An Atlanta-based contract manufacturer that built its reputation by sourcing across the world in Asia now has another foreign factory closer to home.
As part of its acquisition of Mooresville, N.C.-based General Microcircuits Inc. announced this week, Atlanta’s East West Manufacturing gets the company’s factory in San Jose, Costa Rica.
It’s a play toward what the company calls “nearshoring,” providing U.S. customers pricing and quality benefits similar to what it offers from its Asia factories — without the weekslong ocean journey. GMI, which also sources from China, Korea and Taiwan, makes electronic components including printed circuit board assemblies.
Sourcing across the Pacific can be much cheaper from a pure pricing standpoint, but factor in logistics costs and the need for quicker turnaround in many industries, and places like Costa Rica or even North Carolina become more competitive.
The Costa Rica factory, along with General Microcircuits’ Mooresville facility, complements East West’s established Asia network, which is better suited for low-cost, high-volume parts. That allows the company to capture more value from each customer relationship.
“We can now offer customers a supply chain solution from the napkin through prototyping, new product introduction, small production runs, scaling production and mass production through the various operations,” says East West spokesman Andy Reese. “We plan to grow both N.C. and Costa Rica by leveraging our sales and marketing reach and existing customer relationships. Both of GMI’s locations are well-positioned for immediate growth.”
GMI has 110 people in North Carolina and about 100 in Costa Rica.
East West is now more closely mirroring the vision for the company co-founders Scott Ellyson and Jeff Sweeney had when they launched it in 2001.
“Our partnership with GMI allows us to offer a truly global supply chain to our customers,” Mr. Ellyson, the CEO, said in a news release.
Speaking at a Global Atlanta forum held last July, the New York-based North American representative for CINDE, Costa Rica’s investment promotion agency, said the country is focusing heavily on high-tech manufacturing. The country already exports $5.2 billion in IT-enabled services and $3 billion in medical devices and its constantly working with companies to retool the country’s workforce for the jobs of tomorrow.
“We really are focusing on making the very well-established industries grow,” Pilar Madrigal said during the event held in Atlanta.
The GMI website touts Costa Rica’s 95 percent literacy rate and the factory’s central time zone, lack of duties or tariffs and seven- to 10-day ocean transit to the U.S.
The deal is East West’s second acquisition in North Carolina in recent months as it undertakes an expansion strategy centered on the domestic market with the help of a capital investment from Heritage Growth Partners.
It bought Raleigh-based Team Manufacturing in September. With that deal, plus GMI and the 50-plus people in the Atlanta headquarters, East West now employs more than 250 in the U.S. and 1,700-plus globally, many of them in the company’s wholly owned factories in Vietnam. The terms of the most recent deal were not disclosed.
More detail on the company’s strategy here: East West Buys North Carolina Factory to Kick-Start U.S. Expansion