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Insight

Baby Steps for Cooling Systems Made in Chihuahua

Mon, 09/01/2014 - 12:16

Global markets have allowed specialized companies to venture into new territories. This is the case for Tristone, the German expert in the design and manufacture of flow technology systems for engine and battery cooling. Tristone already has a significant presence in Europe where it is a trusted supplier in its niche for some of the most important OEMs like Volkswagen, BMW, and Jaguar. These links saw the company being requested by its clients to set up subsidiaries in other countries. Tristone has therefore opened operations in Mexico and China and has started a joint venture in India. These plants add to Tristone’s manufacturing roster which has already seen it build plants in Poland, Italy, Turkey, and Spain.

Tristone entered Mexico in 2011 but it did not start production until March 2012. The company decided to establish in Chihuahua after looking at a number of locations in central and northern Mexico. The decision was swayed by Tristone being able to take up residence in a plant that was once used by Goodyear and Veyance. This meant that the facilities already had some machinery installed, which made the process of starting a plant in a new country significantly easier. “Being located in the north of the country allows us to fulfill our main objective of supplying the NAFTA region. We supply 54% of our production to the US while the rest is for the local market. Being in Chihuahua makes the supplying process much easier,” states Jesús Blanco, Managing Director of Tristone Mexico. Although Tristone only has two years in Mexico, it already counts some of the major players in the industry in its client portfolio. The company is working with Volkswagen, BMW, Bosch, Chrysler, Ford, and GM, while also being in talks to start with Nissan and the new

Audi plant in Puebla. Most of these customers approach Tristone because they have already worked with the company in Europe. Still, Mexico is a competitive market and with the presence of Continental, the leader in the flow technology sector, Blanco is aware that Tristone has to put in extra effort to become an OEM’s preferred supplier. As such, it has sought to further customize its product offering, covering hoses, connectors and multi- branched assemblies. The lack of local suppliers for its products is a particular challenge for Blanco. For Tristone Mexico, it has been difficult to find any that can meet the requirements of its customers. “We are pushing as much as possible to have local suppliers. We even have people dedicated to finding them, but in many cases our European customers impose their European suppliers,” says Blanco. “This is reasonable since OEMs need to ensure the quality of their finished vehicles and the only way to do so is by relying on well-known suppliers.” This means that although Tristone is trying to develop its Mexican supplier base, it is not profitable for the company to do so. “It is expensive to invest in tooling and training for local companies. Even the logistical cost of bringing in parts and materials from Europe is less than the investment needed to develop local suppliers,” says Blanco.

At the moment, the efforts and investments being made by Tristone in Mexico are focused on increasing production capacity as well as sales. Its production capacity in the state will double by 2016, but R&D and engineering are not part of short-term plans for its Mexican operations. For now, Tristone will keep its focus on manufacturing engine cooling systems in Chihuahua, although Blanco stresses it can create a specialized product at a client’s request.