Automotive Sector a Perfect Fit for ShoemakerThu, 09/01/2016 - 14:56
Q: What spurred Medina Torres’ move into the automotive market and what opportunities are you targeting?
A: Although all OEMs use leather every company has specific requirements, especially in the premium market. This involves large investments and the complex transformation of our manufacturing process. We have been implementing renovations since 1997 and the most important update started in 2010. Previously Medina Torres solely targeted the shoe industry but the economic crisis of 1994 led us to change our strategy to target four more sectors including pet products, furniture, automotive and aerospace. We consolidated our first contract in the automotive industry with Bader. Five years later, Seton approached us and we developed a three-year partnership with the company before securing more business with GST and Eagle Ottawa. Three years ago we chose to become independent and build our own future in the industry. We have finally sealed our first contract with Volkswagen supplying the Golf platform, which will open doors to more car manufacturers.
Q: What hurdles did you face and what strategies did you implement as you entered this market?
A: It is not easy to enter the automotive industry as a new company because most OEMs already have partnerships with other suppliers. We have the advantage of already understanding the processes and being ready to demonstrate that we are capable of delivering excellent quality, which often takes 6-12 months. In 2015 we acquired the testing equipment needed, giving us the necessary credibility to participate in the market. To become an automotive supplier companies must participate in a tender and in the most recent we were among the two most price-competitive players. We have acquired the necessary contacts to approach companies and now that we are working with Volkswagen, we have a permanent staff member in Puebla. Also, our sales director has traveled to Detroit to meet the purchasing directors of Ford and Nissan.
Q: How can its shoe background help Medina Torres offer added value to its customers?
A: Having such broad experience gives us unique flexibility in leather selection. Each pelt is assigned to an industry based on its quality. While other companies may use both good and lower-quality leather in their automotive products, we use only the best pelts for these applications, resulting in stable, competitive prices.
Even though we are not 100 percent focused on automotive, we are ISO 9000/TS 16949 certified, which ensures best practices in automotive production operations and have been audited by Volkswagen for quality and efficiency in line with their standards. We started production for the Golf platform in May 2016 and Volkswagen is planning another visit in April to our facilities to ensure everything runs to plan. We are finally in the right position to compete in the market and are not afraid to invest to improve our operations.
Q: How prepared is Medina Torres to handle the demand resulting from its new deal with Volkswagen?
A: We did encounter an obstacle in our cutting capabilities during our first test run, which caused us to delay the start of production. We made sure we could comply with Volkswagen’s demands with only 20 percent of our production capacity and we still have the capacity to grow 15-20 percent if needed. Efficient operations will allow us to eventually participate in other bids for Volkswagen as well as for other OEMs. The tender for the new Jetta will happen in the second half of 2016 with that for the Tiguan following in 2017 so we are already planning to participate. The company is starting to develop leather for steering wheels. This is a more delicate product and we are partnering with TRW to supply the Volkswagen Group. The company currently sources this from Italy so it would be advantageous to have a local supplier. When fully active, we expect our automotive segment to represent 20 percent of our business. The shoe industry is declining and will probably fall to only 10 percent in the next five years, but our pet segment is twice what we manage in automotive. We want to protect our shares in other markets to ensure the longevity of Medina Torres.