QUERETARO, Mexico—Quality Synthetic Rubber Inc. is venturing south of the border.
The unit of Q Holding Co. will establish a manufacturing facility dedicated to producing primarily silicone electrical connector seals and insulators for industrial applications, mainly automotive and aerospace. The 65,000-sq.-ft. plant will be operational on Nov. 15 and is projected to create 135 jobs.
QSR is making an initial capital equipment investment of $3 million for the first year. The site has room for an additional 65,000 square feet should demand dictate it expand further.
“We've looked to going into Mexico for many years,” President and CEO Randy Ross said. “Not because we're just shooting in the dark without plan, but we look to where our customers are. Where are our customers setting up operation and where do they consume the product? We would like to, not just in Mexico but around the world, make sure our operations are close to serving our customers needs.”
He added that the firm has a large amount of revenue in the country that it already has developed, and now is the ideal time to locate manufacturing there to produce close to those customers. The firm's volumes are increasing year-over-year and have hit the point for some form of brick and mortar investment.
“When we looked at where our customers were consuming the product, the very logical choice was Mexico,” Ross said. “It was both a matter of us outgrowing our current infrastructure and looking at our revenue flows and where we've developed a majority of the business and this idea of being close to the customer's manufacturing operation.”
Automotive has been a fast-growing market for Mexico with major original equipment manufacturers making significant investments in enhancing their manufacturing presence. Ford, General Motors, Fiat-Chrysler, Honda, Nissan, Toyota, Mazda, Kia, BMW, Mercedes-Benz and Volkswagen either already are operating or preparing to open assembly plants in the country.
Right now QSR's facility will serve its industrial customers, but the firm has the capability to serve the medical market through its Qure Medical arm if demand dictates. All it would take is some additional investments to secure the appropriate medical-related certifications.
Ross said he believes the firm isn't far from making those investments as more medical device production occurs in the region.
“It's a very clear trend upward,” Ross said. “We don't think there will be a lack of demand for our products in Mexico. It's really just a matter of taking the right thoughtful steps to meet those demands.”
Electrical protection and management systems is Q's largest area of focus, and about 80 percent of the firm's overall business deals with silicone parts. Ross said medical and aerospace are fast growing markets for Q, recently receiving AS 9000 certification for the aerospace industry.
Queretaro is quickly becoming known for aerospace, thanks largely to Bombardier's decision to locate an aerospace engineering and production facility there. Furthermore, Ross said the city has a strong rubber manufacturing infrastructure with a number of Tier 1 automotive suppliers in the region. The executive added that a number of suppliers the firm utilizes are based in the area.
QSR also received some work force training credits along the lines of what a firm would receive in the U.S.
“We didn't pick Queretaro because it's the cheapest location in the world,” Ross said. “We picked it because it has a great manufacturing infrastructure and a history in rubber technology. It's really a fascinating part of Mexico.”
In 2005, Q ventured into China, and since then the facility has grown on both the QSR and medical side. At the time, Asia was a new manufacturing frontier for the firm, just as Mexico is today, but Ross said the focus remains the same.
“What they did was absolutely correct,” Ross said of Q's approach to China, and now Mexico. “Don't focus on the inputs—focus on the outputs. Our customers expect the exact same level of quality out of China and out of Mexico as they do out of the U.S. So when the founders of the company set up the Chinese operation, we were building off of those same philosophies. You'll find the same level of investment in the equipment and the tooling, so the focus is what comes out of that plant is at a standard that we can be proud of from any Q location.”
And once the quality is there, the next step is establishing a culture to make sure it stays top notch.
“Business has a leveling effect when it comes to technology and breakthroughs,” Ross said. “But the one constant advantage companies can create is people and culture. What we're trying to infuse early on into Mexico is why what Q does is so critical not only as part of the company, but to society.”