A Client’s Perspective of Wire Harness Assembly in Mexico (Telamon Client Story)
Telamon Corporation, an Indiana-based wire harness assembly firm
Telamon has more than 2,000 employees globally between the U.S., Europe and Mexico. In 2007, the company opened its first production location outside of the U.S. at one of Entrada Group’s manufacturing campuses in Fresnillo, Mexico.
Telamon’s headcount grew quickly after the initial launch in Fresnillo. In 2007 the wire harness assembly company began with just 30 total employees (directs and indirects). Production grew rapidly and by 2014 Telamon had 600 employees. Eventually, Telamon was able to vie for business against larger wire harness producers. They did so by relying on the addition of cost-competitive wire harness assembly in Mexico.
Growth Doubles in a Hot Auto Sector
From 2014 to 2018, the high demand for cost-competitive wire harness assembly in Mexico continued unabated and lead to more growth in Telamon’s Mexico operation. In turn, the company doubled its headcount in Fresnillo, from 600 to 1,200 employees. Subsequently, the company’s turnover skyrocketed to 43% on an annual basis and peaked in 2016.
Around this period, recruitment and retention issues were evident at Telamon. As a result, high turnover eventually led to operational challenges. Those challenges couldn’t be overcome with just an increase in wire harness assembly production volume. New hires would leave in as little as one week and there was not enough staff to keep up with the ever-growing demand. As a result, Telamon found itself between a rock and a hard place. Their customers were attracted to the company’s competitive cost structure. Moreover, adding new costs to address the labor retention problem was not a sustainable solution for the company.
Addressing the Issue
The staff turnover issue had to be addressed. Telamon and Entrada conducted a year-long evaluation to get to the root cause of the high turnover. In the end, Entrada made some key findings and was able to formulate a comprehensive and custom-tailored analysis of Telamon’s operations. Entrada discovered where Telamon could improve to increase retention. As a result, these analyses included:
- Performing a comprehensive audit of Human Resources activities, such as: recruiting, interviewing, onboarding and offboarding processes
- Evaluating turnover data
- Evaluating local plant leadership performance and compensation
- Analyzing and comparing a raft of Telamon compensation factors: salary, benefits, bonuses, transportation
- Reviewing training and development programs, and workplace facilities and amenities
- Benchmarking its findings against other producers within Entrada’s manufacturing campus of 6,500+ employees
Entrada then collaborated with Telamon’s executive leadership and local (Mexico-based) management team through the entire process. Most importantly, fully transparent recommendations were made with input from both groups. The analysis resulted in extensive changes.
Recommendations and Change
The evaluation revealed that Telamon’s manufacturing operation was not compensating local plant management sufficiently when compared to the prevailing regional wages for wire harness assembly in Mexico. Telamon agreed that new local leadership was necessary, to better handle the company’s ongoing growth, given their expanded footprint and headcount that at the time was more than 1,200.
These internal changes were going to be extensive. They would be including overhauling recruitment interviews, implementation of exit interviews, enhanced training, new-hire referrals and new programs that would encourage more staff interaction and community engagement.
The findings also advocated capital improvements of workplace facilities and amenities and augmented productivity bonuses. In total, Telamon invested more than $50,000 in improved workplace amenities alone. The list of facility enhancements included:
- Office expansion
- Cafeteria extension
- Water storage expansion
- Improved ventilation
- Pluvial ramp drainage
Positive Outcomes and No Fear of Growth
Once Entrada’s recommendations were implemented, turnover plummeted by nearly 50% on an annualized basis, which is well below the average in the surrounding area. Telamon’s turnover has stabilized over the past year-plus, and more consistent Human Resources processes and exit interviews have shown an enhanced brand perception among employees and prospective new hires.
Since these changes, Telamon has won projects with new clients in Mexico, as the Fresnillo facility can now better service its customers and be more efficient. Above all, Telamon has even expanded its wire harness assembly in Mexico by an additional 25,000 square feet.
What Telamon experienced is something many other wire manufacturers have faced when they establish operations in Mexico. With the assistance of Entrada Group and Entrada’s Manufacturing Support Platform, Telamon was able to overcome those challenges. In conclusion, Telamon was able to enhance its current customer satisfaction, increase its employee retention and win new client contracts.