TODCO Case Study
California Mexico Provides Greater BOTTOM-LINE profits!
A Marian, Ohio based division of Overhead Doors Corporation, the largest producer of overhead swing doors worldwide.
When TODCO's President Daniel Rengert needed a manufacturing solution that would allow him to reduce labor costs while maintaining a close proximity to TODCO's west coast customers, he realized a near-shore manufacturing operation was his best answer. For TODCO this was an expansion of their manufacturing operation that would afford them some very unique benefits.
Expanding to Mexico positioned TODCO closer to our customer base in Mexico and Southern California, states Jim Frazzini, TODCO'S V.P. of Operations.
Better Margins, New Customers and Process Improvement
TODCO immediately experienced a significant cost reduction in labor. The average fully burdened Line Assembler's per hour wage in Baja California is $2.52 as compared to California at $13.30, that was an 81% savings just on labor rates! This allowed TODCO to be more price-competitive while increasing their profit margins.
The close geographic proximity of Baja California to Southern California made it an ideal location for Manufacturing.If fact, being in the Baja California region has helped TODCO develop new customers given many of the major automotive manufactures have operations here. This improved process flow helped with TODCO's Lean Manufacturing initiatives and overall manufacturing cost reduction.
TODCO'S new facility presented an opportunity for a plant re-design which resulted in tremendous improvement of our process flow,states Frazzini.
Entering Mexico: IMMEX (Shelter) Program
Having identified Baja California as the ideal location for TODCO, the next question was how to establish their Manufacturing operation. Under Mexico's IMMEX (Shelter) Program, TODCO was able to quickly establish their Manufacturing operation and begin production. This program allows companies to enter Mexico without any liability and minimal risk to the organization.
Expanding to Baja California, Mexico has been a great strategic move for TODCO, helping them reduce costs and increase their customer base.
We continue to look for ways to increase our business in Mexico and with Co-Production. It has been a great experience and I'd do it again without any hesitation!, Mr. Frazzini says.