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Insight

Finders, Minders, and Grinders for Growth

Mon, 09/01/2014 - 12:00

Often overlooked, Chihuahua is a silent giant in the automotive industry. Sergio Mendoza, CEO of Factoria, a company that has offered support services to foreign suppliers since 1995, has concluded that in order for the industry to thrive in the region it needs the support of finders, grinders, and minders. Grinders make up the bottom of the business pyramid and carry out the bulk of the daily work, while minders form the middle management that direct the grinders. Finders are at the top, being the company partners responsible for winning new business. In terms of the state’s managements finders are deeply involved in the detection of business opportunities to attract companies to the State. In Chihuahua, the role of these finders was traditionally played by local companies from the private sector. “Finder companies sell shelter services, offering industrial land and buildings. They normally go offshore and showcase what the Chihuahua has to offer,” details Mendoza. However, with the Bajio’s magnetic pull, these companies have extended their services to other states, when previously they concentrated only on Chihuahua. “Years ago, their resources were mainly destined for Chihuahua. Now, the situation has changed and other regions are being showcased by them also. This is a positive change for the country as a whole,” Mendoza admits. While the investment has spread to other regions for the benefit of Mexico, this transition has left a void in Chihuahua and the role of finder has to be filled. Mendoza believes the state government has to play a bigger role as a finder for the regional automotive industry.

Minimizing risk and investment requirements enable companies to take advantage of the low labor cost and the strategic location of Chihuahua. Factoria offers a wide range of services, including contract assemblies, outsourcing of engineering functions, local representation, warehousing, just-in-time deliveries, vendor-managed inventory (VMI) and third party logistics (3PL). “For example, one of our clients is launching a new appliqué that goes into Visteon’s instrument panel. When their executive arrived, we provided translators so he could speak with the operators,” Mendoza explains. “Easing cultural barriers is not the only service. We also provide logistics, importation and warehousing for the parts and we supply to Visteon just in time. This way, their client do not have to have inventory on the ground.”

These outsourcing services enable companies to adopt lean business models that help them thrive. “Many companies are opting for this lean model. Inventories are costly and if suppliers are overseas, inventories can become critical and quite large,” Mendoza comments. Factoria is able to help its OEM and Tier 1 clients achieve their inventory goals. Mendoza explains how this is achieved: “We have the parts here but they belong to the supplier and not the local plant. With our services, our clients do not have to lease a building or even have a footprint in Mexico.” This means that through outsourcing it becomes easier for companies to simply have a local representative. Providing engineering support is also important. “Our role is to help our client understand the complexities and characteristics of the issue by providing data,” Mendoza adds. Acquiring this knowledge is achieved by a close collaboration with the quality and engineering departments of the Tier 1 and OEM clients. “Without this interaction, it would not be possible to obtain the proper information. Once you earn the trust of these centers, they endorse you, and if you help solve issues in the assembly line, they refer you to their suppliers.”