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Sensormatic Is Twenty Years Old And Still On Top

Aguadilla Plant Secures Olympic Games, Supplies Stateside Market With Smart Tags And More


October 12, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

The 2002 Winter Olympics in Salt Lake City, Utah, will be safer because Puerto Rican hands will manufacture the electronic surveillance equipment used to provide security during the event.

Sensormatic Electronics Corp., the Florida-based security equipment manufacturer with operations in Aguadilla, Puerto Rico, registered a 30% jump in sales during 1996 when the Summer Olympics were held in Atlanta, Georgia, said Vice President Jorge A. Santos. The company expects to replicate that growth when it provides the security systems for the Winter Games to be held in Salt Lake City from Feb. 8 through 24, 2002.

"The Olympics serve as a showcase for the company to bring out its newest and best products, which are then purchased by our clients worldwide," Santos said, adding that the only security breach at the Atlanta games occurred at a park outside the main premises, which were wired with Sensormatic equipment. Most of that security technology was manufactured in Puerto Rico.

Sensormatic, a world leader in the manufacture of security equipment, has 60 new products in the pipeline, most of which are associated with security for the Olympics. The majority of these will be manufactured at their largest manufacturing plant worldwide located in Puerto Rico. About 70% of their products, which totaled $1.1 billion in sales last year, were manufactured in Aguadilla.

The local plant, which celebrates its 20th anniversary next week, has been consistently chosen as Best in Class by headquarters. The parent company has three major manufacturing plant sites: Ireland, China and Puerto Rico, with a smaller production facility in Boca Raton, Fla.

Operating 24 hours a day, seven days a week, Sensormatic in Aguadilla has registered a 40% increase in production over the past three years, while its work force increased 10%. Further, for the past 18 months, the local plant has performed research and development (R&D) previously carried out in the States, said Santos, who is in charge of supply chain manufacturing for the Americas and International markets.

"This means that some of our local design engineers and marketing experts are in the U.S. mainland all the time participating in the creation and design of the new products the company will make," he said. "Most will eventually be manufactured in Puerto Rico."

Sensormatic engineers in Puerto Rico were responsible for designing the best-selling Vulcan tag, a so-called smart tag that allows retail stores to keep security pedestals at a farther distance from each other. This allows for a better flow of customers. The Vulcan tag has also practically eliminated the number of false alarms, which occurred when a non-paid items are removed from a store.

Santos said his goal within the next two years is to position the Puerto Rico plant as the development center for everything created for the Latin American market. "That is a market that is growing fast and having the development center here, where there is no language barrier, would be great for both sides."

He is working on a $5 million proposal to get an R&D grant from the Puerto Rico Industrial Development Co. (Pridco) to establish a science and education laboratory at his plant. This would allow Sensormatic to serve the Latin America market, increase the Aguadilla plant’s R&D capability, and ensure that new products are continuously in their pipeline. The Pridco R&D fund was set up as part of Gov. Pedro Rossello’s Science & Technology initiative to help existing companies and start-ups develop new products.

The Aguadilla facility has 324,000 square feet, and is the largest under-the same-roof plant on the island. Located on a 58-acre site, adjacent to Hewlett Packard Puerto Rico, Sensormatic employs 1,500 people. The plant has a $26 million annual payroll and annually purchases $20 million locally.

Santos, who has worked at the plant for three years, said the key to the facility’s success is its superior quality, and its ability to develop and deliver products to market faster. For example, the plant has reduced its manufacturing cycle--the period from the design of a new product to delivery to a client--to an average of four months. Normally, this process can take as long as a year.

"If we could get the U.S. Congress to make Section 30A [of the U.S. Internal Revenue Code] permanent, I would automatically get a tax credit for the total payroll and I would even beat our China plant in cost," said Santos, referring to the federal wage credit slated to be phased out in the next few years.

The Aguadilla plant supplies 100% of Sensormatic’s North America market and manufactures a small percentage for the European and Asian markets as well. For example, the Aguadilla plant manufactures 100% of the North American demand for its the electronic surveillance products, which includes the smart tags and other surveillance equipment used in stores.

The plant also supplies 100% Sensormatic’s video systems division North American sales, which includes the cameras and recording equipment used in casinos, and a small percentage manufactured for Europe and Asia. The access control division, which manufactures the smart tags that allow security to monitor a person’s whereabouts, also is responsible for covering 100% of the company’s North America market.

The local plant manufactures 40 families of products, including a total of 5,000 electronic boards, in 360 different models daily.

Asked what managers can do to maintain the island’s manufacturing competitiveness, Santos said the key is to benchmark continuously and keep abreast of what the best are doing worldwide for comparison.

"Benchmarking will tell you what needs to be done to achieve world class standing. To achieve this category, one must invest constantly in employee training," said Santos, adding that he offers each employee 40 hours of training annually and is proud to have several examples of two generations of family members working at his plant.

This Caribbean Business article appears courtesy of Casiano Communications.
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