Bulk International serves US market from renovated plant in central Mexico

EVEN with higher steel prices, 2004 was a good year for Bulk International S de RL de CV, a wholly owned tank trailer manufacturing subsidiary of Bulk Resources Inc, Tampa, Florida. Company officials say they believe 2005 will be even better.

Operating out of a newly renovated factory at an industrial park in the Mexican state of Guanajuato, Bulk International is on track to build approximately 200 stainless steel chemical tank trailers this year. Output is projected to reach 300 tankers in 2005.

“Overall, 2004 has been a very successful year for us,” says Terry Taylor, Bulk Resources president. “We have a lot of activity right now, and we're getting a lot of orders. The second quarter was especially good, with several orders in the 20-trailer range coming from fleet customers. Higher steel prices were the only factor that kept this year from being even better. Right now, the increased cost of steel is adding about $6,000 to our DOT407 tank trailers.

“Despite the higher cost for materials, demand for stainless steel chemical trailers should continue to strengthen in 2005. The US economy is coming on strong, and tank truck carriers need new equipment to keep up with chemical shipments.”

All of the tank trailers produced at the Bulk International plant are built for parent company Bulk Resources, which adds them to its leasing fleet or sells them to tank fleets and other customers.

“Bulk International is our manufacturing subsidiary, and Bulk Resources handles all marketing,” Taylor says. “We're continuing to build up the Bulk Resources lease fleet. Ultimately, we'd like to have 1,000 to 2,000 trailers in the lease fleet. We're targeting customers who want long-term operating leases of five to seven years.”

Bulk International evolved from Bulk Manufacturing Inc, which was based in Plant City, Florida, for many years. The current tank manufacturing entity operates in Mexico under maquiladora status building primarily for the US market.

“Our factory in Plant City was much smaller, with a total yearly capacity of around 300 tank trailers,” Taylor says. “We needed a larger facility to remain competitive. With a multi-shift staff, the new facility could produce about a thousand tank trailers annually. Right now, we're just running a single shift.

“As a maquiladora, we can import components duty-free from the other NAFTA (North American Free Trade Agreement) countries. We have to use the parts in the assembly of our tank trailers, which are exported duty-free to the United States and Canada. We can also sell our tank trailers in Mexico.”

Larger plant

The project to find a new and larger plant started in 2000 as the US economy slowed. Because tank manufacturing is labor-intensive, it quickly became clear to Bulk Resources management that Mexico offered some key advantages.

Within a relatively short time, the search team found an existing facility in the Parque Opcion industrial park about a half hour north of Queretaro, Queretaro. The 40,000-sq-ft building was used previously to fabricate carbon steel tanks.

“We chose what we believe is a prime location just off one of the NAFTA highways 530 miles south of the US-Mexico border,” Taylor says. “We moved to the Mexico interior, because we believe there is a more stable workforce in this area. This location also was attractive because a large number of multinational companies have set up shop in the nearby cities and towns.”

Even though the building had been used previously for carbon steel tanks, a major renovation effort was needed before Bulk International could commence operations. Improvements started with a new roof.

Fabricating machinery was shipped in from the old Plant City location. Equipment includes a CNC plasma cutter, press brake, 20-ft shear, seam welder plate roll, two 7.5-ton bridge cranes, 1,000 cfm air compressor, angle roll, and roll former for turning out reinforcing rings. Welding machines and portable plasma cutters also were supplied from the United States.

A preliminary production line was laid out, but the management team has continued to fine-tune the operation. Fabrication operations are being reorganized. In addition, construction of a new paint and sandblasting shop is nearing completion.

Work team

While the renovation was underway, the plant staff was being assembled and trained. The management team includes Americans and Mexicans: Thomas A Ballon, president and general manager; Mark Krebs, production manager; Bob Butts and Antonio Vazquez, supply chain/purchasing; purchasing and quality control; Bernard Gehl, chief engineer and quality control; Eduardo Vega, controller; and Maria Elena Andrade, human resources.

Seventy workers were hired for the current single-shift operation. Most of them had to be trained in stainless steel welding before the plant could commence operation.

“These are hard workers, and they showed a lot of drive in completing the welding training,” Ballon says. “I believe the tanks they build can stand up against any comparable product in the US market. Our factory is DOT (Department of Transportation) and ASME (American Society of Mechanical Engineering) certified. We'll also obtain 3A certification for foodgrade tanks.”

The main product manufactured at the plant are 7,000-gallon nominal straight-round and 6,900-gallon nominal double-conical DOT407 chemical tankers, but the company also is seeing considerable demand for 6,500 and 5,000-gallon units. Both insulated and uninsulated tanks are in demand.

Long life

Bulk International builds the tank trailers to deliver long life. Tanks are designed with a 300°F temperature capability. Twelve 10-gauge-channel rings and stiffeners are standard. A full subframe supports the fifthwheel plate and landing gear, and a heavy-duty tubular frame supports the ladder and hose tubes. In-transit heat is provided with a dimple steam pan and all-stainless piping. On insulated trailers, six inches of fiberglass compressed to five is standard.

Stainless steel is the primary material sourced in Mexico. Mexinox, the Mexican subsidiary of Thyssen-Krupp, supplies Type 316/316L in 20-ft-long by 48-inch-wide sheets. Steel disc wheels, axle assemblies, and springs also are supplied through Mexico-based companies.

However, most other components are imported from the United States. Dished heads come from Wisconsin Stainless. Standard equipment on the tank trailers includes Betts domelids and discharge outlets, Girard vents, and 11R22.5 tires. Customers have a choice of Reyco spring or Hendrickson air suspensions.

“In some cases, it's cheaper for us to source most components in the United States and ship them to our plant duty-free,” Ballon says. “We have 18 months to send those components back to the United States before tariffs kick in. We monitor those deadlines closely with import/export software that tracks inventory and flags components nearing the 18-month deadline. Bulk Resources helps coordinate our supply-chain activity.

“A customs broker in Laredo, Texas, warehouses components for us for shipment in quantity to the plant in Guanajuato, using our own trailers, which helps control shipping costs. At the plant, we maintain a larger-than-normal inventory of tank components and fabricating machinery replacement parts. Emergency shipments from the United States can take several days or weeks.”

Cultural challenges

Import/export issues are just a few of the challenges that Bulk International has had to address. Mail service is spotty to non-existent at times. A satellite dish is the best way to ensure consistent Internet and email service.

Managers from the United States are still learning the culture and ways of doing business in Mexico. Government bureaucracy can be daunting at times. For instance, only original documents — not photocopies — are acceptable for many government transactions.

Mexican federal work rules make it relatively expensive to terminate an employee once past the probationary period. Bulk International provides workers with training, uniforms, and protective equipment.

A doctor visits the plant at least weekly to provide medical treatment at no cost to the workers. Lunch is provided each workday, and workers pay about four pesos (approximately 40 cents US) for the meals that include all of the basic food groups, meat, rice, beans, and fruit.

Many workers lack transportation, so Bulk International provides the equivalent of vanpools and bus service to take them to and from the plant.

Workers are paid weekly in cash or with a bank debit card. Ballon points out that more workers receive their wages in cash than in a debit card.

Language can be an issue. While most of the Mexican administrative staff is bilingual, many plant workers speak only Spanish. US managers have varying degrees of Spanish speaking ability. The company is sponsoring English lessons two to three nights a week at the plant.

“We're meeting all of the challenges, and we're turning out a very good product in the process,” Ballon says. “Our tank trailers are well engineered and are very competitively priced.”

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