Jatco makes a move to Modesto

Custom injection molder Jatco Inc. is moving its headquarters and California operations about 75 miles to the Modesto area from Union City.

In November, Jatco took possession of a leased 58,000-square-foot facility on 2.8 acres in unincorporated Stanislaus County near the north end of the agricultural growing areas of the San Joaquin Valley.

Previously, Hi-Tec Sports plc produced Magnum-brand boots in the plant.

The industrial and commercial area of Union City is being redeveloped, and Jatco needed to exit the premises by April 19, Jatco President Steven Jones said in a telephone interview.

Jatco would not be able to stay at the Union City location for long, and determined that nearby alternative locations had disadvantages.

"It became more prohibitive in the [San Francisco] Bay Area to continue operations," he said.

"We did not have a lot of time to prepare for relocation and needed to make a quick decision," Jones said. "We started looking into the Central Valley with its employee resources, better costs and better commute times."

The search included exploring other possible sites in Stockton and Turlock in addition to the Modesto area.

"We have had a good run in Union City, but the demographics have changed," Jones said. "It is more difficult to do business where we have been located."

Jones joined Jatco in 1997 and was executive vice president in 2010 when he was named president.

Opportunity Stanislaus and others assisted Jatco in finding a site.

"Jatco came to the city of Modesto, which invited us to support the project," said David White, CEO of the economic development organization serving Stanislaus County. "With what is happening in California, the cost of doing business in the Bay Area" is high, and, "coming to the Central Valley will be a much more affordable option for Jatco."

In Stanislaus County, "we have a lot of manufacturing," he said. The arrival of Jatco will "help fill out our supply chain for local operations" such as those of E&J Gallo Winery Inc. and Foster Farms LLC.

The selected site is outside Modesto's municipal boundary but within the city's sphere of influence, and Modesto provides some services, White noted.

"Jatco picked our site partly because of the affordability and quality of life its new employees will experience in Modesto and the surrounding areas," Thomas Reeves, city of Modesto community and media relations officer, said.

Because the site is not in Modesto proper, "the city will not receive direct benefits from taxes," but the proximity to Modesto will provide advantages, Reeves said.

Modesto provides sewer and water services at Jatco's new location, and Jatco will receive some assistance on employee training and that help could also benefit some employees who are relocating.

The Modesto site is close to the state Highway 99 transportation corridor and provides Jatco with easy access to customers, including those in the nearby foothills of the Sierra Nevada Mountains and the Sacramento market.

Jatco also found a new employee in the move to Modesto. Steven Ames had worked with Opportunity Stanislaus and Modesto's community and economic development department, where he fielded "a lot of calls" from prospective customers and employees, he said. In February, Ames joined Jatco as director of sales.

Jatco is working with partner agencies on job fairs and other recruitment efforts.

"We are looking for inspectors, operators and possibly material handlers," Jones said.

Jatco's strategic plan calls for more automation.

"The relocation is allowing us to become more efficient and the opportunity to enhance our automation capabilities," he said.

Jatco offered each of its 125-150 employees an opportunity to relocate. Several employees have 30 or more years of service.

Under current plans, only two people from the executive and technical teams will not go with Jatco to Modesto, but 20-30 will make the change.

Some plant workers may shorten their commutes to work.

Jatco went back to an employee of 10 years who resigned after moving earlier to the Modesto area.

"She left two years ago but is coming back," Jones said.

"Everybody has been great," he said. "For an injection molding company to be welcomed is refreshing."

"We are getting close to completing the improvements," Jones said. "We are awaiting an upgraded electrical panel and planning to move our larger [injection molding] machines around end of March."

In Union City, Jatco is vacating a 102,000-square-foot leased building where it used about 70 percent and subleases the remainder.

The Modesto site offers a more efficient design with narrower aisle racks will allow the operation to fit into the smaller floor space.

In addition, Jatco is shipping some business to, and beefing up, its Greenwood, S.C., facility, which employs 25-35 and occupies 80,000 square feet. Jatco opened the operation in 2010.

Jatco is moving some of the Union City presses to South Carolina. Greenwood is going from its five injection molding machines of 80-720 tons, and may have 10 or more presses in the near future.

In Union City, Jatco has operated 33 injection molding machines of 55-1,500 tons. With the offloading of some equipment to South Carolina, Jatco will have about 25 presses in Modesto with clamping forces ranging from 55-1,500 tons.

"We want to avoid redundancy" for the equipment serving operations in California, Jones said.

Jatco handles mold modification in house, buys its tools primarily overseas and, in recent years, has looked at procuring from domestic mold shops.

"We have not had as much success as we would like, but we may expand" that domestic mold making effort, Jones said.

Jatco's primary end markets include agriculture, construction, industrial, consumer and houseware, point-of-purchase and medical, the latter involving disposables and device housings and utilizing portable clean rooms, with annual sales of about $18-$20 million, Jones said.

Jones would not disclose Jatco's 2019 capital expenditure budget, but he noted a "good portion" will involve expenditures for the move.

In September, the Ontario, Calif.-based North American agency IAMPO R&T certified Jatco's quality management system in Union City as being compliant to the ISO 9001:2015 standard.

Jatco can transfer the required documentation and controls to the Modesto area location through a scheduled ISO surveillance audit.