Jabil Circuit started operations in Mexico in 1997 and just one year later you announced your plans to double your facilities. What does Mexico represent for Jabil Circuit's operations worldwide?
We will be three years old in November. Almost three years ago, we began to ship the first boards to our customers. We started with a 155 thousand square feet building. Pretty soon we felt that with the growth that was coming, it was necessary to have additional floor space; therefore we built a 120 thousand square feet expansion. Last year we expanded again, and built a 117,000 sq. ft. building. In that short period of time, we had grown substantially and obviously, Guadalajara has had much more weight for the Corporation. We are now running here in Guadalajara pretty much at full capacity. We decided to build an additional facility in Chihuahua City, which is presently under construction; temporarily, we leased a building there to start operations while we have our own building ready. Jabil has also a facility in Tijuana, which came as part of GET acquisition by Jabil, along with factories in China.
What would you name as being the key factors behind this surprisingly rapid growth? What do you expect for the future since you already have plans to expand your operations in Mexico?
The main reasons, which would explain our success here in Mexico, are our capacity to deliver very good quality to the Customers and to provide more value-added services. Many of the products Jabil builds have Jabil design. For some of our Customers, we provide the service of shipping the final product to the end user. These are some of the ingredients that have made us successful. To get the first Customer is always more difficult; once you prove your capabilities others come fast.
You provide electronic services for companies in the field of telecommunications, PC, automotive and consumer industries. Could you name some of your most important customers and are you currently holding negotiations to contract with new customers?
I can speak for Guadalajara. We have CISCO Systems, Dell, Schlumberger, (meters for the Utilities Companies in the US), Whirlpool, Motorola, Visteon, etc.
Competition among contract manufacturers is becoming stronger everyday. What are your competitive advantages in the electronics manufacturing?
We have some distinctive advantages. Some products require design that Jabil provides. We have what we call the WorkCell structure; it is like having different plants within the factory and people that are fully dedicated to a special project. We have a team that works for each Customer's products only; the equipment and resources are only for that particular Customer. You can really feel how empowerment works here. Our labor environment is excellent. We are successful and employees stay with us in spite of the very fierce competition in human resources. We seldom lose people to other companies. It means that they are happy working with us, fully committed and loyal to the company.
How has the local industry benefited from the set-up of this type of industry in Guadalajara?
Companies such as ours, help the local industry, the people and the community in general.
For the local industry, they bring the opportunity of new and exiting growing business in which they can participate. They enter into a market highly competitive that forces the local industry to become very efficient and cost effective.
Another important aspect is technology. Our industry brings to the Country the latest in technology that helps develop the local industry.
There is also the generation of jobs and the associated wealth, which in turns helps people to live better and consume goods.
It is important to note that typically our types of Companies are good corporate citizens.
We had an interview with the Vice-president of Flextronics and he was complaining that up to date the supportive industry is not sufficiently developed and he would like to see more companies come to Guadalajara. What's your insight?
If you look at the percentage of local purchases for components made in Mexico, it is very low. That is one of the challenges for Mexico, to get more local value-added. In the 70's, Countries such as Malaysia and Korea for example, among others in the Far East, were promoting the investment of such Suppliers; Mexico was then a very protective economy. The local businessman at that time felt very protected by serving the local market with high profits, instead of developing ways to supply component at a very high volume and low margin. When the economy was opened, and imports allowed, many of those Companies were not competitive. Mexico joined the GATT and then NAFTA, which has helped in attracting companies and has also made them more competitive. It will still take some time to get where we want in the supply base. We are behind some of the Far East countries in that respect. We were late and that's why there are not many companies to support this industry, but now you can see that more and more suppliers are coming to Mexico. Some of them are starting by having some warehouses and providing the services of importing the goods and transferring them to other companies. Eventually, more companies will have full operations here.
Besides low-cost manufacturing, what would you name as being the advantages that Mexico can offer to a company willing to set-up operations in this country?
It is not only the labor costs, it's the total added-value services that are provided, the skills people have, the Universities that supply the industry with enough capable students with the required profile. In the past, what we used to receive from the Universities was very different from what the electronic industry was requiring. After conversations between the Universities and the Companies, graduates are now much closer to what the Industry demands, thus becoming an asset for these companies. Besides, we have the proximity to the markets and a wide network of trade agreements. If we talk about the freight from here to the US versus the freight from the Far East to the US, that's an advantage for us. Moreover, we pick up the phone and we are in the same time zone or have one or two hour's difference. | Don't you think there is a miss-match between what the companies demand and what the Universities in Mexico can provide in terms of skilled labor?
It used to be that way. I think we're getting closer and closer. When the electronic industry started in Guadalajara, in the late 60's, there was a big miss-match. Since then, huge improvements have been made.
There are ongoing negotiations to finalize free trade agreements, for example, with Singapore and one of your main competitors is a Singapore-based company. Do you think it's positive for Mexico to further enlarge its network of agreements or would it be better to focus on consolidating the trade agreements that have already been signed?
Both. I think we need to consolidate what we have, but also, without ignoring the markets Mexico has, the Country has to look for new markets. And today you can see what the newly elected president is doing in Chile, Brazil and Argentina, trying to expand markets. You know that our most important market is the USA; that doesn't mean it has to be our only market. He (Fox) is talking about the Merco-Sur, and its size is very important.
Besides competing with your natural competitors. Do you also happen to compete with other Jabil's plants?
There is a person at Jabil that directs each one of the accounts. He sees what is best for the customer and the decision is taken. I'm not trying to take lines from other Jabil factories. The company is structured by project; there is a business unit manager for that specific account and they are in constant contact with the customer to make the proper decisions.
You mentioned that Jabil Circuit acquired GET, a Chine based company. What are the synergies that made this operation possible?
The plant in Mexico had nothing to do with the acquisition. It was important for Jabil to have better presence in China.
China is an important market now that it will become a member of the World Trade Organization. What do you expect from China?
It won't be a problem.
How would you like to see the electronic industry in Guadalajara 5-10 years from now?
I would like to see better infrastructure in Guadalajara for the electronic industry, and much more local integration. With better infrastructure, we (Mexico) would be able to increase the Supply base. Fortunatelly, Guadalajara has recently embarked in the task of developing more industrial parks, similar to what other cities in the North of Mexico have been doing, such as Monterrey, Juárez, and Chihuahua.
What does Mexico's internal market represent as a percentage of your production.
We presently export all our production
What are your main export markets besides the USA?
The USA is number-one. We ship smaller amounts to other countries.
I would like to have your assessment on the transition period we are witnessing in Mexico, what do you expect and what would you demand from the new administration?
It's something that we, the Mexicans, have never experienced before. Obviously, most Mexicans are expecting a change. Most people have hopes for a better life. How? By improving the distribution of wealth, reducing bureaucracy and fighting corruption among other things. Changes like those are badly needed and should be very positive for the Country. Here is an opportunity for improvement, by having a new group with a fresh point of view. I hope that this change will turn out to be very beneficial for Mexico. Since the elected President has management experience, he should be sensitive to our specific business issues, which would translate into additional opportunities. Mr. Fox does not have an easy task but I think he has all the willingness and desire to make history.
Imagine if Fox asked you what you think his priority should be.
Mexico has many poor people and we need to help them resolve their problems. Another priority should also be to decrease crime rate; by increasing jobs, we hope that security will improve. Corruption should be fought against, government requirements should be simplified. He has been talking about improvement in education, which we feel is very important. The fiscal reform he is talking about is interesting; we always talk about how complex our system is. I hope he carries out all those changes and takes into account the participation from different sectors. We are moving from a kind of dictatorship to an environment with more participation.
What is your professional background?
I was one of the pioneers in the electronic field in Guadalajara! I'm a chemical engineer and when I graduated from the school in Guadalajara, I worked for Celanese Corporation (in Ocotlán, near Guadalajara). They supported my education and training in the quality control area, and I even wrote a book on statistical process control. Then, I came back to Guadalajara and worked one year for a corn-products company in QA. That is when Motorola decided to make the investment in Mexico and build the plant in Guadalajara, so I joined Motorola with the first group of employees in 1969 as the QC Manager. I had different position in Manufacturing, Sales, Marketing for 14 years and I then move to Burroughs as the first Mexican General Manager in Guadalajara for the electronic industry; I was one year in charge of the Plant and then I also got the Latin American support operation in Dallas. Then, Motorola decided that they were going to have a Mexican General Manager, so they called me back and worked there again for 11 years. The last 3 years I was also the country manager for all the Motorola Sectors in Mexico. I then became a full time consultant for Motorola. I was in that role when Scientific Atlanta asked me to join them to go to the USA and then open the first high-volume facility for their products in Juárez, Mexico. I had lived in Texas for 2 years when Jabil offered me a job. So I went to the interview and a week later, I committed to come back to my hometown. In September, I will be 4 years at Jabil in a very rewarding job. |
Jabil Circuit 