Contract textile producer says production in U.S. and Mexico benefits its varied customers
BY DOROTHY WHITCOMB
Faced with uncertainties surrounding the possible renegotiation or even U.S. withdrawal from the North American Free Trade Agreement, executives at contract textiles manufacturer MFI International are bolstering their business by further diversifying the wide variety of products and services they offer to customers. And because MFI manufactures in both the United States and Mexico, has a strong management team in place and is committed to a strategy that continually takes the company in new directions, MFI’s leaders are confident they can position MFI to successfully respond to any changes to NAFTA or, for that matter, any other trade agreements.
MFI, which has headquarters in both El Paso, Texas, and Ciudad Juarez, Mexico, was founded in 1962 by Lance Levine. Although Levine started the business to manufacture sewn vacuum cleaner filters, his stepson, Lawrence Wollschlager, says the company’s business plan has long included contract manufacturing a broad range of products.
In fact, it was a disappointing contract to make bedroom slippers, Wollschlager says, that brought his mother, Cecilia Levine, into Lance Levine’s life.
“My stepfather couldn’t make any money on the contract and a friend told him that he knew someone who could,” says Wollschlager, who serves as MFI president and chief operating officer. The competitors met and married, and Cecilia Levine went on to serve as MFI’s president until her retirement.
“After we sold the filtration business in 1985, the company transformed quickly. We began doing a lot of business in clean room garments and foam inserts for baby car seats. Today, we manufacture products for the bedding and home furnishings industries, as well as medical products, child safety restraints, base layer clothing, high elasticity knit workout garments and field evacuation units for wounded soldiers,” Wollschlager says.
A move into bedding
MFI entered the bedding industry in 2007 and, today, sales to the sector account for about 60% of the company’s annual sales. “This is the industry that we’re really driving hard to continue to grow,” Wollschlager says.
But he doesn’t want that bedding growth to come at the expense of other industries the company serves.
“My goal is to increase overall sales, but to keep the percentage of annual sales to the bedding industry about where it is. I wouldn’t want it to exceed 70% because of the diversity of products that has kept this company alive for the last 35 years,” Wollschlager says. “Because we’ve had our hands in so many industries, we’ve had more flexibility.”
MFI’s portfolio of bedding products also is diverse. Its primary bedding product is sewn covers for memory foam mattresses, but it also makes foundation covers, pillow covers, fire barriers, mattress pads and toppers, and foot protectors for point-of-purchase displays.
“Because we need production in thousands of units rather than hundreds, we cater to the top six bedding manufacturers and boxed bedding producers,” Wollschlager says. The boxed bedding segment is a particularly strong growth area for the company, he adds.
MFI has a bifurcated business model for products like sewn mattress covers. “Some customers come with a predesigned product and have already negotiated with the textile mills for specs and price. We then buy the fabric exactly that way and produce it to spec,” Wollschlager explains. “Other customers come to us with an idea for a mattress, and we collaborate with them to design a cover to go with the theme of the mattress. In this case, we negotiate the textile purchase and own the supply chain. The business is split about 50/50.”
In April, MFI began producing complete mattresses for the first time, turning out a foam and latex hybrid model “for a major memory foam manufacturer” and assuming part of the distribution responsibility, Wollschlager says. “MFI will handle distribution on the West Coast of the U.S., the Rocky Mountain chain and some of the Southeast, and our customer will maintain manufacturing and distribution in the Midwest,” he says.
Wollschlager says 95% of his customers are based in the United States and most are quite concerned about protecting their intellectual property. MFI protects them by manufacturing their products in Mexico where, Wollschlager says, “there is a lot of respect for intellectual property.”
“We keep all of our production teams segregated so that designs don’t migrate to other clients,” he says.
The company, which employs about 100 people in the United States and about 650 in Mexico, has four manufacturing facilities in three locations. Its 55,000-square-foot facility in El Paso is used for cutting, sewing, warehousing and distribution. Six miles away in Ciudad Juarez, the company operates two facilities, which total 84,000 square feet. One facility houses cutting and sewing operations; the second, Wollschlager says, is used “to assist companies that want to operate in Mexico under its shelter program.”
“The shelter program,” he continues, “gives them an opportunity to operate under our permits. We give them the labor, but they run their operations and make sure that their product is produced the way they want it to be.”
Last year, MFI opened a 95,000-square-foot sewing facility in Ciudad Jimenez, Mexico. It made the move farther south when the maquiladoras along the U.S.-Mexican border began to experience an acute labor shortage.
“Despite the challenges that this posed, it was an opportunity to re-evaluate our business model,” Wollschlager says. “In Jimenez, we found that we had access to a highly skilled workforce and the added benefit of a lower cost business operating model. We expect this to bring many years of added value to our customers, with greater cost savings and significant added capacity to handle any size program.”
Wollschlager believes that having manufacturing facilities in two countries creates other competitive advantages for his company.
“MFI’s strategic locations offer greater flexibility to customers by requiring less raw material and shorter finished goods pipelines,” he says. “This allows our customers to transition to new product lines faster, with less probability of material obsolescence as is often seen in long pipeline areas such as Central America, Asia and Europe. Labor costs on both sides of the border are also very low, and because of our location, freight costs are remarkably low.”
Under current trade agreements, having locations on both sides of the border creates yet another advantage for MFI customers.
“The unique thing that we do—that can’t be done if you produce out of one location in Mexico—is to cut in the U.S. and sew in Mexico,” Wollschlager says. “U.S. Customs considers that a ‘significant transformation’ and that triggers lower tariffs.”
Preparing for uncertainty
Wollschlager is concerned that many of these key advantages could soon be eroded.
“The threat of NAFTA going away or being renegotiated is the biggest challenge that we face,” he says. “It’s a huge threat because of the uncertainty it creates. We don’t know what’s going to happen or to what level.”
Wollschlager is counting on the investments MFI has made in technology and staffing to offset any changes in trade agreements. The company recently invested about $500,000 in new technology for adhesive lamination and automated fabric cutting, and it consistently reaches outside of the textile industry when hiring.
“I can’t say enough about the quality of the team that we have here,” Wollschlager says. “Most of our staff comes from the automotive, electronics manufacturing and plastics industries and we take advantage of everything they’ve learned there.”
Offering company operators and administrative staff opportunities to continually further their education and upgrade skill sets is a cornerstone of the MFI culture.
“We help the administrative staff with continuing education to reach their own personal goals. At the operator level, I want to see everyone grow,” he says. “We are part of a public-private partnership with the state of Chihuahua to help them get elementary, middle and high school degrees. We are proud of the fact that we have graduated more students than any other maquiladora in Juarez.”
In spite of the current uncertainty surrounding the impact of trade agreements on his company, Wollschlager is optimistic about MFI’s future.
“We will evolve, but our focus will continue to be on supporting North America,” he says. “It is critical for the United States, Canada and Mexico to continue to work together to support jobs in all three of our countries.”
By offering his managers an opportunity to invest in the company, Wollschlager sees a time in which his privately held company is “significantly larger, self-sustaining and not dependent on my involvement.”
“I want to be the best manufacturer in North America, and we’re perfectly capable of getting there,” he continues. “It doesn’t matter what we do, we will do it well because we have an amazing team. The sky’s the limit.”