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 Business News | January 2006 
Mexican Factory Beats The Odds
 Amy Guthrie - Dow Jones News
| | Hitachi plant stays afloat despite Asian competition. |
Guadalajara, Mexico - Beyond the gate of what appears to be a massive colonial-style Mexican estate lies one of the world's most sophisticated assembly lines.
Behind terra cotta-colored walls designed by renowned Mexican architect Ricardo Legorreta, wide hallways are lined with dozens of 20-foot-tall wooden crates carrying machinery from China — evidence of a small manufacturing victory in this corner of the world.
"There was a time when the company contemplated moving everything to China," says Carlos Gutierrez, the 44-year-old manager of Hitachi Global Storage Technologies' Mexico plant.
Less than five years later, Gutierrez is doing everything he can to make space for production returning from Shenzen.
"Where there's a lot of technology, that's where we can compete," says Gutierrez, whose gung-ho attitude has been key to keeping Hitachi business and jobs in Mexico.
The Hitachi plant, a joint venture with IBM, is a rare case of a Mexican assembly line triumphing over its peer in Asia. The once-booming electronics corridor in and around Guadalajara, in the western state of Jalisco, has lost 12 projects to lower wages and costs in Asia since 2002. Three have since come back.
Gutierrez attributes his plant's good fortune to a mixture of timing, quality and preparedness. Rather than cutting back investment in 2001 when IBM decided to transfer a third of the Guadalajara line to China, Gutierrez sought to make his factory more efficient and get more complex assignments.
The flight of jobs was also stymied after IBM and Hitachi formed Hitachi Global Storage Technologies in 2003, and the new company opted to use the China facility for other projects.
Central Mexico arrived on the electronics manufacturing map after the North American Free Trade Agreement took effect in 1994 and work flooded into Mexico. Investment flows slowed after the turn of the century as tough economic times encouraged global companies to shift assembly jobs to Asia.
"The industry emerged from the recession still weak, and with a need to compete with other parts of the world," says Pedro Avalos, president of the western chapter of Mexico's national technology industry chamber, Canieti.
Electronics exports from Jalisco, which specializes in making telecommunications and computer equipment, are expected to have hit a record $11.28 billion in 2005, up 10 percent from 2004.
Avalos believes the growth in electronics exports from his region will also support a 5 percent to 7 percent annual expansion in shipments of electronics goods from Mexico as a whole. In 2004, Mexico exported $42.91 billion in electronics, off from the sector's peak of $46.25 billion in 2000. |
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