Minnesota to Mexico: Moving south to support your U.S. business

Providing cheap labor and growing markets, Mexico and Central and South America continue to attract OEMs. And in an effort to reduce costs to manufacture and service these markets, OEMs are pulling more and more U.S.-based molders and moldmakers south of the border. In fact, 1999 could be considered a banner year for molders and moldmakers locating plants in Mexico. Consider these examples:

In February 1999, Carlisle Engineered Products of Chardon, OH, opened a 48,000-sq-ft molding plant in Chihuahua, Mexico, that houses 14 injection molding presses. The plant produces polypropylene automotive harnesses.

Asheboro, NC-based Technimark Inc. now has three custom injection molding plants in Mexico—one in Reynosa in partnership with John Deere, and another in Chihuahua in partnership with Black & Decker. This is in addition to the 1998 acquisition of Plasticos SA de CV in Mexicali, Mexico.

In early 1999, UFE Inc., a custom injection molder headquartered in Stillwater, MN, announced that it had launched a custom molding facility in Monterrey, Nuevo Leon, Mexico. Acquiring an already established 107,000-sq-ft molding facility with 23 Van Dorn presses from a U.S.-based OEM reduced both startup time and red tape for UFE.

And in December 1999 Nypro Inc. (Clinton, MA) announced plans to open a 21-machine, 30,000-sq-ft, $6 million automotive and electronics injection molding plant in Monterrey.

All of these companies have one thing in common—they went to Mexico at the request of their customers. But there is another reason driving moldmakers and molders south. As certain markets in the U.S. slow or begin to die, many companies find that by establishing businesses in Mexico and Central or South America, they can support their U.S.-based shops with new work and increased revenue.

Supporting Molds in Guadalajara
Ed Kelly would probably be the last person in the world anyone would expect to go to a foreign country and open a mold shop. A dyed-in-the-wool, made-in-the-U.S.A. moldmaker for more than 30 years, Kelly founded Tooling Science Inc. and C&D Tool in Maple Grove, MN. But, as the business environment changed, so did Kelly’s business outlook.

“Some of our best customers have recently opened for business in Mexico and that seems to offer some great opportunities,” says Kelly, president of Tooling Science.

Mike Ditty, who has been with the company for 23 years, first as a mold designer and now as a sales engineer, researched the idea for more than a year before recommending that the company site a tooling facility in Guadalajara.

Ditty found that, because of the shortage of mold shops in the area, the availability of good-quality mold maintenance was lacking. Molding operations in the region were eager to have Tooling Science become a part of the business community. In addition to major OEMs such as Lucent Technologies and Hewlett-Packard, there are five large molding operations in Guadalajara.

A partnership seemed to be the best way to go initially, so Ditty began asking OEMs and molders about space in their existing plants. Nearly all were receptive to the idea, notes Ditty; but one, The Tech Group, headquartered in Scottsdale, AZ, turned out to be a particularly good fit.

Tooling Science opened its operation in October 1999 in 3000 sq ft of space in a building that is part of The Tech Group’s molding facility. However, Ditty makes it clear that the company is not captive to Tech. It’s a custom moldmaker that plans to serve many customers from its location.

The shop offers tooling support, repair, and maintenance to area OEMs and injection molders. Abel Ruiz, an experienced mold designer and engineer who’s worked for several large molders in Arizona, manages the facility.

In the short term, Tooling Science’s primary goal is to provide service and support for tools and molds; however, long term the company plans to build new molds. Surprisingly, the company won’t reduce work at its Minnesota plant. Instead, it plans to share the opportunities from Mexico to expand both facilities.

From Mexico to Minnesota
Using blossoming markets south of the U.S. border to help grow business in the U.S. was not lost on another Minnesota molder and moldmaker, Anchor Tool & Plastic. Ron Rogers says he’s watched manufacturing leave Minnesota for 20 years. At one time, says Rogers, companies beat a path to the door of his Minneapolis-based facility. Not any more. “There’s no market left in Minnesota,” he says.

He blames much of the problem on an environment that was unfriendly to manufacturing. “All the manufacturing was chased out,” he says, “and once it leaves there’s no sense in staying around to see who turns out the lights.”

Rogers decided to make a radical move and in June 1998 he opened the doors of a new molding plant in Nogales, Sonora, Mexico. He still maintains his facility in Minneapolis, however, and travels to the area frequently, bringing jobs not only for his shop but for other moldmakers in the area. “I’ve brought more tooling back to our Twin Cities plant than we have there already,” he explains.

Rogers says his moldmaking success is a result of a lack of skilled workers and technology. “There are a lot of machines, but little technology on the border,” he adds.

Rogers notes that Mexico’s popularity is still strong with large OEMs. But suppliers—especially moldmakers and molders—aren’t all making a beeline into Mexico to support them. Yet, he believes there’s more opportunity for new business in Mexico than almost anywhere else.

“Taiwan is no longer a favored place,” he says. “China absorbs a fair amount of work, but there are a lot of drawbacks there. Asia isn’t very favored anymore, and with the tariffs increasing it will be interesting to see what happens.”

Rogers adds that he has customers “whose objective is to get all their molds back from Asia and begin molding in Mexico,” which will provide additional opportunities.

Heading south has its drawbacks, however. “There’s a lot of low-end business on the border,” explains Rogers. “Companies come here because it’s inexpensive to manufacture so they expect everything to be cheap, even from quality molding and moldmaking companies like Anchor. Is there a need for quality tooling and molding here yet?” he asks. “That’s still the question.”