The main advantage of Mexico is a stable workforce with a very strong work ethic. Productivity on an hourly basis is very high.
Overview
Pacific Insight transitioned from crafting wire harnesses to shaping the future of LED systems for OEM giants like Ford and Tesla. A transformative step into Mexico unlocked this generational success, culminating in a $114 million acquisition.
When entrepreneurs embark on the journey of building a business, they often dream of a future filled with growth, success, and the possibility of a lucrative exit. For the ownership team at Pacific Insight Electronics, this dream became a reality, thanks to three essential factors:
This is a story of how vision, collaboration, timing and the right strategic partner led Pacific Insight to strong, stable growth and a $114 million strategic acquisition.
A Legacy of Growth and Value
Vancouver-based Pacific Insight Electronics designed, developed, and manufactured lighting and electronic products for the automotive and commercial vehicle markets. In 2007, the publicly traded company generated annual revenues of $48 million, serving mainly the commercial vehicle and utility transportation sectors.
Pacific Insight’s owner, Stuart Ross, having dedicated decades to launching, building, and growing the company, aimed for a significant exit that would make his years of hard work and sacrifice pay off. But to realize that growth and create the generational wealth he sought, the company had to pursue a more deliberate and aggressive growth strategy.
The company's leadership team recognized that to enhance valuation, they needed to diversify, better compete on cost, and expand into new markets. This was when Pacific Insight’s leadership team decided to set up its first Mexican production facility in partnership with Entrada Group’s Zacatecas manufacturing campus.
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Setting Up in Mexico
Entrada Group, with its decades of experience as a manufacturing support provider, would provide Pacific Insight with:
But beyond that, Entrada would give Pacific Insight a “fast track” to Mexico manufacturing, enabling the company from day one to benefit from not only its years of experience supporting Mexico manufacturing, but also advantages in import and export, compliance and trade certifications that would take a new company years to obtain.
For a mid-sized manufacturer like Pacific Insight, this was a huge boost. Like starting a marathon at mile 20.
Mexico as a Catalyst
The benefits of establishing operations in Mexico were transformative. Before Mexico, Pacific Insight was not involved in the consumer car and light truck market. However, the cost-competitive labor in Zacatecas at Entrada Group’s manufacturing campus and the ability to manufacture product tariff-free, thanks to NAFTA’s rules of origin, allowed Pacific Insight to enter automotive sector for the first time. This expansion was crucial in diversifying its product offerings and customer base.
By virtue of its presence in Mexico and relationship, Pacific Insight was able to take over the wire harness-assembly business of another Entrada client that exited the region, and enter the car and light truck market.
Unprecedented Growth
Over the next decade, Pacific Insight’s revenue soared from $48 million in 2007 to $125 million by the time of its acquisition in 2017. The workforce in Mexico at Entrada’s campus grew from 35 employees to an impressive 838 employees. The strategic advantage gained through cost-competitive labor, better talent, and access to Mexico's free trade agreements propelled the company’s growth.
In addition to expanding its workforce and revenues, Pacific Insight also received the prestigious Ford One quality assurance award in July 2017. This recognition from one of the world’s largest automotive OEMs served as further proof of concept and faith in its operations in Mexico, solidifying its reputation in the industry. Pacific Insight later added Tesla as an OEM client, on the strength of its Mexico production facility.
The Role of Entrada Group
The partnership with Entrada Group was the linchpin of Pacific Insight’s success in Mexico. Entrada’s comprehensive support system ensured that Pacific Insight could focus on its core manufacturing activities while leaving the non-manufacturing responsibilities in capable hands.
This support was particularly critical when Pacific Insight’s ownership realized the need to become more vertically integrated to attract potential buyers. With Entrada Group’s assistance, it arranged for their Chinese plastics supplier to set up production in Mexico, adding another layer of vertical integration.
A Dream Realized
In late 2017, Methode Electronics, a global developer of custom engineered and application-specific products and solutions, acquired Pacific Insight for $114 million in cash. Methode recognized the strategic fit of Pacific Insight’s products within its portfolio, particularly its LED lighting systems, which complemented Methode’s existing offerings.
The acquisition was not just a financial milestone; it was the culmination of years of strategic planning, relentless effort, and the foresight to leverage the advantages of manufacturing in Mexico. For the principal owner of Pacific Insight, this exit event was the realization of a dream, providing the generational wealth and legacy he had envisioned.
The growth and subsequent acquisition of Pacific Insight would not have been possible without the strategic move to Mexico and the comprehensive support provided by Entrada Group. This partnership was the catalyst that enabled Pacific Insight to diversify, expand, and ultimately achieve an exit that many business owners aspire to.
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