A fully exposed case study of starting a Maquiladora in Tijuana

1- Preliminary report and photos from Friday Oct. 31 to Monday, Nov. 3 showing zero lost production time.

2- Costs in running the maquiladora after one year

3- The step-by-step process including SECOFI paperwork

4- See the actual SECOFI forms

1. Ken Clark, Small Business Advisor
Small Business Development & Int' Trade Center
Southwestern College
900 Otay Lakes Rd.
Chula Vista, CA 91910

Dear Ken:

Following is the concluding report on the work performed for EXX's
maquiladora problem. Please attach last week's preliminary report to complete
the package.

Following is a list of action items, most of which were developed through
consensus with key personnel from Sta Ana and Tijuana, which should result in
achieving:
- Triple or quadruple production output
- within less space than is now being used
- with a marginal increase in the number of employees
- while reducing turnover
- and reducing scrap and rework

Concluding this report is a recommended course of action along with expected
cost/benefit analysis.

Action Items for EXX Maquiladora in Tijuana

1. New Plant Layout
a) Material to be distributed from near dock-side
b) Prep across table from stuffing operation
1) As pre-forms become available use space to increase stuffing
ops.
2) Minimum queue
c) Orient Miata line from east to west next to divider isle
d) Orient existing stuffing line east to west, north of wave
solder station.
e) Wave solder station centered, to the east
f) Establish mini-lab table dedicated to training and
occasional rework.
g) Build isolated module for linear power supply
h) Leave burn-in and varnish operations as is

2. Discipline Wave Solder Process
a) Establish critical criteria
b) Establish log along with appropriate instruments
1) Test for chemical purity
2) Test for temperature and cleanliness
3) Other - to be determined
c) Establish SPC chart at this station

3. Establish data collection for rework
a) Systematize problem-solving
b) Establish project management process using personnel

4. Make illustrated planning at each station fully
comprehensible
a) Use photos and actual examples of components
b) Develop with the idea the operators need not know how to
read.
c) Illustrate quality requirements
1) Make it possible for people to KNOW they are doing it right
without guessing.
2) If measurements need to be taken, do it, provide the tools.
3) Discipline "I accept your part because it is good" concept.
d) Discipline configuration control
e) Establish time-standards and then demonstrate management
requirement to continuously improve.
1) Chart actual vs. expected standard times over time
2) Make it more a game than a whip
f) Establish operator feedback/listening system (suggestion
box) and put a response system in place.
1) No cash awards are necessary
2) Respond to operator suggestions will keep many of the best
people content and wanting to stay.

5. Manpower
a) Reduce turnover
1) Hire only those with some record of stability
2) Establish a path for upward mobility everybody can
understand and believe.
a> Entry level operator to train at learning center
b> Stuffing operators wishing to move up to be cycled through
learning center.
c> First on-line job with older linear power supply
d> Show how through better tools the job will become easier
every week and the same number of people will make more
product thus ensuring longevity.
b) Improve training
1) Training to be continuous
2) Develop multiple talents to shift people around when
necessary and keep the job from becoming boring. (To those
who this applies - others will resist change - leave them
be.)
3) Trainer to be among highest paid with high prestige
a> Trainer can pinch-hit at any station
b> To be groomed for Industrial Engineering role
4) Recognize the need for a dual-career path:
a> Toward supervision and management
b> Toward manufacturing technology
c> Both should contain equal reward system
5) Develop Skill Based Pay schedule
a> Pay in accordance to what a person knows and can do
b> Not in accordance to how many years with the company
c> Emulate Navy enlisted process for pay-raise
1> Based on a list of things one must know
2> Each item signed off by a supervisor after having
demonstrated capabilities or learning experience.

6. Establish Continuous Process Improvement System
a) Data acquisition and report generation
1) Times, problems, opportunities
2) Project identification and definition
b) Some variation of SPC and Pareto charting
c) Establish a Native System of Project Management
d) Recognize these activities are in addition to normal routine
and separate the doers from the talkers - Corporate culture
to reward doers -
e) Extensive use of vendors for ideas and solutions
f) Establish CHANGE as a way of life
g) Act on suggestions either by doing or by explaining why not
now or why later.

7. Establish sound reporting system to Don and Marshall
a) Weekly reports in graphic format
b) Show goals and achievements
c) Maintain Action Item check-list
1) Strike-out items done
2) Highlight items pending from HQ
3) Show a natural order of things
d) Nobody to attend a meeting without a notebook
e) Nobody from HQ to enter the Tijuana facility without a
notebook.

8. Tooling, fixturing, machines
a) Establish firm preventive maintenance program for all tools,
machines and systems now in place.
b) Draw and photograph operating instructions for equipment now
sitting idle that could be working.
c) Determine to provide operators with better tools, work-space
comfort, training and procedures on a continuous,
never-ending basis.
d) Establish a system whereby data collection from above can be
converted into projects which will develop and install
tools, jigs, fixtures, training and machines.
e) Some possible tools:
1) Stuff boards while held in x y slide, cutter/crimpers
mounted firmly, template and spring loaded button to locate
component to be trimmed. (Could triple throughput)
2) Activate prep tooling and continue to upgrade until all
components arrive ready for insertion.
3) Put components in tilted box with horizontal static-proof
smooth surface to facilitate alignment and removal by the
operators.
4) Develop carrying trays

9. Dust
a) Develop data on problems caused by dust
b) Assign loss-function value
c) Propose alternative solutions
d) Develop cost-savings plan with sound ROI
e) Get management support and funding
f) Install the system
g) Document expected vs real savings

10. Planned growth
a) Determine to increase production without increasing
personnel proportionately.
b) Determine to increase throughput with same space
c) Item a and b are possible by adhering to all items on this
action list.
d) Use planned growth as a driving force behind hiring,
training and retaining personnel.

11. Establish Management Training Program

RECOMMENDED COURSE OF ACTION

Action on the above items could begin immediately with existing facilities and
personnel. However, it is recommended that we hire a Mexican industrial
technologist/engineer and a maintenance mechanic as soon as possible and train
them into handling most of the items on the list in a more cost-effective
manner.

Please note that all items relate to production technology and few are related
to management issues which is proof that your management team is performing
brilliantly with the limited resources at their disposal.

A detailed cost analysis is not possible with the information I have. However,
if you were to plot a curve showing quadrupled production over a one year
time-frame and another line starting with 42 people, escalating to only 60 at
the end of the year, add a line for tools/jigs/fixtures equivalent to 20 of
labor costs, and you should see a significant improvement in earnings.

Thank you for this opportunity to be of service.

Sincerely,

Wayne Lundberg, CMfgE

Photos showing evening of Oct. 31, and morning of Nov. 3 and not a single glitch in the production schedule.

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