Eugenio Madero
CEO of
SANLUIS Rassini North America
View from the Top

The Brakes Are Off for Automotive Innovation

Mon, 09/01/2014 - 09:52

Q: What impact has SANLUIS Rassini had on the development of the automotive industry, and what role does Mexico play in your regional and global operations?

A: Rassini is a leading designer and manufacturer of suspension and brake components for the automotive industry, mainly focused on OEMs. It is the world’s largest producer of suspension components for light commercial vehicles as well as the largest fully integrated brake rotor producer in the Americas, including foundry of gray and ductile iron, machining, coating, anti-corrosive treatment, and assembly. We have eight manufacturing sites strategically located in the US, Mexico, and Brazil, in addition to four technological centers in the same countries. As an engineering driven company, Rassini has greatly contributed to the ongoing strength of the automotive industry in North America. We are at the forefront of technological innovation in manufacturing and are ranked within the top 100 North American suppliers by Automotive News. Our consistent focus on technology and engineering development has enabled us to secure 40 new contracts since 2012. For one major automaker, we will be in six out of ten vehicles by 2016. Of course, Mexico plays an instrumental role in our regional and global operations as we are headquartered in Mexico City. We also have production plants and operations facilities strategically located throughout Mexico, with locations in Mexico City, Puebla, Piedras Negras, Xalostoc, and Queretaro. In addition, we are expanding our brake rotor facility in Mexico. Our site is the only fully vertically integrated brake rotor facility in North America, comprising foundry, machining, coating, stress relief, and ferritic nitrocarburizing anti-corrosive processes. Including the new foundry, which will be ready by the end of 2014, our plant will be equipped to handle a capacity of 180,000 tonnes annually, equivalent to 15 million rotors.

Q: 2013 saw you reach record sales levels worldwide. What role did Mexico’s automotive sector play in this success?

A: The strong surge in Mexico’s automotive industry has greatly contributed to our growth over the past several years. This led to the achievement of our strongest financial results to date, with the highest level of sales, EBITDA, and cash flow generation in the company’s history in 2013. Rassini expects continued strong financial results as more automakers invest in Mexico and more business pours into the country. Many automakers are establishing or growing their operations in Mexico this year. GM, Ford, Chrysler, Honda, Mazda, Nissan, Audi, and Volkswagen have all announced expansion plans in Mexico and are expected to invest close to a combined US$10 billion over the coming years. We are poised to leverage this growth, as our headquarters, production plants, and operations facilities are strategically located throughout Mexico. In addition, we continue to invest in state-of-the-art equipment in order to promote superior quality and service, along with tailored technology and integrated services that include design, engineering, and technical support. During 2013, SANLUIS Rassini was awarded new contracts that will secure additional sales of more than US$500 million over the next five years, maintaining growth rates well above the industry average.

Q: In what ways does the manufacturing and design process for the company’s suspensions differ between the light and heavy vehicle sectors?

A: The structural features are vastly different for light vehicles versus the heavy duty sector. Leaf springs are used for the heavy duty industry and larger full size pick- up trucks to support a heavier weight load. We focus on using the highest grade materials and design parts that are very specific to each vehicle platform. In both instances, we are able to use our advanced engineering processes to help eliminate several iterations at the design phase and provide the end product to the customer much more quickly. Additionally, with these improvements in design and higher quality steel grades, we are able to reduce the weight in pour parts while simultaneously resisting harder loads and protecting against unfavorable weather conditions. All of this helps to improve the life of our products, the vehicle’s overall performance, and reduce gas consumption.

Q: What opportunities has the company identified to diversify into other vehicle segments?

A: Taking advantage of our current installed capacity, we have made an initial investment of US$6 million to expand our suspension offerings in North America to now include leaf springs for the commercial truck market. According to a recent Frost & Sullivan market insight study of commercial truck markets, sales in 2014 are expected to reach their highest levels since 2008. The rapid growth forecasted for the regional market has already given us the opportunity to secure a 5% market share since launching the business in Q1 2014. We expect to see that share grow to 20% by 2018. We also have extensive experience in the Brazilian heavy truck market. We hold a 63% market share in South America, and are capitalizing on this success in the North American market. By leveraging our current success in both the light and heavy truck markets throughout North and South America, we are using our position as a leader in engineering development to provide our quality products and award- winning technology to a new group of customers.

Q: What have been the main innovation strategies that have led to the company to become a preferred supplier in springs for light trucks in the NAFTA region?

A: We have steadfastly focused on ensuring that our customer needs are met and that we are providing superior technology solutions. We provide our OEM customers with integrated services that include design, engineering, and technical support. Our engineers work closely with our customers from the moment a platform is first designed to develop specific products for use in each particular platform. We also help develop custom steel alloys to meet our customers’ requirements. OEMs increasingly value the quality of these customer-tailored services, while continuing to emphasize cost competitiveness and consistent high quality. In our suspensions division, our advanced product and process engineering groups successfully developed lighter suspension components using strengthened materials, which have already been approved by our main customers. An alternative heat treatment process is also being developed in order to increase material strength that will result in even lighter products. Our proprietary RDDP (Rassini Digital Design Process) has been implemented in our suspension business, which reflects a seamless integration of several digital analytical tools that reduce product development cycle time by 60%. During 2013, high-tech equipment was installed to produce lighter coil springs with strengths of 1,350MPa and lighted leaf springs above 1,400MPa. We also tightened dimensional tolerances, which significantly improved product performance.

Q: What have been the biggest contributions the company has made to the automotive industry?

A: Both the brakes and suspension system play a critical role in a vehicle’s ride and handling. Our goal is to develop technology that helps ensure an enjoyable ride for consumers – free of noise and vibration issues on the brakes side, and offering smooth performance on the suspension side. We have also added a production process known as FNC (Ferritic Nitro Carburizing with Stress Relief Process) that helps double the life of Rassini rotors and protects against corrosion. Rassini’s four technical centers located in the US, Mexico, and Brazil, are equipped with state-of- the-art testing equipment, advanced analytical software, materials development labs, and a highly trained team of talented engineers focused on the constant development of novel products that exceed customer needs. We are the only Mexican-based supplier to receive the 2012 and 2013 GM Supplier of the Year Award, winning it for our brakes division.

Our rotors, which improve stopping distance and allow for increased air ventilation, are now being used on several high performance platforms such as the Maserati Ghibli, Quattroporte, and Lincoln MKC. For brakes, we currently have a 15% market share in North America, which is expected to grow to 28% by 2016 given our current sales backlog. Our team on the ground in Plymouth, Michigan, allows us to stay closely connected with many of our larger customers. We also continue to invest in technology and research. For example, we have the capabilities needed to produce all the machining and tooling needed for all of our plants. Rassini has also invested heavily in technology like 3D printing and prototyping programs that enable us to cut production time immensely.