Key plastics processors that supply mobile-phone components to Nokia Oyj are investing heavily in Texas. In 1995, the Espoo, Finland-based company's U.S. unit had about 15 firms supplying plastic components to its assembly facility in Fort Worth, Texas.
There were "too many" suppliers, and the situation was "causing problems for us," said Jouko Vainola, senior purchasing manager for Nokia Americas.
So Nokia thinned the ranks.
Now, its principal parts makers have built or expanded operations in the Forth Worth area. Those suppliers include Perlos Oyj of Nurmijarvi, Finland; Triple S Plastics Inc. of Vicksburg, Mich.; and Textron Inc.'s newly acquired InteSys Technologies Inc. of Gilbert, Ariz.
Perlos, Triple S and Nokia all occupy space at the Alliance Airport industrial corridor managed by Hillwood Development Corp. Ross Perot Jr. is chairman of the Fort Worth developer.
"Logistically, it would have been a nightmare without having these suppliers over here," Vainola said in a telephone interview. "Suppliers deliver directly to our lines."
Nokia Americas, based in nearby Irving, Texas, started commercial production in Fort Worth in 1994 and now occupies a 500,000-square-foot building there. The area has "a trained work force, excellent air service for passengers and cargo, and a strong school system," said Jim Bowman, vice president of communications.
"We don't have to go anyplace else. We have a good logistics chain all the way through relationships with customers and vendors alike. The business has developed a great deal of momentum."
Nokia and others in telecommunications are subcontracting more of their production, following the lead of the computer industry. Nokia suppliers handle an increasing number of subassemblies and are getting into procurement of parts such as speakers and key buttons. For now, they use Nokia-agreed pricing for nonplastic items, but they will be more independent over time, Bowman said.
The company employs 5,500 in Irving and Fort Worth, up from 4,200 in April, he said.
Bowman maintains that suppliers came willingly to Fort Worth.
"Plastics processors saw an opportunity by having their own operations near us," Bowman said. "We did not require them to be here."
Perlos, Triple S and others have invested substantially in the region.
Perlos (Texas) Inc., a subsidiary of the Finish firm, is expanding into an addition and expects to be fully operational by May. Perlos followed Nokia to Fort Worth in 1995.
"One big reason is the logistics — and the cost," said Keijo Riuttala, vice president for operations. It is "almost impossible to deliver from Europe," factoring in freight and other costs.
The newly expanded plant will employ 500 and have 90 presses, most with 70 tons of clamping force. A majority are hydraulic Engels and all-electric Milacron Roboshots.
Perlos has supplied telecommunications housings to Nokia in Europe since the early 1980s.
"We have a lot of common history with Nokia and previous operations like television manufacturing," Riuttala said.
Triple S Plastics began operations down the street from Nokia in August. The firm took a two-year lease on 40 percent of a former CompUSA warehouse. Triple S updated electrical capacity in its 66,000-square-foot portion of the building.
"We got lucky," said Phil Weaver, vice president of marketing and administration. "The facility was vacated just two months before we started looking."
Triple S had supplied Nokia with components since 1996 from another plant in Georgetown, Texas. When Triple S moved to the new facility, it added 12 presses with clamping forces of 65-200 tons. Most are all-electric JSW models. Plans call for at least 22 presses within two years; the space can accommodate 30 units.
Triple S employs 85 in Fort Worth and is molding housings, doing in-mold decorating for cell-phone lenses and providing subassembly services, which now are dedicated to support Nokia.
Another European telecommunications supplier has located nearby. Torekov, Sweden-based plastics processor Nolato AB leased 40,000 square feet and began production in January 1999.
Nolato plants in Sweden supply components to Telefon AB L.M. Ericsson, Nokia and Siemens AG.
Nolato Texas employs 100 and is on the verge of announcing a major expansion that could triple the existing space. In addition, Nolato Texas has been exploring opportunities to make telecommunications parts elsewhere in North America, possibly through an acquisition.
"Nokia has created a wonderful demand for suppliers here," said James Soderquist, Nolato Texas business development manager.
In October, Hillwood leased 42,000 square feet to Savcor Coatings Ltd., a producer of plasma-vapor-deposition coatings for application to plastic parts.
''We chose Alliance to be close to our customers Nokia, Nolato and Perlos," Vice President Martin Andritschsky said in a press release.
Savcor Coatings is a unit of Savcor Group Ltd. Oyj of Mikkeli, Finland.
Nokia is regarded as the world's largest wireless-phone manufacturer, competing principally with Motorola Inc. and Telefon AB L.M. Ericsson.
For the nine months ended Sept. 30, Nokia's profit rose 57 percent to 1.72 billion euros ($1.83 billion) on sales growth of 49 percent to 13.4 billion euros ($14.3 billion).
Jorma Ollila, Nokia chairman and chief executive officer, projects that the company's sales will grow 30-40 percent during 2000 and 25-35 percent for both 2001 and 2002.