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.