Help a Mexican producer make your items to your specifications and cost constraints

Sanyo did it and became a world-class player

The legend you may hear when hanging out with people in the maquiladora business goes something like this:

In 1983 the United States and Mexico agreed on a new border crossing for Tijuana, at Otay Mesa, near the Rodriguez Airport and Brown Field in San Diego. Among the first to buy land and eventually establish factories near the proposed border crossing was a newcomer to the area, Sanyo.

Nobody knew much about Sanyo. The story goes to say that two young go-getters from the parent company in Japan were sent on a mission where their wits, knowledge and passion for growth would be the force to launch a whole new business. Their mission was to discover something that could be manufactured in Mexico and sold in Mexico at a healthy enough profit to expand the business and later dominate the US small refrigerator market. It was a 10 year plan.

The go-getters discovered enough near-ready resources and job shops in Mexico to make household fans which could be sold through the ever growing chain of supermarkets such as Aurrera, Gigante, Calimax, and the like.

The near-ready resources consisted of small manufacturers here and there throughout the Mexican republic who still did things the 'old way' with little regard to production control, quality control or continuous process improvement... least of all six sigma quality!

The Sanyo people promised long-term purchase agreements at profitable rates if the owners would agree to let Sanyo teach their production people how to do things the Japanese way. Those who agreed became rich over the years.

The Sanyo team would spend a few days at each new supplier's facility and would conduct team-building training and facilitation, brainstorming, continuous process improvement tools, innovation and of course statistical process control. As the shop owners saw more product flow out their shipping department and more cash being deposited in their bank account, they celebrated. And celebrated often.

Sanyo made good profits from the sale of fans and invested it in a new building, machines, conveyors, tools and most important of all... TRAINING. They prototyped the manufacturing line for small refrigerators and began selling them in the United States to places such as Price Club and others.

According to plan, within a few years they dominated the small refrigerator market in the United States. All of it funded from the revenues generated through the sale of fans in Mexico, even during one of the worst periods of devaluation in the history of the country.

End of story.

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A few facts: Many shops in Mexico that had the opportunity to deal with Sanyo when their first started chose to rely on the protection of a closed border then a reality in Mexico. For example, to buy an American made car in Mexico you would have to pay 100 import duty. To buy a lathe from anywhere in the world would cost you 100 duty because there was a lathe manufacturer in Torreon. Car manufacturers in Mexico City, Puebla and other places.

So there was no incentive to drive costs down through intelligent manufacturing processes.

Until NAFTA.

Then all hades broke loose and many small and large factories simply could not compete and shut down operations. If ever you fly over the city of Monterrey, look down and find the center of town then glance slightly north to hundreds of acres of rusting metal buildings and machinery. At one time it was a major steel mill. Closed because of greed, union strife, but mostly because they simply could not compete in a world market.

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