By Karen E. Thuermer, AJOTOutside of the banking business, few industries have been hit as hard as the automobile and retail industries. With business margins tight, shipping costs highly scrutinized, and the worldwide downturn threatening every company’s bottom line, near-shore locations in low-cost countries such Central America play an even greater role for cost savings than ever before. Some industries, particularly automotive suppliers and apparel manufacturers, have found advantages to moving manufacturing operations to low-cost Honduras. This was the case for Empire Electronics, a mid-tier auto parts supplier in Troy, MI that today is recognized as the leading North American automotive supplier of exterior lighting harnesses and potted lamp sockets. In 1996, the company found it was loosing substantial sales and a major customer to less expensive suppliers in Mexico. “We considered moving our operations to India, but realized that logistically it would be a nightmare,” recalls Steve Doman, Chairman of the Board. Consequently, the company decided to open a plant in Mexico. “But at the 11th hour, an associate asked if we had thought about Honduras,” Doman recalls. “By then, I was already uncomfortable with Mexico. I felt backed into a corner, and too many companies were already operating there.” Although skeptical, Doman flew to Honduras and, within 72 hours, decided that if Empire were going to risk everything and set up shop in a low-cost country, he would do it there. That was 12 years ago. Doman has never looked back. “Today we have a highly skilled and very diligent workforce in Honduras with operation costs that make us very competitive globally,” he says. Its facility in San Pedro Sula offers 240,000 square-feet of manufacturing space. Besides the ability to hire skilled workers in this trade at a rate that is 90% cheaper than in the United States, Empire realizes a huge advantage in shipping parts just-in-time from Honduras to North American clients within two or so days. As a result, between 2003 and 2006 the company tripled its capabilities by adding injection molding and tooling to its manufacturing processes. “Today, when tier one customers ask for help in design or engineering, we can offer larger cost savings,” Doman says. “We also produce a better product that fits the technology and quality benchmarks mandated by our own customers.” With annual shipments hovering around 3.5 million parts (pre-recession) and 2007 sales topping $65 million, Empire became one of the auto industry’s fastest-growing tier two suppliers of wiring harnesses, molded components and PCB assemblies. When this AJOT reporter visited the firm’s Honduran operations in August of last year, Doman projected that the company could easily do $100 million in sales by 2010. At that time, Doman revealed that Empire had recently begun doing business directly with General Motors, Ford and Chrysler and had hopes of one day becoming a tier one supplier. Empire supplied the sunroof harness for the 2008 Ford Escape and tail lamp harness for the 2008 Chevrolet Malibu. Last year Empire Electronics was honored by Visteon Corp., one of the world’s leading automotive suppliers, for outstanding overall performance in providing products or services to Visteon. Empire Electronics continues to have a solid presence in Honduras. Earlier this year it had 1,300 employees, but had to lay off personnel because of the recession. Empire now has about 1,000 employees and is now beginning to hire workers again. GROWTH OPPORTUNITIES Despite the fact Honduras has recently experienced a change in government that has created some civil unrest, the business community there remains united in urging a peaceful and quick resolution. Honduran factories, many located in industrial parks in Free Trade Zones, continue to produce high-quality electrical harnesses, automotive components, and textiles and apparel for export. The auto parts business is even expanding despite the global economic