Case Study: Monster Cable

After working with quality manufacturers in Asia, Monster Cable recognizes that opening a Mexico manufacturing facility with NAPS significantly improves their bottom line

Monster Cable Products was founded in 1979 by Noel Lee, then a laser-fusion engineer at the Lawrence Livermore Laboratory. Lee was an audiophile and professional drummer who set out to improve audio quality by developing high performance speaker cables. Lee developed a better construction for cables that would expand the clarity, dynamics and power of audio signals. Through his efforts, Monster Cable became one of the world’s leading manufacturers of high performance cables for audio, video and computer components.

Monster Cable (MC) grew at a rapid pace while shipping retail-packed cables from their high quality Asian factories to Monster Cable’s Northern California headquarters for distribution throughout the U.S. In the summer of 2006 Monster Cable began exploring the idea of setting up an operation in Mexico. Monster Cable was looking for flexibility in terms of postponing the final configuration of cables sourced in Asia, allowing the company to optimize costs and efficiencies in the delivery of their product. MC was searching for ways to improve their bottom line while retaining the high quality that has positioned a company as a leader in the audio cable market.

MC sought to find a source of affordable labor in a location that would continue to afford the company a logistical advantage in working with shipments from Asia to the ports of Los Angeles and Long Beach. The Tijuana, Baja California region was high on the list because of NAFTA benefits, an experienced workforce, proximity to the ports, etc. Monster Cable selected North American Production Sharing (NAPS) as a business partner that would make it possible for MC to quickly and effectively set up an operation to package and customize product in Mexico.

It took a little over a month for the first shipment to leave the Monster Cable facilities in December of 2006, from the time Monster Cable signed its agreement with NAPS. Within six months the company recuperated its investment to set up the plant in Mexico. According to Raul Corella, Vice President of Global Supply Chain & Operations for Monster Cable, the employees at MC in Tijuana are extremely flexible and innovative. Corella points out that by partnering with NAPS, the company has benefited from the years of experience NAPS offers in human resource management and employee turnover has been minimized. According to Monster Cable’s own analysis, the combined wage reduction and productivity increase has resulted in savings in excess of 60% of the total manufacturing hourly costs (all-in costs of direct/indirect labor and all facility overheads).

Raul Corella made the following observation in March of 2009: “the project met and exceeded our expectations. We have completed our third transfer phase and now have moved 100% of our original USA manufacturing process to Tijuana, and about 15% of our China capacity as well. We are combining California product design with competitive China high volume component manufacturing with North-American region final product configuration and retail packaging in Tijuana to reach a lean, flexible and competitive supply chain.”

When asked if Monster Cable would recommend the services of NAPS in setting up operations in Mexico, Raul commented: “We performed an extensive due diligence period of selecting a Mexico-shelter partner, with the assistance of Mexican government provided sources as well as recommendations from long-tenured local experts in the region. The NAPS team had the best combination of customer service orientation, deep Mexican accounting, customs, labor and environmental regulatory knowledge and a sense of long-term partnership disposition. After almost three years of starting our relationship we are extremely pleased with their service. The NAPS team has become an integral part of our success in Mexico.”