexico, so the market knows we're here,'' explained Alsop.
``We want to be in other parts of Mexico, too." To serve the auto industry, he said they would be willing to put a plant in the central part of the country, since Nissan, General Motors Corp. and other major automakers have operations near there.
Meanwhile, regarding the headquarters transaction, InteSys has signed a 20-year lease with two optional extensions of 20 years each.
W.P. Carey & Co. Inc. of New York acquired the property Feb. 3, said Sean Sovak, first vice president of the real estate investment banker.
InteSys listed the property for sale in July, Bob Young, first vice president of CB Richard Ellis of Phoenix, said in a telephone interview. The deal ``took longer because of [tight] borrowing markets,'' said Young, the selling commercial broker.
The firm had the facility custom built in 1986, and has expanded it three times. Today it occupies more than 249,000 square feet.
Correspondent Roger Renstrom contributed to this report.
