Dive Brief:

• Voxx International has completed the transition of most of its automotive division's production lines from Florida to Mexico, CEO Pat Lavelle said on the consumer products manufacturer's earnings call last week.
• The shift is one way the consumer electronics company is improving its gross margins and reducing expenses as it faces headwinds such as weaker consumer spending and production issues among automakers, Lavelle said.
• "We're essentially taking out everything we can based on lower sales volumes without impacting our ability to serve our customer and innovate," Lavelle said.

Dive Insight:

Voxx began the process of moving certain manufacturing operations, including for its OEM safety product lines, to Mexico last year in a bid to improve its bottom line.

"Labor costs are roughly half of what they are in the U.S., and the cost to operate is less as well, which will help improve margins and profitability," Lavelle said on a call in 2022.

Amid the shift in production, Voxx disclosed plans in July to lay off 63 employees at its Florida facility by Sept. 30, according to a Worker Adjustment and Retraining Notification (WARN) Act notice. That location handles the majority of OEM production and assembly for the company's security, keyless entry and remote start systems, along with rear-seat entertainment solutions, according to its website.

"VOXX has made the difficult decision to conduct this layoff due to the economic downturn and a decline in demand for the products produced, sold and distributed by VOXX," the company said in the notice.

The ongoing United Auto Workers strike could generate additional headwinds for Voxx. If it persists, the company will see a lagging effect on inventories on dealer lots, hurting its aftermarket automotive sales, Lavelle said on last week's call.

"However, we have gains with our heavy-duty truck manufacturers, fleets, and other OEMs outside of the big three automakers that are part of the UAW strike," Lavelle said. "So, it's a little bit of a mixed bag."