The development of strategic relationships with both U.S. suppliers and customers has allowed Mexican synthetic washbasin provider Lafex S.A. de C.V. to survive and grow in the face of cheap Asian imports.
“We work hand in hand not only with our suppliers, but with our customers as well, to work as partners to survive the Asian threat and add more value and quality to our products so we can keep growing at the same pace. Our suppliers are American companies, and we have worked together to develop better products at lower cost,” says Director of Operations Anzurio Jaime.
Lafex, which says it is the number one independent company in its business, avoids competing with its own clients by not having vertically integrated production. It makes washbasins and similar surface products rather than manufacturing a substrate that is then made into these products. “We don’t fabricate a solid surface. We fabricate a complementary product (sinks and washbasins), so we do not become competition to our customers. Chinese companies fabricate both the material and the product, so they end up competing with their clients,” he says.
Lafex buys raw materials from suppliers such as Interplastic Corporation and Huber, with whom it has worked for about 14 years. The company maintains close contact to help its product development process. “People from their laboratories come and visit our facilities to work on our projects; also we send people to their laboratories to help them develop new materials. We are more than partners; we are a team and we consider them as friends,” he says.
Strategic joint ventures have also been established with key customers to provide access to marketing and distribution channels in different regions of the U.S. allowing it to benefit from local knowledge. Lafex has a strategic joint venture with solid surface bath and kitchen products producer Transolid Inc, of North Carolina. This provides Lafex with market access and a channel through which to obtain marketing information about changing consumer tastes and trends. “Transolid helps us. They trade our products and have introduced them in many different markets,” he says.
In the same vein, it enjoys strong relations with Bradley Corporation, a leading manufacturer of commercial plumbing fixtures and washroom accessories based in Menomonee Falls, Wis. “Bradley fabricates double, triple and sometimes quadruple washbasins for stadiums and restaurants. We have had the chance to work with them and it has been great. We have become a specialist in this market and we are the number one independent company, and we are proud of this,” he says.
Exacting quality control gives the company an edge in the marketplace. For example, color consistency that is maintained over time is important for products that are exposed to heat, moisture and other environmental factors in heavy usage areas such as kitchens and bathrooms.
“Bathrooms and kitchens are exposed to water temperature changes and this thermal shock [rapid change in temperature] can be a problem. Our products resist over 5,000 thermal shocks [during their useful life], which is a higher amount than the products of our competitors, so we achieve tremendous color consistency,” he says, adding that the products exceed the quality standards that have been established for the industry.
Competing against low-cost foreign competitors also requires a constant effort to control costs and improve productivity. “We have a group that works to make processes more efficient, lower costs and improve the quality of our products. I can assure you that there is not a single piece with an imperfection that leaves this plant,” he says.
The quality controls the company has in place at the various stages of production means that it enjoys a high yield with few products rejected for quality reasons. “About 98 percent of our production becomes a final product, and we have no complaints from clients or final consumers,” he says.
With 99 percent of production exported, the majority of customers are in the U.S. although the company also has customers in Europe and the Middle East.
Quick response time and delivery has been crucial to growth in the U.S. market, which the company has obtained through its distribution method. “We export to the U.S. by truck. I know it sounds weird as truck transportation can be really expensive, but this method has turned out great for us as we have managed to obtain delivery times of around a week, which is great and has been more effective for our company.
Lafex originated from a company created in 1989 that produced solid surfaces; it went bankrupt during the 1994 Mexican ‘tequila’ financial crisis. Following this, Carlos Salino Obregon bought the company in 1995 and began production using finished products with synthetic materials to take advantage of the NAFTA Free Trade Agreement that Mexico enjoys with the US.
“This business was mostly handled by American companies, but since [NAFTA], Mexico has been and still is a cheaper labor market. American companies stopped fabricating these products so we are doing it for them,” he says.
The combination of the change in strategy and NAFTA has seen the company grow rapidly over the last 10 years through organic growth. “There hasn’t been a year where our growth was below 20 percent. We started the first year with sales for around $1 million and now our forecast for 2007 is for sales of about $98 million. We are the number one in washbasins and sinks in the world,” he says.
Lafex operates plants in Guadalajara in Jalisco state and Capilla de Guadalupe. The 9,000-square-meter Guadalajara factory is the main production facility, with an additional 4,000 square meters at Capilla de Guadalupe, where the company recently spent $800,000 to purchase additional equipment. Together, these employ about 460 people; 85 percent of whom are involved directly in the manufacturing process.
Lafex produces a synthetic material called Bestone that is produced under strictly controlled temperature, humidity and materials. Bestone has a non-porous, stain resistant surface that is produced from a mixture of alumina trihydrate, polyester resin, acrylic and pigments that are mixed and homogenized under vacuum to prevent the formation of air bubbles. A catalyst is subsequently added to aid solidification when the mixture is poured into molds. Once solidified, pieces are removed from the mold, cured in an oven, and finished, with the whole process taking two days to complete.
The company has production capacity of 25,000 pieces a month, which equates to 300,000 pieces a year. “All materials are imported under the Pipex government program that allows for the importation of raw materials at 0 percent tariffs when production is dedicated to manufacture export products. Ninety-nine percent of our production is exported,” he says.
The production process and products are certified by the National Association of Home Builders in the U.S., and by the Canadian Standard Association in Canada, and the firm is working towards obtaining ISO: 14000 certification.
Through strategic joint ventures with raw materials suppliers and customers, Lafex works to develop new product formulas using different additives, and it spends about 3 percent of sales on research and development. “We have a quality control laboratory that works on alternative methods, staffed with 12 people,” he says.
Leading the trends
Marketing intelligence that the firm receives from its strategic partners allows it to investigate market trends such as sizes, materials and product deepness. Current development efforts are focused on producing vessel washbasins that sit on top of any other surface. “We follow the trends, and this is the trend of the market at the moment. This is what the restaurants and hotels are demanding. We have a team of 10 people dedicated to mold fabrication, so we can manufacture practically any design,” he says.
Product development has also seen the addition of lines such as shower pans and accessories to supply hospitals and universities.
“We enjoy our work and believe that a happy worker works harder. If he enjoys his job you won’t have to be on top of him to do it as he will do it because he is doing what he likes,” he says. Such dedication will no doubt continue to position Lafex for growth in the washbasin market against Asian imports.