MGS to fuel more growth with acquisition in Mexico

MGS Mfg. Group Inc. sales have increased about 10 percent annually for the last four years at the company’s facility in the city of Chihuahua, Mexico, according to President Paul Manley.

Now the mold maker and contract manufacturer is growing physically in Mexico, too, with the acquisition of a 125,000-square-foot facility in Juárez from Jabil Inc.

Terms of the deal were not disclosed except that it includes 65 injection molding machines and it calls for retaining the 500 employees who had been making plastic parts for Jabil’s automotive, electronics and consumer products markets.

MGS has been serving those markets, too, some 215 miles to the south of Juárez in the city of Chihuahua, Manley said in a phone interview. He described customers as OEMs, brand owners and Fortune 500 companies.

“The Mexican market and our customers in Mexico have been strategic to MGS since our entry into the market in 2008,” Manley said. “We have been very successful in growing our business in Chihuahua and this acquisition provides additional capacity and space to continue to grow in the market. We are excited about our growth opportunities and look forward to working with a very experienced and talented Juárez team.”

Headquartered in Germantown, Wis., MGS was roughly a $200 million company before the acquisition, Manley said. With the Juárez deal, MGS now has 6 plants and about 345 injection molding machines and 1,700 employees in the U.S., Mexico and Ireland.

MGS also has a new CEO, Greg Adams, the former president and CEO of Tenere Inc., a custom manufacturer of metal and plastic assemblies based in Dresser, Wis. His appointment was announced Sept. 7 along with his primary responsibilities of driving growth organically and through acquisitions. Adams also spent 15 years at Nypro North America, which is now a subsidiary of Jabil Circuits.

Jabil is a publicly traded company based in St. Petersburg, Fla., that posted record net sales of $18.4 billion in fiscal 2016. The company offers engineering, manufacturing and supply services at 28 facilities worldwide for the automotive, appliance, medical device and other markets. The Juárez site was part of the Nypro organization that Jabil bought in 2013.

MGS is expanding in Mexico at a time of lingering uncertainty over renegotiation of NAFTA. The 23-year-old pact governs more than $1 trillion of commerce between the U.S., Mexico and Canada. A second round of talks between the three countries ended Sept. 5. Some controversial changes, such as the use of U.S.-made materials in automobiles and higher wages for Mexican workers, have been proposed to address the $60 billion trade deficit the U.S. has with Mexico.

Before the Juárez acquisition, MGS officials had a lot of internal discussions about doing more business in Mexico as well as talks with customers and advisers about NAFTA.

“While there’s uncertainty, when we look at our customers continuing to invest in Mexico and localize manufacturing from Asia to Mexico to service the North American market, we see a strong manufacturing relationship between Mexico and the United States at the moment,” Manley said. “It’s anybody’s guess what will happen in Washington, but we must make decisions for our business based upon what we know today.”

While Manley noted the U.S. trade imbalance with Mexico, he added, “Our No. 1 cost component in our Mexican operations is resin, and the great majority of that resin is imported into Mexico from U.S. plants.”

Before the Juárez acquisition, most of MGS’s sales, about 45 percent, came from the health care market, which isn’t served by either facility in Mexico. The company also does substantial work in markets for electronics (22 percent), automotive (18 percent) and consumer products (8 percent).

“While health care has been our fastest growing market,” Manley said, “we see value in the diversification of the markets we serve.”

Business in Mexico has been increasing at a good clip because MGS offers customers a wide range of services related to molding precision plastic parts, selecting engineering-grade resins and building equipment for launch programs, according to the company president.

“What makes MGS unique is that we are able to combine world-class plastics manufacturing with world-class tooling and engineering,” Manley said. “We strive to be a single point of accountability in the supply chain of our customers. A great team and a great approach toward partnering with customers is what has and will continue to fuel our growth.”

The Juárez facility also has a nearly completed clean room. In addition to the two plants in Mexico, MGS operates in Germantown, Wis., Libertyville and Antioch, Ill., and Leixlip, Ireland. The company is owned by the Milwaukee-based private equity firm Mason Wells.

Adams, the new CEO, who is succeeding Jeff Kolbow, has experience dealing with operational improvements, safety, customer satisfaction, developing accounts, and leading strategic initiatives from his years at Nypro.

“I am very excited to join MGS, which is poised for further growth with tremendous capabilities and customers in addition to backing from Mason Wells,” Adams said in a news release. “I’m delighted to return to precision plastics and look forward to working with the MGS team to help convert its many opportunities into successful customer solutions.”

Adams earned a bachelor’s degree in economics at Michigan State University, a master’s degree in manufacturing engineering at Worcester Polytechnic Institute, and an M.B.A. at the University of Michigan.

Read the article in Plastics News