Desarrollo del Negocio en Mexico

Jan. 1, 2020
Cloyes Gear & Products? business in Mexico City began with the acquisition of a subsidiary company in 1990 in Chicago called Timing Gears Company, which manufactured and sold timing components under the brand Cy-Lent. Timing Gears Company sold to

Cloyes Gear & Products’ business in Mexico City began with the acquisition of a subsidiary company in 1990 in Chicago called Timing Gears Company, which manufactured and sold timing components under the brand Cy-Lent. Timing Gears Company sold to a few distributors who imported the product into Mexico. In 1996, the Timing Gears Company operations were folded into Cloyes, including sales and marketing. At that point in time, total sales into Mexico for Cloyes was less than $250,000. During the next several years, Cloyes was able to grow sales substantially in the Mexican market and surpassed the million-dollar mark in 2003.

At this point in time, Cloyes had also acquired our biggest competitor, Dynagear Timing Products, out of bankruptcy. Dynagear had a Mexican distribution operation called Dynagear de Mexico. Our senior management made the decision that Dynagear de Mexico would not be a part of the acquisition. Dynagear de Mexico was subsequently acquired by a former Dynagear employee and re-established under a new brand of products. However, Cloyes purchased the trade name Dynagear.

In Mexico, Cloyes began marketing three brands of timing products – Cloyes, Dynagear and Cy-Lent. We also began to consider setting up a manufacturing plant in Mexico to manufacture timing chain, as it was the most labor-intensive product we made. And it was thought that the new plant also could function as a distribution center that would service our Mexican customers. We had come to the conclusion that because we were a small, single-line supplier, having local distribution would significantly help our selling efforts. Our competitors were Mexican companies, and we felt we needed to have a local presence as well. A very large engine parts distributor agreed to buy Cloyes timing products as soon as they were available in Mexico. This distributor could only buy from us if we were in Mexico because they did not possess an import permit enabling them to buy from U.S. companies. At that time, however, we thought that a distribution only operation might not generate enough revenue to be a stand-alone business. So we were still considering developing a manufacturing facility as well.

As we began the search for a manufacturing and distribution facility in Mexico, we decided it would be prudent to partner with an established Mexican company. We felt that having a Mexican partner would make the incorporation of a Mexican business easier. We also felt that having a Mexican partner would be a big help with our selling efforts. We were able to find a partner that was well established in Mexico and very connected to the key aftermarket distributors. Both of the benefits we hoped for in having a partner materialized for us in big ways.

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In May of 2004 we were able to secure a more than adequate building in the state and city of Aguascalientes, which is in the geographical center of Mexico. We considered a few buildings in Mexico City but decided that the more affordable real estate cost and the location in Aguascalientes better suited our needs.

Due to the fact that we already had a very efficient chain plant in the United States, we decided to put our manufacturing plans on hold but proceeded with the incorporation of our distribution company – Cloyes Dynagear Mexicana. From the beginning, it was our intention to duplicate what we believed to be our outstanding customer service practices at our U.S. distribution center. We established goals of having a complete line, shipping all orders within 48 hours and filling orders 95 percent or better. Our research showed that our competitors in Mexico were offering shorter lines and requiring longer lead-times. We felt we could do better. Within a very short time, our high levels of customer service lead to Cloyes Dynagear Mexicana securing substantial additional market share.

It has now been more than seven years since we incorporated Cloyes Dynagear Mexicana in Mexico. Our sales growth has been consistent and has exceeded our expectations. We’ve been challenged by the rapidly increasing variety of applications in the market and have made large investments in inventory to keep up with this challenge. We’ve seen the spread of U.S. program groups into the distributor base in Mexico, which we believe is an advantage for Cloyes. We are starting to see the same types of demands that we have seen from our U.S. customers for years, including things like computer cataloging and late-model part availability. We’ve been able to remain competitively priced while still making a good return on our investment. Issues for which we had concern, such as collections and currency fluctuations, have been manageable.

Cloyes now considers our distribution company in Mexico to be a big success. We also are actively seeking opportunities to manufacture products that will fit the location and markets in Mexico. In addition, the decision to partner with an already established Mexican company has paid real dividends in terms of sales growth and successful organizational management. The establishment of Cloyes Dynagear Mexicana has proven to be a sound strategic move for Cloyes Gear, and we are looking forward to continued growth and success.