Preparing the Way for Mexican Manufacturing: Interview with CADELEC President Ernesto Sanchez

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According to the National Science Foundation, <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Mexico ranks among several countries that "appear to be laying the foundation for manufacturing and exporting high-tech products in the near future." The NSF, which has rated countries based on such factors as technological infrastructure and student enrollments in secondary and higher education, reported this year that Mexico's overall score rose in 2003, then held steady on three indicators last year and increased in its productive capacity indicator that same year. While China remains a first choice for many manufacturers seeking lower prices and high quality, Mexico beckons from just across the southern US border as a prime place to do business. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

CADELEC, a not-for-profit organization based in Guadalajara, was formed in 1998 by leading electronics companies in Mexico. Its mission is to promote Mexican industry and to foster development of a robust, well-integrated supply chain connecting Mexico with international suppliers. The organization, which was formed as a spin-off of the Chamber of the Electronics Industry, has a board of directors made up of the general managers of several OEM companies in Mexico, such as IBM, Hewlett-Packard and Hitachi. The board also includes Electronics Manufacturing Services (EMS) providers such as Solectron, Jabil, Sanmina and Flextronics. Ernesto Sanchez, general manager of Jabil Circuit's operation in Mexico, serves as CADELEC's board president. The organization is also supported by the federal and state governments in Jalisco.

Recently, PCB007's Ray Rasmussen spoke with Mr. Sanchez about CADELEC's founding and its efforts to support Mexican manufacturing. According to Sanchez, "Over the past eight years, CADELEC has been successful in developing certain segments of the electronics industry in Mexico," where both the Jalisco region and Mexico in general have seen significant growth in electronics sales, production, and project complexity.

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Jabil Circuit General Manager Ernesto Sanchez

While one of CADELEC's functions is to interface with the government on behalf of the manufacturing sector in Mexico, Sanchez assured Rasmussen that the association does much more to support industry. "We also directly engage with 'foreign' companies to attract them into the region by explaining the market potential and also present them to the government so they can take advantage of some specific incentives," including government grants, he noted. CADELEC also provides additional information for those who would like to enter the region to do business--for example, said Sanchez, "companies that would like to move there that need to do some kind of transformation or adaptation" to take part in the electronics industry.

A fourth area of CADELEC's focus is local promotion, which "tells the story of what's going on in the region and in the country," according to Sanchez.

CADELEC is also working to improve the infrastructure for electronics manufacturing  and seeks to attract suppliers to the region.  Sanchez emphasized that the organization is trying to attract more printed circuit board makers but acknowledged that, for the most part, Mexico remains a region of assembly--especially, he said, with the loss a few years ago of key player Multek. However, the region is ripe for high-complexity PCB makers who would handle more than just "high-volume, low-mix" production that is manufactured inexpensively in China and some other Asian countries, said Sanchez.

When asked how CADELEC is addressing shortfalls in the Mexican supply chain in order to improve service offerings to EMS companies and OEMs, he noted a number of efforts, including working with local government to put appropriate training programs in place to equip workers. The industry organization also continues working to attract supply-chain members such as chemical providers and copper manufacturers. According to Sanchez, "I think that we could present our case for one of these companies to come over here."

Rasmussen asked the CADELEC president point-blank, "So, speaking of Asia, tell us  why would people come [to Mexico]? We've been watching and reading about the growth in the Mexican electronics market recently and how it's recovered nicely. But, how are you able to compete with countries like China and the very, very low cost? I know you've got a much more complex product there (Mexico). But in general, what do you do that allows you to be competitive?"

Sanchez named several appealing factors that he said suit Mexico as a manufacturing haven for U.S.-based businesses--for instance, proximity to the main market, making for lower logistical costs than with Asian production, as well as to U.S. companies' design centers for complex operations, most of which are in North America, he stated. "The engineer can jump on the plane, if he's in California, in the morning and have lunch in Mexico with the manufacturer," Sanchez noted. As well, he said, cultural similarities between Mexico and the U.S. make for good working relationships. Another factor in Mexico that should appeal to U.S. companies looking abroad for production is the level of corporate protection in Mexico, where Sanchez said that laws protecting Intellectual Property are strongly enforced by the government.

CADELEC will sponsor, promote and actively participate in Mexitronica 2006, scheduled to take place Tuesday through Thursday, October 10-12, at Expo Guadalajara. During the three-day Mexitronica event, CADELEC will operate a buying center on the trade show floor that will feature office space where member companies, ready to purchase during the event, can conduct business with suppliers who are exhibiting there.

CADELEC is also supporting the efforts of Real-Time With...Mexitronica, a media event produced by PCB007 which is designed to provide comprehensive coverage of the this exciting market.

When asked why Mexitronica is a worthwhile event for U.S. businesses to attend, Sanchez called it "a great opportunity to, first, have a closer look at the Mexican offering in manufacturing and also design, because there is a significant move toward value-added activities like design." He said the show is a time to meet several supply-chain companies, see their wares, and come face to face with primary industry decision-makers in Mexico. In short, it's an opportunity to get connected with Mexico.

For more information about services provided by CADELEC, contact Ana Lorena Velasquez, marketing and PR manager, at . For more information about CADELEC or doing business in Mexico, visit .



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