| Analysis, Strengths, and Service Comparison |
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Mexico is becoming more attractive than Asia. A growing number of U.S. and Canadian companies, that currently use Asian contract manufacturers to assemble and package their products, are investigating the possibility of transferring these operations to Mexico. The main reasons for such a change in strategic business direction are: |
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Economic and political instability in several Asian countries |
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Increased ocean freight costs due to fewer exports from North America to Asia |
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Lack of product confidentiality and enforcement of patent rights—many western products are copied and manufactured by Asian companies illegally |
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Inability of the Asian contract manufacturers to quickly respond to required changes in production schedules—associated with the distance between the two continents (3-4 weeks ocean freight from port to port) |
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Need to warehouse and keep large inventory of finished products in the U.S./Canada |
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Logistics and time required to rework/replace defective parts |
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Products manufactured in Mexico in compliance with NAFTA requirements do not pay duties in the U.S. |
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Turnkey capability. A large number of companies nowadays require that the contract manufacturer be fully responsible for the selection of vendors, quality control of all incoming materials and payments to all the suppliers involved in the project. |
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Warehousing and distribution services. In order to reduce their inventory and freight costs, more and more companies are requesting that the warehousing and distribution of their finished products be done by the contract manufacturer. |
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ISO and QS certification. Different types of certifications are becoming standard requirements in certain areas of contract manufacturing—QS 9000, for automotive components, is an example. A certified plant is an assurance, to the client, that the contract manufacturer has all the necessary manufacturing and quality control procedures in place. |
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MicroMex specializes in labor-intensive and low-medium technology projects—it offers contract manufacturing in the following areas: |
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Electronics and mechanical assemblies |
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General assemblies |
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Packaging |
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Refurbishing |
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The company is committed to providing the highest quality of contract manufacturing services at low offshore rates. MicroMex’s role is to be a “solution provider” to its customers and an “extension” of their business in Mexico; this strategy has been very successful and effective in the development of long-term and loyal business relationships with its clients. |
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MicroMex is UL compliant and ISO 9001:2000 certified. Depending on the future demand for contract manufacturing of automotive components in Mexico, MicroMex will also consider obtaining the QS 9000 certification. |
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Shelter operators—as a general rule, these companies require a minimum number of employees per customer/project and provide all the required infrastructure (building, labor, etc.) to the client. They normally own large plants, are financially wealthy and have higher operational costs due to the size of their businesses. It is mostly attractive to companies that want to transfer large operations to Mexico. |
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Contract manufacturers—these companies provide a large variety of services (production, assembly, packaging, etc.) independently of the size of the project/client. They vary from small family owned and operated labor-intensive businesses to large and well-equipped operations. It is mostly attractive to companies that want to subcontract small-medium projects. The type of services offered by contract manufacturers in Mexico vary depending on the size of the operation, level of equipment and financial capabilities: |
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Turnkey—Normally offered by large and financially wealthy companies with enough working capital investment to support the payments to all the suppliers of raw materials involved in the project. |
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In-house manufacturing/assembly/packaging—Generally provided by sizeable companies specialized in different types of manufacturing—injection molding, metal stamping, etc. These maquiladoras manufacture the required parts for the client utilizing their own in-house equipment. Product assembly and packaging are normally secondary services—offered for simple projects that do not require specialized labor or complex assembly/testing. |
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Labor-intensive assembly/packaging—Standard services offered by most companies in the contract manufacturing industry—the client supplies all the raw materials and the equipment (when necessary), and the maquiladora provides the required labor. |
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Experience - MicroMex is a privately owed company that has been in operation since 1988 in the contract manufacturing business in Mexico with a history of excellent services and steady growth. |
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MicroMex owns its own manufacturing company in Mexico – DEMSA (Diseño Electronico Mexicano S.A. de C.V.) |
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Low cost assembly/packaging/refurbishing alternative – MicroMex’s costs for contract manufacturing are very competitive and attractive for labor-intensive projects that require assembly, packaging and refurbishing—substantial savings compared to the U.S. and Canada. MicroMex is a very lean company that operates with minimum overhead. |
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UL/ISO 9000 – MicroMex is UL compliant and is ISO 9001:2000 certified. |
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Best quality – At MicroMex, quality is priority # 1. The company is committed to providing the best quality of contract manufacturing services in Mexico—MicroMex is seen as a subsidiary of its clients in Mexico. |
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Personalized attention – MicroMex tailors its services according to each client’s individual needs. If required by the customer, MicroMex can also provide a two-way dedicated direct line for telecommunication worldwide. |
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Warehousing & distribution – MicroMex can provide warehousing and distribution of the finished product as required by the client. |
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Turnkey capability – MicroMex has established solid business relationships with local suppliers and can offer turnkey for projects that require plastic injection, metal stamping, packaging and printing. |
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Steady and plentiful labor – Imuris has approximately 15,000 inhabitants and abundant labor. The turnover at MicroMex is minimum - less than 5% per year -, which is considered outstanding in the industry; high turnover is the major problem faced by the maquiladoras located in the Mexican/U.S. border towns (Tijuana, Mexicali, Nogales, Ciudad Juarez, Nuevo Laredo, etc.). MicroMex offers very competitive salaries and benefits and is involved in local community programs for education and sports—reflected by the loyalty and long-term commitment of its employees. |
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Strategic location – Imuris is located about 30-45 minutes south of Nogales, Sonora and the Mexican/U.S. border. This is very attractive to the clients because it allows a quick turnaround for their products and low freight costs—the freight in Mexico has traditionally been more expensive than in the U.S. and can be a decisive factor in the profitability of a project depending on the location of the contract manufacturer’s plant. |
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Long-term customers – MicroMex has a proven history of solid long-lasting business relationships and excellent client retention rate. |
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Product specifications (drawings and samples) |
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Raw materials (MicroMex can offer turnkey for some locally supplied materials—plastic and metal components, packaging and printing) |
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Initial training/supervision (to ensure that the product is assembled according to the client’s specifications and quality standards) |
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Equipment (if specialized equipment is required) |
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Manufacturing facility (including electricity, water, etc.) |
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Insurance for client’s equipment |
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All the direct an indirect labor (including plant manager, engineers, full benefits, etc.) |
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The permits to manufacture in Mexico |
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All the import/export documentation in Mexico (for equipment, raw materials, finished products, etc.) |
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English/Spanish translation |
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Coordination of all the border crossings (for incoming raw materials and outgoing finished products) |
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Freight and border crossings - U.S. to Mexico and Mexico to U.S. - are charged separately depending on the number of trips. The client is responsible for the payment of all duties—if required by U.S. Customs. |
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MicroMex provides: |
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Manufacturing plant (floor space/maintenance) |
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Industrial park maintenance |
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Minimum wages for direct labor |
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Required legal benefits (socialized medicine/social security) |
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Human resources management |
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Payroll |
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Mexican taxes/permits |
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Import/export permits |
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Professional consulting—regarding any aspect of the maquiladora industry |
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Transportation for the employees |
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Cafeteria |
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Same wages for direct labor as paid for contract manufacturing |
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Private medical care |
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Free prescribed eye glasses and medicine |
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Private life insurance for indirect labor |
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School supplies for employees’ children |
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Short term personal loans with no interest |
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Attendance/performance/Christmas bonuses |
Copyright © 1997 MicroMex, Inc. All rights reserved.