Since Solectron de Mexico started its operations in 1997, you've gradually been expanding your facilities. What role is Solectron de Mexico playing in Solectron worldwide operations today?
For the sake of being more accurate with the dates, I think it would be important to state that I guess I was the first employee of Solectron de Mexico that started on October, 1996. The 1st of September 1997, the first four-stage part of this plant (four buildings) was finished. President Zedillo did the inauguration in October 1997. To build this plant, one of the biggest feats was that these four buildings were constructed in 4 ½ months and this, during the rainy season. I'll explain this, because that's what Solectron de Mexico is all about. We started out very fast and we are continuing to grow very fast. The expansion will continue until the year 2003. Right now, Solectron de Mexico plays an important role in Solectron Corporation. At this point, we're probably in the fourth or fifth place among the largest sites in the world. Hopefully, by next year we'll be in third place of the Solectron Corporation universe.
To better serve your customers, Mexico has definitely a strategic location because of its proximity to the largest market in the world. Besides this fact and the low cost manufacturing rates, what are the main advantages of being present in Mexico?
You've certainly pointed out two of the most important: a low-cost environment; the proximity to the USA is very important because the supply chain reduces in days as opposed to goods from the Far East. Another reason is that there's an important infrastructure that is being built around Mexico, in the case of Guadalajara. The airports have been privatized, that is going to increase trade. The NAFTA agreement has also stimulated the growth of exports between Mexico and the USA. When we talk about cheap labor, it's more important to really get the advantages in the engineering talent you have versus the cost of engineering talent in the USA. That's where you achieve important savings. I also think Mexico is going to be a springboard for a lot of the products being exported into the rest of Latin America. I think Mexico is going to increase its commercial influence to the rest of Latin America, which will make it a very adequate center of activity between the USA, Canada and the rest of America. I also understand that the world is going into regions. You have an Eastern Region, an Americas Region, and the European Region. Each region must have its low-cost provider and I think Mexico is that low-cost provider for North America. It depends on the geography.
One of the problems and disadvantages as compared to Asian countries you are facing is the lack of a well established infrastructure of supply companies. Do you agree? and if so, do you expect this situation to change in the near future?
I agree. We do not have the supply chain established in Guadalajara. We are beginning clustering, but we have to understand this by stages. Thirty/twenty years ago, mayor companies established here: IBM, Motorola, General Instruments, and Kodak. All of a sudden, in 1995, contract manufacturing boomed. As this central competence grows, as far as contract manufacturing, and I mean in number of exports, in number of needed revenue to export to the USA and the rest of the world. The leverage we'll be able to exercise over the suppliers to come here and cluster is the next wave I think is coming next. It has started, but it hasn't yet developed into a stream of companies coming in here. But, the reason for us coming down here was a matter of "We have to be here, we have to set up and we have to get going." The suppliers are taking their time because they have to analyze the economics and where they are going to settle the clustering itself. I think Guadalajara is going to be a big advantage for that because there is a lot of land available. Of course, there is another type of infrastructure that has to be brought up to standard to become a dominant player in the market, such as the airport, the flights, the cargo aircraft, trucking, etc.
In fact, you came to Mexico at the same time as your biggest competitors. In such a competitive environment where Asian companies are positioning themselves, how does Solectron stand out?
I can basically say that Solectron started off with a very important thing, and that is that Solectron, being the only company that has been awarded the Malcolm Baldrige Quality Award, you start of with a template that helps you very much to know how to manage the company as you go forward. That template and with the expertise Solectron has grown to achieve over the last 20 years has helped us grow at the rate we're growing and not grow out of control. We've been growing at a tremendous rate but we are still in control. Why? Because of that template that comes from our companies in the USA that have won this very coveted award and have shown us to work in this kind of environment.
The second thing is that I have been able to hire top talent from day one. Our group of directors has been very well sought out and hired. They have been the basis of our growth, they are very competent in what they do.
The third ingredient is the fact that we've had 150% support from our corporate offices. They believe in this project and have supported it blindly.
When you have those types of ingredients it's very difficult not to be successful. Solectron looks at competition favorably. What competition tends to do is give you more credibility.
In order to achieve such a prestigious award, you need to follow very specific steps. Could you please explain the principles and achievements the award implies?
The award itself was won in 1991 for the first time and Solectron tried to see if we could get it a second time, being the only company in the USA that has received it twice in the history of the award (1997). It was very important to me as a director, because it gave me the opportunity, as I was starting this company, to use it as a template to work from and our directors absorbed it. The company itself, in order to win this type of award, has to have a very important ingredient, a vision. We have to know where we're going or where we want to be. That is very well carried out by our President, Mr. Mishimura. He simply says, "we want to be the best." So, when you manage a company to try to be the best company, it's very different from when you try to be the biggest. When you manage a company to be the best, you usually wind up being the biggest, but you also stay there. If you manage a company to be the biggest, you might get to be the biggest, but you don't necessarily stay there for a long time. So there's a different philosophy of management that I have adopted because I totally coincide with what our president has put before us.
You stressed the importance of human resources. There's a labor shortage in Jalisco. Nevertheless, you've managed to solve the problem bringing people from other areas. You seem to be very proud of the skills of the staff you have in your plant. What training scheme are you working on?
Good question. I'll answer in two phases. One, yes, there's a lot of talk of about the scarcity of skilled labor. I really don't see it. I'll tell you why. Depending on whom you talk to, this million has either 5 million, 6 million or 7 million inhabitants. Let's say that half of that is economically active. I'm President of the Maquiladora Association which consists of all the major plants here in Guadalajara, my term will be over at the end of November. All the companies in the Maquiladora Association hire a total of 90,000 people. Ninety thousand out of a 2.5 million economically active population, it would be difficult to say that there's a scarcity of opportunity. Where some people say there's a problem, I see opportunity. We had to bring in people because our projects were vacant, so we were able to bring 1,000 people in a month. I really don't understand why they say there are no people, I think there's plenty of people. And then they say there's not enough people in Guadalajara. Well, we have 90 million people in Mexico, so that's another opportunity. One of our biggest sources for executives and middle-level managers is not necessarily Guadalajara. It can be Guadalajara, Mexico City, Monterrey, and the border. I think those who say they have run out of labor have actually run out of ideas of where to headhunt.
There are contradictory opinions among interviewees, some say there's a miss-match between what the educational system can provide and what the private initiative demands, some others deny it. What's your opinion?
Let's take Guadalajara, it has been a commercial city. Monterrey has been an industrial city. The schooling you get in Monterrey is oriented towards big business. The schooling in Guadalajara is more oriented towards commercial: accountancy, law, trade, etc. Now that Guadalajara is beginning to have a manufacturing heritage, the Universities and technical schools are orienting their programs towards that type of industry. Guadalajara has been a commercial city for 450 years, it's never been known as a mayor industrial center. We are going to become very good at manufacturing in this city. The Universities are changing their curricula, so are we and we're trying to help them change. How? By letting them know what kind of trained people we need. And we have to go all the way back to the secondary and high schools. Where people have a fresh mind to decide what they want to do. In the past, becoming a lawyer was "the thing" in Mexico, that's no longer true (and I have nothing against lawyers).
I studied business administration and accounting. I'm not an engineer and I'm running a very technical company. What that tells you is that the skills and attitude of the people are very important and those are molded at home and at the very junior levels of school.
Do you think that the Mexican labor force, in general, easily adapts to the very specific work schemes of Guadalajara's manufacturing industries?
I think so, and I'll tell you why. If you go out
to our plant, you'll see 70% of our direct labor
people have never worked before in their lives and
they're producing some of the most significant products
sold in the USA market. How did that happen? It
happened because people are eager to learn. They
see in Solectron what they want; they want as a
career to get ahead in life. They are very flexible
and very quick and creative. I've been here for
25 years and I've noticed that people have excellent
manual skills here. They are very quick working
with their hands, and this isn't true in northern
parts of Mexico. So, the flexibility of the work
force is very is beyond question. The important
thing is the guidelines, the discipline, objectives
and to teach them what we expect from them as well
as what the company is willing to give back. If
you explain that very carefully, every day, people
become extraordinary workers. You see companies
such as IBM, Motorola, Kodak, they have numerous
international awards for their companies here in
Mexico because of the labor efficiency. What we
are doing, the newly arrived manufacturers, is establishing
a company with guidelines and taking the people
which are the asset to build on. |
I didn't quite answer one of your questions about training. I think that's the key element of bringing together the natural talent these people have and the company's objectives. A person in our factory doesn't walk onto the production floor until they have at least 76-90 hrs worth of training. We believe in training. We're going to continue to enhance training. We depend a lot on the Solectron University that helps us to train the trainers so we can continue to train. That is going to be my theme for the next three years. If we invest in training, we will have optimum results. And I'm also talking about the management level because we are not competing against Flextronics or Jabil, we are competing against the East, that has a lot of years of experience. We are now competing against Eastern Europe. We have to understand what Mexico's competitive advantage is going to be, and work on that. We have some geographical advantages, but what needs to be done? I foresee Mexico is going to be a manufacturing country for the next 10-15 years and then we are going to enter into other types of industry: for example, software.
Do you think there will be a day when Mexico will be able to compete against Asian markets in the electronics business?
Absolutely. Companies like Solectron that come into Mexico are very important for the country due to three things. They bring jobs, dollars, and training. I can also add a fourth point, and that's that these companies are training executives and these executives will later on build their own businesses, or other businesses, and this gives us a managerial know-how that is very important and that Mexico lacks. We are running companies that are competing internationally, not locally, and give us international management experience. That is intangible, uncountable, but it's there and it will help our country to grow.
I know you have plans to expand your facilities. What can you tell us about it?
Well, we have land availability to have a total of 10 buildings. That will be the limit we will put on this sight for I think 10 buildings is the point where "manageable" equals growth and size. The time frame growing from 6 (our current number), to 10 could be 1-2 years, depending on the projects. Everything seems to be moving on schedule and even faster than we anticipated, it would probably take one year and a half.
Since, we have purchased some manufacturing plants from Nortel and one of them happens to be in Monterrey so now we have a Solectron, Monterrey plant. We are working closely to satisfy our customers' needs. There could be a possibility of a third sight somewhere in Mexico.
Solectron prides itself of high environmental standards. In a country where pollution is a matter of concern, what is your policy?
We've only been established for two years, but in the second year we won the State of Jalisco Environmental Award. We won because we're totally committed and dedicated to making sure that we follow the Mexican standards. This is my country, so we want to take care of it. You'd be surprised by the enthusiasm people show to embrace these initiatives: our safety precautions, our environmental precautions. They are very quick to adapt to that and to single out whoever doesn't.
If you take a look at Mexico's environmental standards, you'll find them to be one of the most severe in the world. What we have to do is make sure they are enforced. In my Maquiladora Association, we have a committee wholly committed to the environmental side of production. We make sure that all companies are aware of the laws, how we have to abide by them, what has to be done, what the changes are. We keep fairly up to date.
Time management when providing your customers with the products they demand is crucial in this business. How would you describe the situation of the infrastructure you enjoy here in Jalisco, taking the recently privatized Guadalajara airport and its upgrading plans in mind?
One of the best things that could have happened was to privatize the airports. Guadalajara, being the second largest city in Mexico had one of the worst airports in the world. From a tourist's, passenger, business, cargo point of view, the airport was non-existent for a city this size. Having been privatized and knowing the plans this group has, I'm happy it's changing, we want to help them. We can help them by giving them business: cargo, tourism. But they have to invest money. There's always the question, "What comes first, the chicken or the egg?." You have to have the investment and capability before everything else arrives. So that's what they are doing. They are making the airport more user-friendly. The airport's aspect is looking better. They have to establish things such as more competition among the ground-handlers so that the cargo aircraft can be unloaded speedily. There's got to be investment in equipment.
If you look at Mexico, and this bothers me a lot, and specifically Guadalajara, it's geographically very well located to make it a hub to send air cargo from the rest of Latin America and all the way to Canada. It's within the range of all the types of planes.
Also as a gateway for Asia?
Exactly, because we have Manzanillo. You can take-off from here and get all the way to Singapore. So, once people realize that Guadalajara's location is right in the center. It's not true for Mexico City. First of all, Mexico City's airport is very busy and secondly, you cannot take-off in a fully loaded plane on a hot day. If you want to go to South America, you have to stop to refuel somewhere. Guadalajara probably has the second-largest runway in Mexico. So, all of these advantages, (I think the airport authorities are starting to understand), have to be absorbed by enterprises to promote them. I think the airports have to move faster. It's not my money, so it's easy to say that but I understand capacity has to be there before the customers arrive.
I would like to have your assessment on the political transition period and what you expect from the new administration as a manufacturer in Guadalajara?
First of all, I have to say that President Zedillo has shown a lot of poise and personality in the way he received this country and the way he's handing it over. I believe he's done an excellent job. He's going to go down in history as one of the best presidents. He has kept the country together. He has handled the economic issues, he has brought Mexico back on its feet again and he's done at a high cost for himself. He has proven to be a statesman.
Fox has excellent ideas. I think he has business on his mind, he is a businessman. I think he is going to run this country oriented towards business. I would ask him to make sure he understands that making Mexico more enticing for businesses to establish here is going to be very important. The only thing that will help us get rid of poverty in Mexico is creating jobs. And the only way to create jobs is investing. And the only way to bring in investment is to be competitive at a country level versus Malaysia, Singapore, etc. He has to make sure that the atmosphere is right for companies to come here and settle. If people have a job and are earning money, most of Mexico's problems will vanish. And you do not get rid of poverty by handing out money, people will only spend it.
The past government has made huge mistakes. They feel that they've been able to spend and give rural people money. They have to create jobs in all parts of Mexico, so that means that you have to spend a lot in infrastructure throughout Mexico. I could take a Solectron and put it somewhere in a small town. But, what will I gain from that? Sure, there will be resources available. But, where are the engineers, the University, the airports, this, that? So, there are limited places in Mexico where you can place a cluster. So, the government has to start spending in the right places to develop infrastructure. Again, capability first. The customers will come in afterwards.
Will the Fox administration be able to do this? No, not really. Why? Because I thing the wheels of change are going to be slow to move. We voted for an opposition president and we also voted for a non-majority congress. That's going to be very interesting. He's going to have to fight for his life for every project.
That will bring a brand new political culture.
Yes, there has to be a checking balance. I think it's going the right way. I thing the high-tech industry is very important to Mexico and he has to understand what the most important industries are and give them priority. He has to promote them. And the government has to understand we can't rely on oil alone. We have to rely on our people. And that's what Mexico has always done: it has always relied on natural resources and never on its people. Education and training are going to be very important from now on. Oil is fine, but it won't last forever, and as we all know, the price can change!
I would like to know your professional background. After your 3 years of continued achievements, what is your next challenge and what would you like your contribution to the company to be?
I was involved in manufacturing for many years with different companies. Suzuki was one of them. Then I spent six years in the airline industry. I worked for Aeroméxico, I set up their local regional aircraft called "Aero Litoral". From there, Aeroméxico purchased Aeroperú and I was sent down there to try to bring it back to life, it had many problems. The airport training gave a sense of services and Solectron is a service industry, though we do it through manufacturing. So, if you have a sense of service, "Satisfy your customer," which is a priority in Solectron, that's a very good asset.
What's the future for me in Solectron? I think I can sum it up very easily. I'm 49, I have worked a long time. I have been with very good companies throughout my career, but I guess that at this point in my life I found the company I've been looking for all my life, because of the way they manage, the way they trust you, the vision. It totally meshed with my way of thinking. I am very happy. I think this will be the last company of my career. I think one of the things I'd like to do is help Solectron to continue to be number-one. How? Wherever and whenever they need me. Solectron, as a company, has been very good to me and the only way to pay back is through loyalty. There's something about Solectron. It's very difficult to describe. It's what my CEO calls "spirit and soul". It involves you, it gets you in such a way that you feel you are a very important part of something. That's how Solectron has made me feel and that's why I'm very happy. I'm very vocal about my feelings for Solectron. It's easy to be vocal about something you love so much. Plus, everything you see here. I started with a cell phone in the trunk of my car, it was my office. All you see here, these 9,600 employees, the buildings, the infrastructure, the products, it started with a dream and a cell phone in the trunk of a car. That shows you how much can be done. |
SELECTRON de Mexico