Container Corp. Tijuana Plant to Serve Japanese Firms
In a move that illustrates the “second wave” of multinational manufacturers to Mexican maquiladoras, Container Corp. of America said Monday it will set up a Tijuana plant to assemble shipping boxes for several of its television and toy manufacturer customers already located there.
The nation’s second-largest maker of corrugated paper containers, Container Corp. of America is 50% owned by Jefferson Smurfit Corp., a St. Louis-based paper and packaging concern. The other half is owned by Morgan Stanley investment bankers. Jefferson Smurfit reported revenue of $1.1 billion for the fiscal year ended Dec. 31.
Container Corp. is one of several suppliers who are following larger customers who have already set up maquiladoras, the name for assembly plants owned by foreign companies that are designed to take advantage of Mexico’s low labor costs.
Although the company declined to name them for competitive reasons, Container Corp.’s clients in Tijuana include television manufacturers Sanyo, Hitachi and Matsushita as well as several toy manufacturers, sources said.
Plant to Employ 30
“(Setting up operations in Tijuana) is a way for suppliers to attain the same cost efficiencies as their direct end users,” said Sean Doyle, an agent with Coldwell Banker International, a San Diego-based commercial real estate firm that follows the Tijuana market for multinational clients.
Container Corp.’s plant will total about 50,000 square feet in size and employ up to 30 once it is fully operational, said Donald B. Johnston, a western region vice president based in Los Angeles. The plant, which is located in the Mesa de Otay area east of the city center, is leased from the ATISA development group and is scheduled to open in January, he said.
The opening of the new plant in Tijuana will cause no layoffs at facilities now used by Container Corp. in the Los Angeles area, Johnston said. Workers at the Tijuana plant will be transforming corrugated sheets into finished shipping containers.
Cutting Paper Work
Johnston said the descion to open the plant in Tijuana was driven by the company’s desire to provide better service to its customers by eliminating “import-export problems” created by clients taking possession of corrugated boxes in the United States. With the plant located in Tijuana and Container Corp. making direct deliveries to the Mexican plants, a lot of paper work is eliminated for clients, he said.
Container Corp.’s move to Mexico is also a response to many customers’ requests for “just-in-time “ delivery, a system that minimizes storage time for supplies, reducing customers’ inventory financing costs. Container has more than 50 similar plants in the United States, many near its direct customers.
Container Corp. was acquired by Jefferson Smurfit and Morgan Stanley in July, 1986, from Mobil Corp. for $700 million in cash and the assumption of $457 million of Container Corp. debt and liabilities. Jefferson Smurfit is 78% owned by Jefferson Smurfit Group, a Republic of Ireland-based company.
