Plastomer’s Mexico Strategy Gets it Close to Customers
Plastomer Corp. is a supplier of fabricated products made from foam, rubber and semi-rigid materials.
They say location is everything. That cannot be truer than for international manufacturers that supply OEMs and Tier I customers with on-the-ground production in Mexico, particularly in the auto sector, where quick delivery is an essential customer expectation.
Plastomer Corp., a U.S.-based supplier of fabricated products made from foam, rubber and semi-rigid materials, had serviced U.S-headquartered customers with in-country Mexico production from its facility in Michigan for many years. But in 2017, Plastomer’s ownership decided a physical Mexico manufacturing footprint was crucial for the company’s competitiveness to put it closer to customers.
“Customers have lots of variables,” says Bill Baughman, founder and president of Plastomer. “If you ship from Detroit down to Mexico, a lot of issues can crop up on the way down that affect inventory. You require longer lead time and it puts more pressure on everything. We decided that if we were to set up our own Mexico production, we could offer speedy delivery, lowering waste, storage requirements and obsolescence.”
After evaluating several different Mexico production locations, some of which offered lower operating costs, Plastomer chose Entrada Group’s manufacturing campus in Celaya, in The Bajio region. This is in Mexico’s center and a leading manufacturing hub, as well as the fastest-growing economic area in Latin America. Plastomer’s executives felt the Bajio offered the best combination of four essential factors: cost-competitive operations, access to experienced human capital, proximity to several existing customers and, perhaps best of all, a prime location from which to serve potential new customers.
Entrada Group operates two manufacturing campuses in central Mexico, where it helps its manufacturing partners from the United States and elsewhere work seamlessly with their customers, local workforces and Mexico regulators.
Baughman knew that production in Celaya would not only put Plastomer closer to current automotive customers, but it would also give his company a big advantage for business development in the region. “Your customers and potential customers in Mexico want to see and experience your plant for themselves and they can’t do that when the plant is in Michigan,” Baughman explains.
The Place for Today’s Business and Tomorrow’s Growth
OEMs and Tier Is from industries spanning automotive, aerospace, medical device and consumer electronics produce in and around Celaya, and these multinationals rely on a network of suppliers such as Plastomer for local production. Celaya is in the state of Guanajuato, which generates 70 percent of Mexico’s international trade and 70 percent of its automotive production. Additionally, Guanajuato is an important logistics center thanks to excellent roads, rail hubs and two international airports, in Celaya and Silao. This transport network ensures Plastomer stays well connected not only to Mexico-based customers and suppliers, but also to those located anywhere in the world. It also makes executive visits for plant tours more convenient.
Like other multinationals around Celaya, Plastomer also appreciates the abundance of youthful, talented labor (both directs and indirect) available locally. Mexico adds nearly 115,000 graduates per year to the workforce, on average, in engineering, manufacturing and construction.
This capable workforce was another key factor that gave Plastomer the confidence to situate its first-ever production location outside of the United States. Nearly 30 technical training institutes and universities, with more than 122,000 students, sit within a 20-mile radius of Entrada’s manufacturing campus in Celaya. In addition, numerous public-private partnerships have been established in The Bajio, enabling employees to train at on-site factory replicas, ensuring they have real-world applicable skills.
“I have a lot of confidence in our staff in Mexico,” Baughman said. “After just a year, they were as capable a workforce as I have in the U.S. after 50 years. I know my competition in places like Toluca and Monterrey has terrible turnover. But for us, turnover is manageable, because we listen to Entrada’s advice about when to make raises and add benefits, like employee transportation.”
In addition to an advantageous Celaya location, Entrada’s manufacturing support platform offered Plastomer the turnkey solution it required. The tailored production environment, a trained workforce, and all general and administrative support functions were in place before the company began production. Not to mention that Plastomer could piggyback onto all the pre-existing compliance and infrastructure elements Entrada had already implemented at its Celaya campus, such as fast-track import/export privileges, priority VAT refund status, government relationships, CT-PAT and OEA certifications.
“With our operations firmly located in Celaya,” Baughman says, “we are now well positioned in the heart of this fast-growing manufacturing region to efficiently service our existing clients and move forward with our expansion plans down the road.”
Gaining the Completive Edge
Able to leverage the fast-track elements of Entrada’s manufacturing campus — advantages that would have taken Plastomer years to establish on its own — the company was able to establish a 50,000-square-foot production facility at Entrada’s Celaya campus. When Plastomer is at full production capacity in Mexico, Baughman estimates it will have a staff of about 50, and will no longer need to ship 10% of product components from Detroit to customers in Mexico.
Further, with Entrada’s manufacturing support platform, Plastomer has both scalability and flexibility to accommodate future expansion and shifting production needs. “With Entrada, we didn’t require a long lease, didn’t have to build a new building and didn’t have to worry about things changing down the road,” Baughman said. “I don’t see us leaving Entrada’s campus regardless of our future size, because the campus can handle our headcount growth.”