A Tyco International Ltd. automotive plant and a new Intec Group Inc. facility are among plastics processors using shelter services in Mexico operations.
A shelter operates under the same 1989 law as other maquiladoras, but those in a shelter gain significant U.S. tax advantages. As clients of shelter operator Offshore Group of Tucson, Ariz., the Tyco and Intec operations, among others, have recourse through the U.S. legal system rather than Mexico's.
Shelter users operate as a department of the provider and typically can get into business quickly. Basically, a manufacturer sends materials, technology and key managers, and the shelter company handles tasks such as human resources, accounting, park management, building maintenance and environmental compliance.
``The shelter concept is an approach that provides flexibility and cost advantages both to existing companies in Mexico and, specifically, organizations just entering the market,'' said Patrick Bartling, vice president of global operations with Bemis Manufacturing Co. in Sheboygan Falls, Wis.
While Bemis' operation in Monterrey, Mexico, does not use a shelter, Bartling said it would consider the possibility, ``given the requirement and the need to develop additional manufacturing capabilities in Mexico.''
Tyco's Luis Mendoza manages a 170,000-square-foot plant in Empalme, Mexico, that employs 1,900. The facility molds and assembles parts for electrical connectors, wire safety harnesses connected to airbags and circuit housing boxes and controls. The plant has 20 injection presses.
Mendoza has experience running Mexican plant operations himself and recognizes many differences with a shelter.
``I don't need to deal with the union, hire people, do payrolls or taxes or have legal representation,'' he said. Tyco is registered in Pembroke, Bermuda.
Intec's Bill Golden is working with Offshore to establish a Guaymas-area site by April. Golden has opened several facilities in Mexico, including a shelter. Many shelters ``are really real estate companies,'' but Offshore dominates operationally and politically as the largest employer in that part of the state of Sonora, he said.
Golden, president of Intec Mexico LLC, a U.S. company, said the operation will start with 20 employees, nine presses and 34,000 square feet. Intec Group of Palatine, Ill., needs the Mexico capability to make insert molded switches, connectors and sensors for an automotive customer.
Offshore, Mexico's largest shelter operator, deals with manufacturing clients principally through in-house maquiladoras and other entities, said Gale Thompson, vice president of operations.
Other Offshore clients processing plastics include Textron Inc. unit InteSys Technologies Inc. for telecommunications, automotive and medical applications; Ping Inc. molding golf-bag boots; and a Choctaw Indian Nation operation overmolding harnesses.
Manufacturers can leave a shelter. A year ago, for example, joint venture Nypro Precision Assemblies Inc. in Tijuana, Mexico, took internal control of its accounting, taxation, permitting, human resource management and import-export services. NPA and shelter contractor Made in Mexico Inc. of San Diego had shared those services since NPA was established in 1993.
Made in Mexico provides shelter services for 16 clients in Tijuana, Tecate and Ensenada in northwestern Mexico.
A U.S. parent without a shelter service may be ignorant of ``what is not getting done'' in its Mexican plant, said Dale Robinson, president of Made in Mexico. ``Many times a corporation in Mexico may be put in jeopardy,'' but the owners don't know about the risk until a change occurs in plant management.
Other significant shelter providers include American Industries of El Paso, Texas; Collectron International Management Inc. of Nogales, Ariz.; Parques Industriales Internacionales Mexicanos, known as Intermex, of Chihuahua, Mexico; Nova/Link SA de CV of Matamoros, Mexico; and Elamex SA de CV of Ciudad Juarez, Mexico.