This Entrepreneur Is Giving Hondurans Something They Really Want—Jobs
This post was originally produced for Forbes.
“Tegu takes us back to the joy of play,” says Jose Zelaya, the Honduran toy manufacturer’s accounting manager. More importantly, the creator of wooden blocks with embedded magnets that fascinate and engage children, is employing people in a country stressed by poverty, unemployment and violence.
Tegu, founded by brothers Chris and Will Haughey a decade ago, with the mission to create jobs in a country that desperately needed them. Along the way, they’ve proven that Honduras, less than three hours and just $233 (round-trip, according to Google) by air from Houston, can be competitive with manufacturing in China and other Asian countries.
Ana Sauceda, an industrial engineer for Tegu, visited with me during my on-site research trip. You can view our discussion in the video player at the top of this article. She says the company is now shipping product to a variety of countries around the world, including China, Japan, Malaysia, Switzerland, Argentina, Uruguay and Chile. The company’s biggest market remains the United States.
Ana Sauceda, Tegu; DEVIN THORPE
At present, the company employs about 110 people in Honduras with another 20 elsewhere.
It is easy to envision Honduran artisans toiling away in a shop creating handcrafted wooden toys but that is not what is going on. Tegu, which does about $8 million in revenue annually, operates an impressive manufacturing facility with more than $1 million invested in production equipment.
Each day begins with 5-S time from lean manufacturing discipline. Everyone in the plant starts at 7:00 by cleaning and organizing their space for optimal efficiency. At 7:30, one of the employees—they all take turns—leads the group in a 30-minute session that includes lean manufacturing reminders, motivational or inspirational messages, usually a prayer and some light exercises. One element of the morning is a discussion about a recent review on Amazon, ensuring that everyone in the company feels a direct connection to the customer.
All Tegu employees at the plant, including office staff, participate in the morning meeting at 7:30, led by a different employee every day. DEVIN THORPE
Ricardo Molina, an industrial engineer who leads the five-person engineering team working to improve processes and cut costs, notes that the company also provides a breakfast for employees who want it at 6:30 each morning. Cofounder Chris Haughey, who brought an engineering background and passion to the business, left the company last year. His departure created a vacuum for leadership and engineering innovation that Molina and his team work to fill today.
Molina notes that their goal is improve three areas: safety, quality and output. The first half of any year is tough for any toy manufacturer, but it has been especially challenging for Tegu, which shipped a key Christmas order to Amazon late last season. Out of stock, Amazon sold almost nothing during the season but just in time for the slow late winter and spring season, had plenty of stock so orders from the company’s biggest retailer have been slow.
Wages at Tegu are modest. With high unemployment rates and a national minimum wage of about $300 per month, many in the plant earn near that level. Molina boasts that the company has a strict nondiscrimination policy, treats employees with respect and provides a health clinic of employees and their families.
Rother Corea, the manufacturing manager at the plant, notes that employees seldom leave, but when they do it is to migrate. Corea’s parents and siblings all live in the United States; his younger siblings were born there. He says, “I love my country.” While he admits brief flashes of temptation to leave, he is committed to working to make Honduras better.
He argues that despite what Zelaya described as a 60-step process to register a new business in Honduras, doing business here is easier than in China.
Doing business in Honduras seems to make economic sense, not only because of the low wage rates but also because the country has set up “free zones” where companies can operate and move money between U.S. affiliates and Honduran operations. Tegu operates in a such a zone, allowing the company to move money back and forth as if there were no border, according to accounting manager Zelaya.
Tegu continues to innovate. It recently introduced a new set of blocks for babies just six months old; I saw the first sets come off the manufacturing line during my visit.
The focus on innovation, customer satisfaction and the “joy of play” are essential for Tegu accomplishing its mission of employing more people in Honduras. Tegu’s success also seems to be a model for manufacturing in Central America.
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