Archive for the ‘US – Mexico Border Issues’ Category

Need for Mexico to expand production patterns.

 Interview with Homero Galindo, Viasystems, by Michael Hissam. 

Published in the March 2012 issue of Juarez-El Paso Now magazine.

Viasystems in Ciudad Juarez recently encountered a nice problem: Growth and newer technology required a change of address in the same city. These precision metal fabricators provide for several industries from a location which has gained further strategic importance within their corporate structure. Homero Galindo, General Manager, North American Operations EMS Systems, Viasystems, sees a bigger picture, one that recognizes lessons learned concerning China, one that includes a look beyond Mexico and to the south as those markets continue to emerge.

FOR VIASYSTEMS, WE SEE POSITIVE REPORTS FROM CIUDAD JUAREZ, AS WELL AS MEXICO. LET´S TALK ABOUT THE RANGE OF PRODUCTS FROM CIUDAD JUAREZ. 

We do a lot of metal fabrication: Parts with different progressive metal presses, different sizes. We do lots of different welding configurations, using different technologies for welding. Primarily our parts are used to make cabinets that are used in a variety of industries, with different requirements. They may go into the medical devices. They can go to telecommunication cabinets. They can go to automobile chassis. We do the electronics or the electromechanical integration along with it to support key OEMs worldwide.

YOU TALK ABOUT A POSITIVE SITUATION FOR YOUR BUSINESS IN CIUDAD JUAREZ, THE LARGEST CITY IN MEXICO´S LARGEST  GEOGRAPHIC STATE.  WHAT ABOUT THE ENCOURAGEMENT AND SUPPORT FROM THE STATE CAPITAL OF CHIHUAHUA?

They are excellent. I think the state of Chihuahua clearly under-stands that it’s got to emerge from light manufacturing to medium and heavy manufacturing. We are very good in light manufacturing. That is small components, mass production. You emerge to medium and heavier manufacturing, so this is more attention to more complex assemblies, high- reliability products, high-end products that have a performance function for any industry where your products go. The skill set is different, from just producing mass productions in the thousands per day. You go to the tens or twenties per day of units and they are high reliability products. You have more complex met-al forming, die casting, electronics, and it elevates the capability manufacturing to another competitive sector.

WHAT ELSE HAS HAPPENED THAT MAKES YOUR LOCATION IN JUAREZ STRATEGIC FOR YOUR COMPANY?

There are many factors. First of all you have to talk about Juarez which has around 40 years of manufacturing experience. You have first-, second- and third-generation employees in the family that are grouped into the manufacturing industry. And more recently the sup-ply chain in the last twenty years. You are looking into a city that has the discipline to understand manufacturing and it is passed on to generation to generation. You also look into a city that has a lot of supply base and services available in the El Paso area and in Juarez to come and sup-port. There’s equipment, raw material, service technicians and equipment technicians that can support your manufacturing on your internal base with engineers and technicians inside your plant. You also look into the schools, the vocational schools available, some are private. Some are sponsored by the state government to prepare technicians to industry needs and the engagement that you have with them, in their own classrooms or in co-participation coming into your facility and you design courses for the needs of processes.

THE BOTTOM LINE FOR INDUSTRY IS THE TOTAL COST OF DOING BUSINESS. YOU ARE IN JUAREZ, YOU ARE IN CHIHUAHUA AND YOU ARE IN NORTHERN MEXICO. HOW DOES ALL THAT FIT IN WITH THE BEST TOTAL COST OF DOING BUSINESS?

It works well when you look at the total landed costs. Let’s say when you are comparing yourself to another area, you look into the wait structure, Mexico and another country and you look into the logistics, the 3PL field expenses. You look into the tariffs and the permits for products coming in from another country. You put all that into balance plus the value of money and the interest rates. You have to compare all those aspects to truly determine your total landed cost for producing in one country over the other one. In our equation, yes sometimes you’re a few points more expensive. Sometimes you are better positioned. But then you add another factor for Juarez: That is the proximity to North American markets. So how much inventory do you have in the pipeline in addition to your landed costs? How fast can you turn around a change on your manufacturing as requested by the customer? You can implement the change in Juarez and within 48 hours your customer can have it on the dock.

FOR VIASYSTEMS IN CIUDAD JUAREZ, AS WE MOVE THROUGH 2012, WHAT WILL BE MILEPOSTS THAT SAY, “SUCCESS?” 

Viasystems is putting a lot of investment and trust in the Juarez operations. This is for execution, for customers with higher reliability products in key industries. These include telecommunications, energy, aerospace, industrial instrumentation, automobile industry. In those as with others the expectation is the high performance on the products that we manufacture for our OEM’s. It’s constant. It’s day- to-day and for that as we grow this expansion and as we are landing these new accounts, that we outperform our customer’s expectations.

WE NOW SEE A HUGE INCREASE IN EXPORTS FROM THE U.S. TO OTHER COUNTRIES IN LATIN AMERICA, WE ALSO SEE MEXICO POSITIONING ITSELF FOR EXPORTS TO THE SOUTH, WHAT SHOULD THE U.S. AUDIENCE UNDERSTAND ABOUT MARKETS SOUTH OF MEXICO?

It is very simple when you look into the economics. You find out what economies are growing, what economies are contracting. We live in a global environment and that’s where you put your focus and that’s where you want a share of that business opportunity. You have to understand that every country is in a different position, whether it’s at a mature level or you have an emerging market. If we have an emerging market, you want to be there.

TEN YEARS AGO MANY COMPANIES LEFT FOR CHINA THINKING LABOR COST WOULD BE EVERYTHING NEEDED FOR SUCCESS. THINGS HAVE CHANGED, WHAT ARE THE LESSONS THAT MEXICO NEEDS TO UNDERSTAND AND MIGHT NEED TO DO BASED ON WHAT YOU ARE SEEING IN CHINA?

In our industry, one fundamental thing that China has done very well is they’re doing manufacturing for OEM’s to support components in other geographies outside of China. It is equally important how the economy has opened up and how the country’s mission has to elevate this standard of living of all the people in China. They have to have more access to products in a country with very protective borders. When you go to China you see the emerging markets already available to them. So in our case, for Viasystems, we have big customers in China — automotive manufacturing plants. Mexico has got to sense that impact as well and open up commerce a little more, pay more attention to tariffs. When you look at it, it is easier to do business in China for China. China has put a mission to do the supply chain — the components that go into a finished product. You find them; you find them in their own cities where you are operating. When you come to Mexico a lot of the components — look at electronics — we have to import everything from Asia. So not a lot of electronic manufacturing, it’s more capital investment, more process, more environmental processes that are involved to make more electronics. I think that’s an area where the government in Mexico should pay more attention and improve the local base of components that go into finished goods to be made in Mexico and also to be available for the Mexican economy as well as outside. When you look into the manufacturing strategy for 30 or 40 years, primarily the focus has been for customers outside the borders. I’m not saying it’s a totality but that’s an area where we all know the Chinese came to learn our model in Mexico for manufacturing. When they went back to China they improved it. I think there are a lot of lessons learned to do reverse engineering. Auto Parts Manufacturing

WHERE DO YOU SEE THE OPPORTUNITY FOR MEXICO FOR CONTINUOUS IMPROVEMENT?  

I think the more you use tech­nology you can eliminate non-value added activities and tasks. Just think everywhere: think academics, think laboratories, think manufacturing. More and more you depend on technology for better accuracy and doing it right the first time. But you must have access to technology.

YOU HAVE BEEN AN EXECUTIVE; YOU HAVE BEEN A LEADER IN ORGANIZATIONS, SUCH AS THE MAQUILADORA ASSOCIATIONS, AND AT THE NATIONAL LEVEL. FOR FOREIGN INVESTORS, ESPECIALLY THOSE FROM THE UNITED STATES THINKING ABOUT DOING BUSINESS IN MEXICO OR SUPPLYING MEXICO, WHAT SHOULD THEY UNDERSTAND ABOUT YOUR COUNTRY?

First of all, we’ve been neighbors for so many years and even though we speak different languages, the culture base is so similar. Our meth­ods are the same, our focus for per­forming is good, getting up in the mornings to work, understanding the rules of the game, understand­ing the code of ethics, understand­ing that you get up and you do a good day of work.

You understand there is a very positive attitude with the Mexican workforce, the very young. It’s an emerging country with young people and they want to do better. They get excited about industry processes and their opportunity to participate on it. Then you look at the engage­ment from different government, lo­cal or federal level departments for the Mexican government. They’re all engaging on how best they can support industry. They spent a lot of time looking into the academics, traditional classroom academics, to more laboratory-oriented train­ing. That’s very, very good for the North American investor thinking about doing business in Mexico. You would assess those benefits or that engagement already put in place to support your processes.

THERE´S ALWAYS THE CONCERN ESPECIALLY IN NORTHERN MEXICO ABOUT THE EFFECTS OF VIOLENCE ON DOING BUSINESS, WHAT ARE YOU THOUGHTS AS TO HOW TO KEEP BUSINESS SUSTAINED IN SPITE OF THAT SITUATION?

Nobody likes the fact that vio­lence has increased in all of Mexico. For some reason the press has fo­cused to talk about Juarez, but it is all across the country. It is a problem that has been there for many, many years. Recently it has escalated more one city over the other ones and it’s put the attention worldwide. For the industry purposes, industry has not been affected. There are some isolated cases, like in any city in the world where somebody gets into the wrong doing activity, not ac­ceptable. But overall trade, people showing up to work, finished goods leaving the country, your support technicians coming into help you, is not affected when it comes to industry. When it comes to other activities, social aspects of living in Mexico, doing business in Mexico, you have to be more cautious but the economy is strong with all the maquiladoras. 

WHEN WE TAKE A LOOK AT VIASYSTEMS ACTIVITIES IN MEXICO, WHAT ARE SOME OF THE THINGS OF WHICH YOU ARE MOST PROUD IN ADDRESSING THE CHALLENGES OF COMPETITION?

Competitiveness is very fierce in my industry and we always have to understand what our customers are looking for from us and espe­cially in our industry, where we are doing contract manufacturing for them, they have alternatives. The alternatives, we want to deliver the best service and the best quality at the best price. In order to do that you have to pay attention every single day to your supply base and your cost of supply base, to your lean manufacturing, to your quality levels and to continuous education on your workforce and you have to delight your customers and it is so simple but it is just so much detail oriented and so much key manage­ment to the point with your people in your organization. 

WHEN YOU WORK WITH SUPPLIERS, WHAT ARE YOU EXPECTATIONS FROM THEM, REALIZING PRICE IS NOT EVERYTHING?  

I expect a lot of process con­trols, a lot of self-audits, a lot of quality metric reviews with them. I expect them to understand their weak points and how they address them, also business continuity, emergency response, disaster re­covery, training for their employ­ees and sustainability. Those are all key areas.

WHEN IT COMES TO JOB TRAINING AT VIASYSTEMS, I SENSE THAT IN ADDITION TO THE JOB SPECIFIC YOU ARE TRYING TO TEACH A PHILOSOPHY OR AN UNDERSTANDING OF THIS GLOBAL BUSINESS SITUATION.

It is very simple. Education can sometimes be confused with academics in the classroom with basic learning of traditional academics. But in our industry we need experience and to put together what you learn in the classrooms and how it affects technology that you build.

Now you are putting variables together; you are putting units; you are putting process flows; you are putting some testing of the parts you doing; you are assessing lot variations from suppliers. All of those components or those variables must tie together with some judgment when you are doing manufacturing. For that purpose you have to spend a lot of time with your employee and your workforce and understand them that even though we are doing assemblies, you are solving variables from so many different fields that come to you. That’s key in manufacturing.

CONCERNING EDUCATION, IF YOU HAD A CHANCE TO ADVISE STUDENTS ABOUT OPPORTUNITIES AND THE EDUCATION TO GET THERE, WHAT WOULD YOUR MESSAGE BE?

I would advise them that they need to pay a lot of attention to science classes. Everybody is in business but you have a product with some function and you must under-stand it. When you look into the best contributions in the economy of the world, it all comes back to science. Science classes and the ability to understand core classes, the contribution for biology, microbiology and electronics are important. Know semi-conductors, know metals. Know about automation. They need to get excited and there is so much a classroom can teach you through formal academics but there’s so much now that you can learn online. The internet has opened the doors for students everywhere in the world to access — even if they live in a small village — what the opportunities are elsewhere. That’s my advice to students: get excited about science.

IF A CUSTOMER WERE TO VISIT YOUR JUAREZ OPERATIONS, WHAT ATTITUDES WOULD THAT CUSTOMER PICK UP FROM YOUR WORK FORCE?

They would see a very exciting and very committed workforce. The workforce is very excited, to-tally dedicated because they are seeing the technology products that we are making and how they contribute to society. You’ll see all the commitment to raise the Via-systems’ logo and those of our customers and our goal is to be very efficient to them and that will open up the doors for better opportunities.

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El Paso Times

Financial Frontera: Delays on bridges cost region big money

by Michael Hissam / Guest columnistelpasotimes.com

Posted: 02/19/2012 12:00:00 AM MST

Bridge wait times continue to drive accounting, economic and opportunity costs — and not for the better.

Nearly 15 years ago, riding in a bus full of investors looking to build in Ciudad Juárez and El Paso, the good vibrations continued until — you guessed it — northbound traffic came to a standstill near the monument on the other side of the Chamizal.

“I’ll be damned if I am going to put my people through this every day,” muttered someone the next row up. To the best of my knowledge, that person — as with many others on the bus –never returned. The investment and jobs and ripple effect into the local economy went to parts unknown.

Earlier this month, Alan Russell, president and CEO of Tecma, based in El Paso, and a delegation of business, political and legal leaders took the wait-time concerns to Washington. They wasted no time putting costs to the issue, while encouraging the government and the public to do a better job in addressing the problem:

Q It is a pain to be waiting in those lines, but you’re saying there’s a big economic impact. Tell us more.

A It’s amazing when you break it down into dollars and cents. Today, border wait times at the five busiest southern ports of entry average over one hour. The economic impact is amazing. This results in an average output loss of a $116 million dollars per minute of delay. In 2008, these delays cost the U.S. economy nearly 26,000 jobs and $6 billion in output; $1.4 billion in wages and $600 million in tax revenue.

By 2017, average wait times will probably increase to 100 minutes or more, costing the U.S. more than 54,000 jobs, $12 billion in output, $3 billion in wages and $1.2 billion lost tax revenue annually. This is not some local study. This is from the Department of Commerce and a 2008 study.

Q Who went with you from El Paso to deliver that very strong message?

A Mayor John Cook from El Paso headed the delegation along with the Greater El Paso Chamber Chairman Chuck Harre, and Chamber President Richard Dayoub and two of the chamber’s very capable staff; additionally El Paso County Judge Veronica Escobar, and Kathleen Walker and Jack Chapman, two very prominent El Paso lawyers who deal in border issues; 10 of us in all.

Q With whom did you meet in the nation’s capital?

A We started with the U.S. Customs and Border Protection, then we went to the U.S. Chamber of Commerce, on to the Department of Homeland Security; we went to Sen. Tom Udall’s office, senator to New Mexico; and the final was the Department of Commerce.

Q What specific cost areas did you present?

A Our focus was truck crossing times, pedestrian crossing times, visa processing times and what these delays cost, as I mentioned before, in real dollars.

Q Others have tried to send the message over the years to the governments, both in Washington and in Mexico City. But taking a look at this effort, to what extent do you believe progress was made?

A It was Washington, we have to take the approach that it is one voice and one ear at a time. It is hard to measure the success of these type meetings, I admit, but we must be persistent. We must assure with every security measure established on this border that commerce is taken into account. I will say that every office I mentioned gave us their full attention and listened to what we had to say. However, the raw facts: Physical security trumps economic security and no greater is that division evident than when we are in an election year.

Q You mention the community, this border community, over one city, the two cities across from each other, El Paso and Ciudad Juárez, if it were one city in the U.S., it would be in the top five or six in population. We know about the economic and trade data, but when it comes to those border crossing issues for the commercial and noncommercial sectors — then what’s the answer, what did your group suggest be done to alleviate this problem?

A I don’t think we will ever alleviate it; I’ve got to be realistic. We are 26 years into this from my perspective alone, and in some cases we are talking about the same things over and over. However, progress is being made with the one ear at a time that I mentioned.

First, we use the facilities that we have more efficiently. Technology has evolved. The bridges and ports of entry that we have were never designed to facilitate the kind of commerce that we are seeing today. We have the technology to improve what we have without going to the expense of brick and mortar.

Homeland Security, very proactive, I was impressed. They’ve made improvements; they have added security measures and fast lanes that we are not taking advantage of. In El Paso alone we are down in the 30 percent utilization of some of the capacities of these programs they’ve put in place. There’s a system called the Pedestrian Gate System at the Bridge of the Americas, Ready Lanes in all three bridges and others. We have got to get the word out. We’ve got to educate the public and the importers who are using the bridges to use them more efficiently through the facilities that we have and we must improve the technology.

Michael Hissam is president of Trans-National Executive Communications. He may be reached at michael.tnec@ymail.com.

 

 

Tecma’s Russell, El Paso group tell D.C. about economic costs of border wait times

TECMA President and CEO K. Alan Russell, as part of a joint delegation from the Greater El Paso Chamber and the City of El Paso, this month told Washington officials of the real expense and job losses caused by border wait times.  In this premiere edition of Tecma Speaks, Russell also points to the need for more efficiency with current border facilities, as well as more public awareness concerning border crossings in this metropolis of more than 2.5 million.

Russell also tackles the issue of Mexico’s competitiveness with China and what that means for U.S. suppliers.

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