For our regular readers. you know that at EastBridge, when it comes to sourcing and building hardware, we’re internationalists. We evaluate your product, and based on the technical requirements/specification, vendor capabilities, lead time, logistics and total delivered cost, we’ll manufacture it where it makes the most sense. We model the capability-cost pathway and jointly decide where and how to move forward.
For the past several years, that path has included Cambodia, Thailand, Vietnam and Mexico. We now have offices and dedicated staff in Ho Chi Minh City, Vietnam and Hermosillo and Monterrey, Mexico.
Through our work in Mexico, we’ve learned a lot about what it takes to succeed in building new hardware products there. We’ve distilled this down into a five-point checklist, which we’re happy to share here.
- Go Really Big (or Really Small) or Go Home
The manufacturing terrain in Mexico is shaped like a dumbbell… Big at both ends, thin in the middle. At one end, you find enormous multinational corporations, often with an automotive industry orientation. At the other, there are tiny mom & pop businesses, narrowly focused on one industrial segment, skilled at doing one thing.
What this means is that your project is a fit if it’s big, high volume and mature (more on this below) or very small, narrow and uncomplicated. If you’re working in the middle, where most projects fall, Mexico likely isn’t a fit for you.
- A Really Long Supply Chain
Sure, your finished product may benefit from a short truck ride to your US distribution center, and that’s great. However, that needs to be balanced against the long and complicated supply chain that needs to be crafted for success in Mexico. The diverse ecosystem (often present in other manufacturing centers) of component distributors, heat treaters, machine shops, wire harness fabricators, testing labs and other service providers is incomplete or nonexistent in Mexico.
This adds complexity to and lengthens the supply chain, which translates to longer lead times, lots of coordination and sometimes higher costs. For all of this, you need to be prepared.
- General Contracting the Project
This ties to point #2… When you decide to renovate your kitchen, your general contractor can purchase the cabinets or you can. Same for tile and the lighting fixtures. It’s often the same when procuring hardware in Mexico.
You’ve identified a capable and motivated molder; however, that motivation doesn’t extend to purchasing the resin, the injection mold tooling or the threaded brass inserts. That’s often on you. The long and twisting supply chain often places you in the role of being the “BOM Builder” or industrial supplies distributor.
This can work and work well if you’re willing to fill the role of supply agent, consigning or selling the components to your CM.
- Understanding Mexican Business Model(s)
To trade successfully with Mexican suppliers, you need to develop an understanding of the maquiladoras system. A maquiladora is a factory that imports components and materials and then assembles or adds value to products that will be exported…
- R versus D versus M
In our world, there’s “R” (“research”), “D” (“development”) and “M” (“manufacturing”). We’re skilled at taking early-stage concepts from research, through development and into volume manufacturing. The transition from development (DFMA – making sure that the design is manufacturable) into full on manufacturing happens collaboratively with the vendors and subcontractors that we manage.
The culture of DFMA tends to be immature in Mexico. CMs there focus on and are skilled at taking on mature products (and the underlying manufacturing processes) and localizing production. Newly conceived or evolving products that require a lot of fine tuning and process development can be a challenge to build in Mexico.
Our experience industrializing new hardware projects in Asia, Europe, Latin America and the US guide the decision about where and how to build your product. Mexico is a great location for many projects, if you understand the terrain. We encourage you to bounce the concept off EastBridge to make sure that you’ll succeed.
Cheers,
Alfredo Garcia