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MTS Expands Globally
Electronic contract manufacturer establishes facilities in Puerto Rico, Dominican Republic, and Ireland
BY MARIALBA MARTINEZ
May 24, 2001
Since 1996, Manufacturing Technology Services Inc. (MTS) has launched two contract manufacturing facilities in Puerto Rico (Caguas and Mayaguez) and started two companies in the Dominican Republic, plus a contract manufacturing plant in Ireland.
"According to manufacturing industry analysts, contract manufacturing already does between 25% and 30% of all electronic manufacturing. Analysts anticipate that by 2005, contract manufacturing will be responsible for 80% of all manufacturing. This industry is very valuable to Puerto Rico and we must position ourselves and create strategies that will include the island in companies expansion plans from the start," said Luis Rivera Oyola, CEO of MTS.
Since opening his first plant in Caguas in 1996, MTS has enjoyed a compound annual growth rate of 85%. Annual sales for fiscal year (FY) 2000, ending on April 30, generated $10.8 million, an increase over FY 1999 sales. Sales during FY 2001 are projected at $16.4 million, with a net income of $1.6 million.
While MTS Caguas and Mayaguez facilities are electronic manufacturing plants, Rivera considers the MTS plant in the Dominican Republic to be one of the most important elements in his determination to remain competitive on a global basis.
"The Dominican Republic should be considered an ally for any Puerto Rico manufacturing venture. We can be competitive by conducting the high technology projects in Puerto Rico, and transfer the more costly labor intensive work to the Dominican Republic," said Rivera.
"MTS has facilities in the Dominican Republic because we believe that by offering alternatives that benefit both countries we can compete with our real contender, Mexico. Mexico is positioned as a low cost and high technology link to Latin America. Puerto Rico's Made in USA label may give us an advantage over Mexico; but this diminishes as more treaties like NAFTA are signed between the U.S. and Caribbean and Latin American countries."
Contrary to most of Puerto Ricos analysts, Rivera does not believe that Ireland or Singapore competes with the island. More than 10 years ago, Ireland positioned itself as the technology and manufacturing center for Europe. Companies like Intel and Hewlett-Packard moved to Ireland in order to have a market presence in Europe.
"Manufacturing must be looked at as a market. Ireland is not Puerto Ricos competitor. Ireland is a part of Europe and it is the natural choice for companies that want to establish a market presence in Europe to establish a facility there," says Rivera.
In looking for additional markets, global companies are now looking toward Latin America. Rivera predicts, "As the market becomes saturated in Japan, Taiwan, and Singapore, companies looking for new markets will move manufacturing facilities to the New WorldNorth and South America. This is when competition for Puerto Rico begins."
MTS was the first Puerto Rican company to earn its ISO 9000 certification back in 1996. This was not entirely out of the ordinary since Rivera worked as a consultant for manufacturing companies on the island who wanted to earn the ISO certification. Prior to this, Rivera worked as plant manager for Aguadillas Digital before it left the island in the early 1990s.
"I always enjoyed electronic manufacturing. But it wasnt until Digital left Puerto Rico that I, and others like me, realized what a great opportunity had been lost to become entrepreneurs," said Rivera.
"We depended too much on [Internal Revenue Code] Section 936 but only as administrators; not entrepreneurs, like Taiwan and Hong Kong had done. We did not take advantage of the technology that was created by our own engineers to create local companies and expand into other value-chain services like research & development and marketing.
"In fact, contract manufacturing was never even spoken about, let alone promoted by the government until the 1990s. Only the big manufacturing companies were promoted. The companies that have remained are those interested in technology, and who had the resources to make changes, such as Hewlett-Packard," said Rivera.
Today, MTS has 54,000 square feet and 185 employees in its Caguas, Mayaguez, Hainojosa (Dominican Republic), and Shannon (Ireland) plants. By summer, 10,000 square feet will be added in Caguas, the largest plant by far which offers complete electronic contract manufacturing services to its clients, including manufacturing, repair, and design support.
"When we started our business in Caguas we had 12 employees, and Im proud to say they are still with us. I consider each of our employees an artisan due to the detailed nature of their work. Through the years, they have helped us open different divisions, among them Client Services, where much of the repairs, restorations, programming, and design work take place.
"Other divisions are the shipping & receiving area, where each component that enters the plant is checked to make sure it works properly; and our warehouse & inventory areas, where some of our clients store up to two weeks inventory to make sure that work continues uninterrupted," said Rivera.
MTS deals with more than 300 suppliers providing more than 1,000 components. Their contract manufacturing services extend to both the private and public sectors. Last year, the Puerto Rico Electric Power Authority (Prepa) contracted MTS to modify electricity meters so they could be read from its central offices, instead of depending on a meter man to accomplish this house by house.
"Prepa was going to have a surplus of more than 600,000 meters which could not be modified. Since the Dominican Republic is undergoing an enormous infrastructure development, MTS opened a plant there to provide meters.
"When we were asked to build the appropriate electricity facilities, install meters, and provide maintenance, we established a second company called World Power Services. We also expect soon to be awarded a contract to provide service and maintenance to 90 mobile computer classrooms across the Dominican Republic," said Rivera.
It is from the Caguas plant that MTS is engaging in product design support and manufacturing. Last year the company prepared a dozen prototypes for a new automated teller machine located in retail stores where you can pay bills for different utilities or services, such as electricity, water, and telephone. A total of 450 models were manufactured and a second order is pending.
Under the trademark Tecnium, MTS will soon start production of a new generation of computers and keyboards, in partnership with two companies from Taiwan. The concept was developed when MTS was asked to modify a design for disabled persons.
"MTS has been working in partnership with the Puerto Rico Assistive Technology Program of the University of Puerto Ricos Medical Science Precinct in Rio Piedras. The concept is to create designs that will provide new skills for persons with disabilities. We recently perfected a device that will allow a child without arms to play electronic games by moving his head, his mouth, or his eyes."
According to Rivera, "In the case of persons who are blind, we found a keyboard with an integrated CPU (Central Processing Unit) which needs only to be connected to a sound system and a printer. The keyboard we are working with is made of solid rubber and totally flexible, preventing damage due to moisture or dust.
"We are also almost ready to produce and market a CPU that is smaller than a childs notebook, with the capacity of a desktop or laptop computer CPU. This product will be totally portable, can be used to automate wheelchairs due to its size, and will improve disabled persons chances of working with high technology devices," said Rivera.
This Caribbean Business article appears courtesy of Casiano Communications.