“People think we are in the hauling business,” explained Rafael De Los Santos, head of Durango, Mexico-based Tradelossa. “But our real business is managing risk.”
Tradelossa enters 2019 with few certainties. The company would welcome large projects, such as its recent job to establish a massive wind farm in Acuna, Mexico. Tradelossa hauled all the wind farm components from the Port of Altamira. The heaviest items were 18 nacelles that weighed 71 tons.
But de los Santos doesn’t know if 2019 will be as good as 2018 in terms of business.
He speculated, “How can I predict what will happen in the next 12 months without knowing what will happen next week? The challenge is to be wrong the least amount of times, not the most.”
Then, probably in early 2020, everyone must prepare for and adapt to USMCA, the U.S. Mexico Canada trade agreement, that will replace NAFTA.
De los Santos and his colleagues, such as AK Industrial Contractors’ Mike Arnett and International Industrial Contracting’s Ken Goddard, attest to one key to success in Mexico this year – excellence in workforce.
At Tradelossa, workforce improvement has been constant since 1973, when the company went to work on a smaller scale, hauling wood from Mexico’s mountains.
Arnett, CEO of AK Industrial, (with offices in Searcy, AK and Monterrey, Mexico), learned long ago that the one asset for relocating a plant to Mexico is picking the right people for the job.
His company employs 40 people in Searcy and 60 in Mexico. AK Industrial also relies heavily on about 150 as-needed, skilled, Mexico-based laborers for millwright and rigging tasks. Arnett describes them as “outstanding a group as there is.”
That wasn’t the way it was in 1981, when AK Industrial reached its first Mexico relocation agreement.
“We quoted the project,” Arnett said. “We needed someone to coordinate the work in Mexico. We found two guys and asked them for a quote on their part of the project. They came back with a quote that was higher than our entire price for the job. You could say we were off to a slow start in Mexico.”
That development revealed to Arnett one peril that’s part of starting any out-of-country business.
“We had a genuine concern regarding machinery that was relocated from the U.S. and put in place in Mexico,” he said. “We made the decision that we needed greater control over the final install.”
Constant tweaking has marked AK Industrial’s improvement process to produce today’s mature international company. Identifying, purchasing and effectively using warehouse space plus an evaluating/training process for skilled workers have been essential to improvement.
Tradelossa hauled Amistad Wind Farm components from the Port of Altamira to Acuna, Mexico. The project required eight months of planning and execution.
“We struggled in those early years,” Arnett said. “Today, I believe we have put together the best possible team. If our workers in Mexico have visas, we bring them to the U.S. for relocation projects. We’re careful to do what is required. Obviously, the evaluation of your labor pool takes time and is costly. But the result is we now we have our outstanding group of skilled technicians.
“All our plant relocating is turn-key,” he said. “We not only do the rigging and freight, but also electrical and mechanical.”
Arnett offered no crystal ball reads on 2019.
“This year started off slowly, then picked up in the second half,” he said. “Looking at 2019, there appears to be a lot of automotive industry potential in Mexico.”
New trade agreement
The new trade agreement with the United States brings conditions such as a $16 per hour minimum wage requirement. Arnett is uncertain about the impact of that wage standard and what other rules will mean for his company.
“There are new requirements, like safety standards for bringing a vehicle to the U.S.” he said. “I don’t know how that will work out. As for forecasting 2019, I see lots of opportunity in what could be huge plant moves,” he said.
International Industrial Contracting formed its Mexico subsidiary in 2006. According to Ken Goddard, “Our company has evolved into one of the premier rigging service providers over the years. That success and knowledge of auto client systems made our company a candidate to cross international borders.”
Goddard said the company bids on projects using teams on both sides of the border.
“We execute projects with human, equipment and financial resources from both sides of the border,” he said. “In Mexico, our business is all about resources. There are no union halls in which to hire your workforce. Specialized equipment is not readily available. And certain materials specified by our clients cannot always be obtained in Mexico. So we became a licensed importer and exporter to meet client needs with specialty materials – mainly electrical cable and accessories.”
Goddard said resource providers have seen a distinct value in working with his company in Mexico “because they are managed properly, treated fairly and paid in a timely fashion.”
Payment terms and the cost of money in Mexico have prevented some of the smaller companies from dealing directly with some automotive clients. So IICC’s providing those services to its Mexico subsidiary, according to Goddard, has helped these resource suppliers to realize success.
The Mazatlan Post with information from https://www.americancranesandtransport.com