Bosch: Confidence in the Post-Covid-19 EraBy Alejandro Enríquez | Mon, 08/24/2020 - 10:54
Q: How has COVID-19 impacted Robert Bosch México’s operations?
A: During the first chapter of the pandemic, like many other players in the industry we were short of supplies from China. We work under lean inventories and we need to remain very competitive to diminish the effects of the pandemic, especially in the automotive industry where we have several tier layers. We have overcome the effects of this first impact, using our experience to continue serving our clients well.
The second chapter came when the pandemic hit Europe and the Americas where we concentrate 95 percent of our automotive suppliers. The North American automotive industry ceased operations at different times, even within the US. This really hit us since we had costs and zero income, like many others in the sector. This is the situation that we are currently facing but companies that adapt faster will emerge stronger.
Q: How is Robert Bosch México preparing to resume operations at its 14 facilities in the country?
A: We have operations in many countries across the globe. Based on our global footprint, we are taking into account best practices implemented at other plants, such as those in China. This will allow us to replicate successful strategies while avoiding contagions. For our operations in Mexico, this knowledge represents a unique opportunity to make fewer mistakes.
We implemented the appropriate measures soon after the first COVID-19 case was reported in the country on February 27. We feel very well-prepared to resume operations as soon as possible. We are enthusiastic to resume production but we are aware that it is one thing to implement measures and another to assure we are doing it well. It will take time for people to get used to new norms and our focus will be on always getting things right. We will also have motivational elements for our 16,000 collaborators to embrace these measures so we can achieve our zero-contagions goal. This is already familiar to us given the zero-accidents principles we have implemented for many years now.
Q: How have Robert Bosch’s midterm strategies changed after COVID-19?
A: There are two main elements in this regard. The first relates to mobility. The changes we have seen in mobility are related to how people are moving around and how goods are being transported directly to the user. These trends may be interrupted by external factors such as COVID-19 or oil prices affecting electrification, for instance. However, the strategic framework remains the same.
Robert Bosch lives off innovation. We are one of the greatest players in the automotive industry in this regard. We register the most patents in the industry, at one every half an hour. That is our strength. We have been preparing for many years and we continue to do so to face the shift in mobility paradigms to serve the end consumer, private or corporate, with sustainability and safety. Regarding the latter, we are ensuring that goods and people are transported safely. We see great opportunity for us to participate in the latest technological trends.
Q: What have been the results of Robert Bosch’s innovation hub in Guadalajara?
A: This is one of our great success stories. A few years ago, we had around 50 developers here. We also identified that we received little local added value from our suppliers. In 2014, we started our project to open an R&D facility and engage in engineering processes at three of our plants. Today, we have 800 local engineers working on these processes. We have 600 in Guadalajara, mostly focused on the automotive industry. This has also been a success thanks to the national human capital, both in hardware and software developments.
Q: How have you prepared for the enforcement of USMCA?
A: We are working to raise our LCV levels. The new requirements differ according to the product segment and considering the competitive environment we are in. In segments where there is higher LCV, the pressure for local players is higher than in other segments where there are a lot of imports, for instance in electronic components. Robert Bosch México, along with its customers, is going to facilitate strategies to reach a higher LCV. Thanks not only to our manufacturing and aftermarket footprint, but also to our engineering operations, we are confident we will be successful in this regard given the times established in the treaty.
Q: What should be the role of local governments and automotive clusters in developing local suppliers?
A: Governments can help but administrations do not last as long as companies. They can help and promote, but the industry should take the initiative. The most successful scheme for a local medium supplier to thrive is to gain a first customer like Robert Bosch or any of our competitors, which have high expectations regarding quality. This is often costly as local suppliers need to invest in their processes and training. However, once they find a customer like Robert Bosch, many doors open for them. Today, we purchase US$500 million from local companies. This is significant given the spillover effect it has on jobs and national added value.
Q: What are your views on the future of the automotive industry in Mexico?
A: The automotive industry is changing but that is a global effect. The role of Mexico in the sector continues to be really advantageous for three main reasons that I will refer to as medals. The bronze medal goes to the country’s good luck. The country is lucky to have access to both the Pacific and the Atlantic Oceans, as well as being next to the largest private consumer market in the world. However, luck must be used accordingly. Silver goes to the demographic bonus. Not so many countries in the region have such a large, young working generation. In Europe, most people were born in the 1960s while in Mexico the largest demographic segment is from the 1990s. This segment’s participation in professional activities will last until 2050. This is the moment for Mexico and Mexicans to become rich. It is also a moment when costs will be stable and predictable given the highly qualified personnel pool.
The gold medal, which needs to be highlighted amid the political environment worldwide where protectionists policies are emerging, goes to Mexico’s free trade agreements (FTA). Mexico is the worldwide champion in FTAs. USMCA will bring many benefits, but so will the new agreement with the EU. Mexico is the EU’s largest partner in Latin America, while Germany is Mexico’s largest trade partner in Europe. Trade has grown considerably over the last few years, sometimes even at a double-digit rate. The new trade agreement the EU has with Mexico is one of the most complex, robust and broad agreements I have had the pleasure to see. This is the gold medal Mexico needs to embrace to exchange ideas, products and services.
Q: What are the opportunities a post-COVID-19 scenario could bring?
A: No one has previous experience in dealing with this situation. However, COVID-19 will bring new opportunities for our sector, especially in automation. Customers will also be more inclined to think about individual transportation, whether it be bicycles, motorcycles or cars. We are still exploring what new opportunities will emerge from this situation.
Robert Bosch is a leading supplier of automotive components, including gasoline and diesel systems, electrical drives, starter motors, generators and mobility applications. The company has 14 manufacturing plants in the country and one R&D center in Guadalajara