Scale brings returns for Mexican pallet manufacturer La Esperanza Grupo Industrial, making it a more environmentally friendly company, as Paul Harris reports.
The scale of the production capacity of Mexican wooden pallet producer La Esperanza Grupo Industrial has enabled the country to take new health regulations in stride while allowing La Esperanza to become environmentally friendly through planting its own forests and working to give more responsive customer service.
“We have the capacity to treat and manufacture a huge amount of pallets, so that gives us a plus when it comes to stock. The high tech machinery that we use gives us the capacity to manufacture what the customer needs at standardized sizes with practically no flaws,” says administration manager Gerardo Hernandez.
Scale enabled the company to comply with a change in Mexico’s law, requiring, since 2005, that all wooden pallets be heat treated in special kilns for 30 minutes at a temperature of 56.5 degrees Celsius to kill biological activity. “This is to eliminate and kill all the worms, bacteria and plagues that the wood may have,” he says, adding that the law has been a plus for the company by helping to ensure quality control.
“These Italian kilns are not cheap and we try to have at least one in each plant, and sometimes three or more depending on its requirements,” says Hernandez.
Packing them in
The company produces and restores wooden block and stringer pallets (used with forklift trucks) as well as crates, in 16 plants throughout Mexico, with headquarters at its Santiago plant in Nuevo Leon state. It continues to expand and recently built a new plant at Altamira, one of the main ports in Mexico.
The plants feature nailing lines and high tech cutting equipment purchased from Spain, Italy and the USA, as well as automatic pallet nailing lines and industrial wooden package cutters.
Scale also allows the company to maintain its own shipping division called Transpo Empaques, with a fleet of trucks that allows it to control delivery, an important service element for customers. “This is really good for the company because we are the ones responsible for the delivery of the product,” he says.
Custom pallet design
Cost reduction is perhaps the most important trend facing the packaging and distribution industry as shippers look to cope with the impact of high gasoline prices. But the search for lower costs does not mean that clients are letting up on the quality they expect. “The industry is buying from companies that offer cheaper products but with top quality. We are doing what we can and what is in our hands to stay at the top and to keep our customers happy,” says Hernandez, adding that “we are improving and optimizing the orders from our providers, in both quantity and price, so we can reduce production costs and offer a better price with the same or better quality.” As part of this effort, the company works with key customers to get a better understanding of their needs and wants. The company is also working on implementing a just-in-time program to improve customer order turnaround times, so that it can be more efficient.
Stacking up growth
Its efforts over the last decade have seen the company become the largest wooden pallet supplier in Mexico as it won orders from wire producer Deacero S.A. de C.V., Delphi Automotive, brewery Grupo Modelo, glass producer Vitro, and canned beer distributor Grupo Herdez S.A. de CV. Some 18 clients represent 83 percent of its sales. The company has become one of the most important in supplying wood platforms in Mexico. “I strongly believe that there is no one in the market like us,” says Hernandez.
Due to transportation costs and the relatively lower unit value of the pallets, the company does not export. “Transportation is too expensive so our prices cannot absorb this and allow us to still be competitive in foreign markets. This is also an advantage for the company as we have almost zero presence of foreign products in the Mexican market,” he says.
Investment in raw materials and JIT, and close working relationships with key clients will see La Esperanza Grupo Industrial’s impressive growth continue.