Cesar-Scott: Straddling the Border with Innovative Thinking
Cesar-Scott, Inc. was incorporated in 1988, but it wasn’t until the mid 1990’s that they began to concentrate on the contract manufacturing of wire harnesses. Since that time, they have built assemblies for the appliance, automotive, electronic and industrial markets. Their mainstay is the 20-26 AWG range, but they also produce many assemblies in 12 thru 18 AWG. They are ISO 9001:2015/IS0 14001:2015 certified and build to the IPC/WHMA-A-620 Standard.
As a somewhat regional supplier, most of their business is in the Borderplex between Ciudad Juárez, México and El Paso, Texas. Many of their customers have corporate headquarters elsewhere, but the facilities they supply to are within this bustling region. WHN recently interviewed the company’s President, Gustavo Farell, about their unique strengths and some new avenues they are pursuing.
For many years, Cesar-Scott produced comparatively simple assemblies. However, as Gustavo discussed, that has changed. “We’ve gotten away from simple discrete wiring to more complex harnesses, usually in the lower to medium volume levels,” he noted. The State of Chihuahua is widely held as the wire harness capital of the world. In such a tough competitive region, it’s easy for a competitor to underbid and snap the simpler designs away. Gustavo has therefore steered efforts towards building higher level assemblies while providing more value to its customers.
The company has also developed a talent for quick changeovers resulting from smaller production quantities. As Gustavo described, “This allows us to preform particularly well when a customer has product families of harnesses with the same connectors and terminals, but with different configurations.”
One thing the company is particularly proud of is their ability to design for manufacturability and assembly (DFMA). They frequently consult with customers’ engineers in the design stage to help ensure the product can be assembled cost efficiently and effectively. “That is something I have always emphasized as key to the contract manufacturing of wire and cable assemblies, or any other product for that matter,” Gustavo instructed. He stressed that, for mostly liability issues, while his team is very good at suggesting improvements to the manufacture of products and to a general drawing clean-up; they have the customer sign off on any changes, thus shying away from full-blown harness design. His senior administrative and engineering team has over 150 years of combined experience working towards this goal.
Within the past three years, Cesar-Scott moved their corporate headquarters from El Paso’s Westside to a very El Paso-centric location. They had always manufactured in Cd. Juárez, but remodeling a building in an old industrial district in downtown El Paso has opened some additional doors. “This put us in close proximity to the two bridges crossing into Mexico, along with El Paso International Airport and other important transport locations,” Gustavo detailed. With the addition of this facility they now have the ability to do some wire and cable assembly and related kitting operations in the US. “This has given us the space and flexibility to work with customers who may not necessarily need or want their production to go across the border.” He feels this strategy has been especially important in today’s fluid trade regulation environment.
The size of this facility has enabled the company to fulfill another one of Gustavo’s visions, and that is the establishment of a Foreign Trade Zone (FTZ). FTZ’s are secure areas under U.S. Customs and Border Protection and are usually located at or near ports of entry. They act as a stop off point for goods that can be stored or processed without being subject to import duties. This process is planned to be complete by the end of April 2019. “We will now be able to eliminate, reduce or defer customs duties on products that come into the United States that may not be staying in the United States,” he advised. He gave an example describing a metal terminal coming into the US where duties would normally apply. Because they come into the FTZ, no duties apply. The product is then shipped to their Mexico facility and is transformed into a wire harness. When it comes back into the US under a different classification, the duties on the individual components are eliminated or deferred, if the overall product qualifies for zero or reduced duties under the proposed new USMCA rules.
They also plan to use the FTZ as a revenue stream by providing consignment services to other companies. One such arrangement that will begin when the US Customs approvals are obtained, is with a company building instrumentation clusters for the truck market in neighboring Cd. Juarez. Currently, this company takes large deliveries of Chinese made LCD displays and modules in the El Paso/Cesar-Scott warehouse facility. Under the new tariff rules, they would pay duty on the entire shipment as it hits US soil. At this time, they have to ship them to their Mexico facility for integration into the final product. The new arrangement will allow them to ship LCD displays and modules to Cesar-Scott’s FTZ and transfer them into Mexico only as needed. The duty will only be paid when the completed clusters come back into the US. As Gustavo described, this is a way for companies to legally eliminate or defer customs tariffs. it also minimizes inventory carrying costs and additional space requirements.
Cesar-Scott has also been busy developing their own product lines outside their traditional contract manufacturing realm. “Since the contract manufacturing business is so competitive, we’ve developed some of our own electronic gas igniters (spark modules) and switch harness assemblies for gas stoves.” He described the development of this saying, “We had a customer designing, manufacturing, marketing and selling these while we were building the wiring harness portion of their products. They decided to pull out of this business and said if we wanted to stay in this space, we would have to come up with our own designs to stand a chance of remaining in the game.” Even though it’s a small part of what they currently do in their Mexico facility, Gustavo feels it will change the overall business model for the company in years to come. “We have some competitors in Asia, so the tariffs have helped us, and by using the FTZ will help even more. There are not too many products like ours coming directly in and out of Mexico.”
Another relatively recent business unit under the Cesar-Scott umbrella is the creation of HST Cable Management Products. With HST, Cesar-Scott distributes cable management products such as heat shrink tubing, expandable sleeving, convoluted tubing, cable, ties, connectors, terminals, cutters, foam/gaskets/die-cut material, tooling, hear shrink equipment, heat guns, and molding machines. “These are components and equipment we have been successful with in our own facility, and we know we have a very good chain of supply,” he said.
One final effort that Gustavo wished to discuss was his personal involvement as the founder of the M-EXPO Wire Processing Technology trade event (www.mexpowire.com). M-EXPO showcases wire processing equipment technology and its suppliers to harness manufacturers in and around the State of Chihuahua and Northern Mexico. He began with some background and spoke about The Borderland Trade Show which was held in El Paso back in the 1990s. That show also showcased products for harness manufacturers, and drew attendees from around this same area. After 9/11, it became difficult for engineers, operations and decision-making personnel from the Mexico “Maquiladora”plants to cross the border. The show eventually withered away.
Two years ago, Gustavo set up an arrangement with a general manufacturing expo in Juárez called EXPO-MRO. He designated an area dedicated solely to wire processing technology equipment. Albeit small, the 2017 show was a good start as shows go, and a lot more interest was generated for M-EXPO 2018. The 2018 show was huge a success, and M-EXPO 2019 plans will more than double the 2018 exhibit space.
Gustavo discussed the logistics of moving equipment and displays across borders. “You’re talking about a foreign country, and it’s difficult to temporarily take equipment across the border, and then bring it back. My team and I will move the equipment back and forth from El Paso to Cd. Juarez through our Logistics arm – Everything Postal, transparent to the exhibitor.” There is a cost associated with this service, but it is available for the exhibitors who need it. A no cost shuttle service for participating exhibitors and attendees to/from El Paso-Cd. Juarez is available the week of the event from a designated central El Paso hotel. Gustavo finished by saying “Just make sure you bring your passport/visa or they may not let you back into the US. You may even experience the pleasure of walking across the Rio Grande to save some time!”
Gustavo is certainly a busy man with a hand in all of these activities, but there is definitely a central theme. “It all ties back to our experience and knowledge working on both sides of the border. We will continue to grow in the contract manufacturing of wire harnesses, which is our bread and butter, but we are expanding into these other products and services.”