Product and component development, manufacturing, VMI warehousing, and delivery logistics
Though North 7 Industrial has enjoyed steady growth in recent years, securing projects hasn't always been easy. In the beginning, the team had to work diligently to build credibility with customers.
"For the first three years, we basically worked for free," says Garcia. "In order to sell components for an assembly line, the product must meet certain qualifications. You have to develop the tools for manufacturing. You have to develop the manufacturing process. You have to develop the product and then provide all the qualification documents."
Once samples are manufactured, Garcia says it may take significant time before full-scale production can begin. "The customer [has to] evaluate the dimensions and functionality," he continues. "Even when you say everything is qualified, [the customer] may still be working through the remainder of the inventory from a previous supplier or [could even] be making the product themselves. You likely won't see an order for the first one to two years."
Despite these timelines, North 7 Industrial now has more than 500 qualified parts in its catalog. Even without an official sales team, the company has built a strong reputation within the industries it serves including automotive, aerospace, electronics, and industrial.
"All of our business is word-of-mouth," says Garcia. "Many of the people you work with move around in the industry. One person you're working with at company A might move to company B and will remember you're a reliable supplier and hire you again. That's one of the big ways we've grown."
Working for organizations with multiple facilities has also led to growth. "Once you're an approved vendor, you end up working with their sister companies," Garcia adds.
North 7 Industrial can manufacture parts as small as one quarter of an inch in diameter and currently makes precision thermoplastic molds, die castings, stamping tools, and electronic harnesses. They use a multitude of materials to meet customer needs including steel -- with secondary processes like heat treatments and plating -- brass and lead-free brass, bronze, stainless steel, and aluminum.
Though headquartered in Brownsville, all of North 7 Industrial's fully-automated manufacturing is done in Taiwan -- a decision Garcia made in part due to his experience with international manufacturing.
"The raw material costs in Taiwan are good," he says. "Over there, you can buy materials directly from the mill. There are distributors, but they're owned by the mill, so you don't experience unreasonable prices. In the U.S., you have to purchase through distributors, and the chain of parties involved causes the price to increase."
Challenges: Cash-flow management is an evergreen lament. As a result of COVID-19, the significant shifts in supply chain expectations, as well as job turnover, business upheaval, and uncertainty in the world, have put North 7 Industrial in the predicament of needing to change payment schedules, adjust payment expectations, and rethink its financial planning.
"The industry is taking longer to pay suppliers," Garcia says. "You have payment terms: usually 30 days or 60 days. But right now, the industry is delaying its payments by two to three weeks. We used to look at cash flow monthly; now, we do it weekly. We have had to reorganize the order of payments as well. Before, we used to know when our money was coming in; now, we don't. Thankfully, we have good relationships with our suppliers, so we've been able to adjust and build buffers with them when needed."
Opportunities: A concrete opportunity for North 7 Industrial is offering vendor-managed inventory (VMI) services in addition to product design, manufacturing, maintenance, repairs, and logistics. Garcia says that VMI can alleviate inventory, storage, workflow, supply chain, and management issues for customers -- a plethora of solutions seamlessly wrapped into a single service.
"Right now, we're working with a company that wants to add a local backup supplier," says Garcia. "They're looking for VMI specifically, and many companies are attracted to that. So, we're working on this new program to promote that service."
Needs: Nearly three years into COVID-19, North 7 Industrial is fully in the throes of pulling the biggest thorn from its side: relying on the Port of Los Angeles.
Known as America’s port, the seaport became a parking lot of shipping containers waiting to dock and unload as a result of the pandemic. Delays piled up -- as did lead times and the problems facing companies dealing in international shipping.
"Initially, to find a vessel, you'd book it one week in advance," says Garcia. "The next week, you deliver it to the port. Then the next week, it's in transit. But because of COVID, everything became delayed by a week. With everything being delayed, there were no spaces in the Los Angeles port for vessels to dock. Suddenly, everything is backed up. Many companies experienced this issue."
Fortunately, Garcia and his team have found a potential solution. "To circumvent the port of L.A., we just started receiving shipments through Houston," he says. "We're excited to see how that works. We're hoping that will be another alternative for us."