Since 1976, American Industries has helped multinational corporations expand their manufacturing operations into Mexico. Essentially, the company lends critical administrative, legal and real estate support that smoothes the transition into a new environment. All clients need worry about is manufacturing their products and growing their business, as Dan Harvey reports.
What do organizations such as Ansell, Hawker Beechcraft and ITT industries have in common (besides being featured in the pages of this magazine)? They’re among many corporations that have expanded their manufacturing operations into Mexico. Further, in spreading their reach across the border, they’ve utilized the services of American Industries.
Manufacturing expansion into countries such as Mexico, an activity typically called “offshoring,” represents a relatively recent corporate trend. But American Industries, with headquarters in El Paso, Texas and Chihuahua, Mexico, has been helping companies establish sites in Mexico for 31 years.
During that period, the company, a privately owned enterprise founded in 1976 by Luis Lara (the current president and chief executive officer), has assisted in successful offshore start-ups for more than 100 international businesses and, in the process, created more than 100,000 jobs.
American Industries supplies turnkey solutions for Mexican-based manufacturing, proffering a business approach and flexible options that enables manufacturers of all sizes and stages of technology to reap the benefits of offshoring. “Because of the nature of our services, we can work with any kind of company, large or small, in any kind of industry,” says Miguel Horcasitas, the company’s marketing and business development manager.
The main reason that companies look to offshore is the cost-savings. For instance, in Mexico, the average fully loaded cost for an assembly operator is $2.50 per hour, according to American Industries. “Obviously, companies coming into Mexico can lower their operational costs,” says Horcasitas.
Another advantage is location. “Many companies have clients in Mexico, so they want to be closer to the operation that they’re supplying,” adds Horcasitas.
Besides the aforementioned companies, American Industries has successfully facilitated offshore manufacturing for well-known corporations such as Amcor, Arrow International, Cessna, Georgia-Pacific, Goodyear, Hallmark, International Paper, Lear Corporation, Mallinckrodt, Sumitomo, Toro, Werner, and Yazaki, among many others. It accomplishes this by providing critical administrative support in an environment characterized by a different culture, language and business laws, where establishing a new manufacturing outpost can be complex. With American Industries’ help, clients can focus on their core competencies and concerns – that is, manufacturing their products and growing their businesses.
With its expert guidance fostered by familiarity with its home terrain – the various regions and laws – American Industries assists clients in making the most appropriate decisions about manufacturing locations to best suit specific needs; and it ensures full compliance with Mexican customs regulations, making import and export transactions straightforward and painless.
Horcasitas explains that American Industries operates two main business units: industrial real estate solutions and Mexican shelter operations services. Both service areas enable clients to begin their own turnkey operations free of administrative risk and liabilities.
The industrial real estate division involves site selection, facilitated by experts who understand the local real estate market. Utilizing its own land reserves and strategic alliances, the division selects the best location to suit a client’s future plans.
“Essentially, we’re land developers,” says Horcasitas. “With our knowledge of a region and more than 7.5 million square feet of industrial real estate, we can build facilities and lease them to companies looking to establish Mexican operations.”
Moreover, all facilities it constructs comply with U.S. and international standards, and if a customer indicates unique needs, American Industries develops a facility to their exact specifications. This build-to-suit option is one of the company’s major selling points.
While construction takes place, American Industries’ Bricsnet software enables the client to access building information anytime and from anywhere. In that way, they can monitor the construction process and address any property management-related issues without having to be on site.
Another significant option is shared leasing, in which small- to medium-sized companies can share building and operating costs while maintaining independent operations. The company also offers a sale-lease-back option: If a customer needs additional working capital, American Industries will purchase a building the client already owns and lease it back to them with flexible terms
The Mexican shelter operation division will find a location, provide staff, assure compliance with legal requirements, and develop the administrative infrastructure.
“Basically, the shelter division provides administrative support,” explains Horcasitas. “In other words, we will take care of all of the red-tape issues related to compliance, environmental permits, legal services and human resource issues.”
Human resources, he adds, involves everything from recruiting and employee selection to labor administration, payroll services, and safety and health coordination.
The company also takes care of the customs issues, says Horcasitas. It will oversee import and export transactions to ensure efficient work flow, including freight forward and cross docking services. “We get the raw material over the border and we make sure it arrives at the Mexican plant,” he says. “We’ll handle the paperwork, record keeping, trucking, and accounting.”
As the company points out, its Mexican shelter services provide the best of both worlds: the client can control their own plant while American Industries takes care of administrative details.
It also handles issues related to financial control, administering all financial needs and providing accurate and timely financial and accounting reports through an advanced information technologies infrastructure; as well as operational and legal services, ensuring that all legal elements (such as permits and special governmental requirements) are set in place. American Industries will even assist clients in the relocation of their employees and their families. “We’ll help find the housing and the schools for their children,” says Horcasitas.
These real estate and shelter business units often operate independently, but they can also work in complimentary fashion. “For some companies, we’ll provide the facilities as well as provide the shelter services,” informs Horcasitas.
Horcasitas indicates that American Industries can get a customer’s Mexican operations up and running rather quickly, sometimes in less than two months. “It depends on what they’re looking for,” he says. “For example, in a build-to-suit situation, involving a facility anywhere from 90,000 to 120,000 square feet, it will take up to six months for final delivery. But, on the shelter service side, if a building is already available, we can get a company online in 45 working days.”
Once an operation is fully functional, American Industries allows clients to maintain full control of the manufacturing operations.
In addition to industrial real estate and shelter services, American Industries provides one-day seminars that educate potential customers on Mexico’s advantages as a low-cost manufacturing center. These seminars include case studies involving multi-national manufactures that successfully expanded into the country. Further, the seminars provide information on how to open a new facility and offer each customer a working cost model that includes employee, logistics, utilities and real estate expenses.
Taking Care of Business
American Industries, which has offices in El Paso, Chihuahua, Juarez, Monterrey, and Nuevo Leon, as well as a North American branch in Ontario, Canada, has experienced an approximate annual growth rate of about 20 percent in the past five years. Currently, it faces competition from five other similar companies. However, American Industries differentiates itself by its scope. “We work nationwide in Mexico,” reveals Horcasitas, “whereas most of our competitors only work regionally. We can take companies where they need to go.”
And once they get there, those companies enjoy a cooperative relationship where they can maintain control of their operations while benefiting from American Industries’ 30-plus years of experience. All they have to worry about is the manufacturing. That’s the easy part. American Industries handles all of the hard stuff.