When Bob Katusak launched International Assembly Inc. in Brownsville 26 years ago, he couldn’t have imagined how the company would evolve. In those pre-NAFTA days, businesses like his were known as shelter operations. In short, he established a manufacturing facility in Matamoros for small American companies that wanted to lower labor costs and contracted with IAI to oversee production, quality, labor and import/export paperwork.
At that time, when AIDS was rampant and new, the United States couldn’t produce enough latex gloves. Katusak and IAI started off helping an American company increase its production of the gloves with a Mexican facility.
Through the 1990s, IAI focused on disposable medical supplies. “Our niche then was very small businesses, taking on jobs larger companies wouldn’t want to do,” said Katusak, who has an engineering degree from Texas A&M University in Kingsville and an MBA from the University of Texas at Brownsville. He was working for Delphi (affiliated with General Motors) in Matamoros when he started IAI.
“We don’t use the term ‘shelter’ anymore,” Katusak said. Mexico changed the rules for shelter operations because some businesses abused the system, which allowed importation of American components without duty for assembly in Mexico.
The terminology changed, but IAI remains a manufacturing services company. It provides the same services it always has to American companies: facilities, labor, logistics and compliance with Mexican and American laws. “We spend over $100,000 a year for legal counsel on both sides of the border in order to comply with changing regulations. It’s challenging to stay on top of them.”
Currently, IAI has six manufacturing facilities with over 300,000 square feet and more than 1,100 employees working in laser etching, metal plating, robotic painting, injection molding and much more. The plants make everything from disposable medical products, bandsaw blades and meat-cutting blades to automotive components such as seat belt housings, medical products and consumer staples.
Katusak said some of his five plants in Matamoros near Veterans International Bridge are dedicated to a single customer. In 2016, IAI opened its sixth Mexican plant in Sahagun, Hidalgo, demonstrating the lengths they go to for clients. “To support one of our Matamoros customers who has clients in Sahagun, we built a manufacturing plant for him there,” enabling the customer to shorten his supply chain.
“The reason customers do business with us is they have confidence in what we do. They trust us with millions of dollars of equipment and their clients. The majority have been with us a long, long time,” Katusak said. The fact that he once worked for Delphi gives him an edge with GM suppliers. But it’s the gamut of manufacturing services that keeps them with IAI. “We take on responsibility of getting their machinery into Mexico, correctly installed, and develop their suppliers.”
IAI owns the Mexican company Impresas IAI RL de CV, which has three operating segments. That way it can respond to varying needs by offering a continuum of manufacturing services.
The first provides manufacturing support of all types, but the client provides the on-site production management. In the second segment, IAI provides the general manager and takes on much more of production and quality responsibilities. To do that, IAI obtained ISO certifications necessary for their clients’ requirements. The third operating group derives from IAI developing as a stand-alone manufacturer.
IAI acquired a bankrupt customer in 2009 and continued supplying their customers. “We’ve grown from strictly manufacturing service to a hybrid to a full-blown manufacturer,” Katusak said. When IAI took over that automotive industry supplier, it received approval from IAI’s existing customers by contractually obligating themselves to stay in that niche. “We don’t compete with any of our customers.”
Katusak doesn’t run IAI alone from a small office in Brownsville, of course. “We’ve got a very robust management team with lots of manufacturing experience in Mexico.” While he crosses into Mexico daily to look in on operations, day-to-day plant management is not his focus. He concentrates on business development, sales and finance. Roser and Cowen customs brokers handle all the import/export paperwork.
IAI established a 30,000-square-foot warehouse and distribution facility in Harlingen in 2017. Katusak said the availability of a building of that size, near Los Indios Free Trade Bridge, on nine acres of land at a good price (his wife is a real estate broker) was irresistible. Used as a cross-docking point, the Harlingen facility ships components into Mexico and receives finished products. The site has potential to expand for manufacturing.