Brose Bets on Mexican Manufacturing, Innovation

Q: During MAS21, you listed the company’s efforts to incorporate renewable energy sources by 2025. How have these efforts advanced?

A: Brose is prioritizing the use of clean energies in its plants in Mexico and abroad. We have switched to new energy suppliers, including Iberdrola, but Mexico’s political climate is putting a question mark over a collaboration with them in the future. We have also taken numerous actions to align our Mexican plants to the new environmental policies.

Alongside the Automotive Cluster and Queretaro’s government, we are creating a “circular energy” policy. This year, we will host an event with numerous Mexican companies to share sustainable actions. We are looking for a date when the industry, government, automotive cluster and universities can come together, but the cluster and government are highly motivated to host this event.

Q: You have lamented the lack of fiscal incentives in Mexico compared to other countries for the adoption of renewable energy. What is the state of incentives now?

A: Incentives have not materialized and further concerns have arisen following the government’s actions regarding energy. We continue to work with the same energy companies but our future with them is now uncertain. For that reason, we are working with Queretaro’s companies and government to communicate our concerns while simultaneously preparing to comply with future changes. Queretaro’s industries, government and the automotive cluster will hold an Environmental Day to set an example for the rest of Mexico and showcase our work in this area, which is vital for the planet.

Q: How has the semiconductor shortage and the congestion at Asian ports affected Brose’s different plants across Mexico?

A: While the pandemic has eased, new challenges have arisen, such as the shortage of semiconductors and steel, although the latter has improved. Demand has been high but we are still struggling with the lack of semiconductors. Additionally, logistical problems are affecting all Mexican industries because all companies require components but transport containers are completely full and customs are completely saturated.

However, Brose aligned with its customers to make adjustments and identify potential synergies to share components as we know that the market is not meeting demand.

Q: How is Brose participating in the lightweighting trend to support OEMs’ environmental goals through better performance?

A: We are ICE-1400 certified. While this is not a complete requirement for end processes, we are convinced we need it. We also want other certifications that are not mandated by the government because Brose is committed to being environmentally conscious.

Q: What are Brose’s plans to increase Mexican production?

A: One of our strategies to address the semiconductor shortage was to bring electronic assemblies to Mexico. Our CEO proposed this new operation and future investment in the country after visiting Mexico last year. This is great news for Brose but also for Mexico.

Last year, we closed a joint venture with Volkswagen to create Brose Sitech and expand our seat-production capabilities from frames to exteriors. Brose Sitech currently operates only in Asia and the EU but it is also looking to invest in Mexico because it is convinced that the country has the right labor force, universities and industry knowledge.

Q: How will Brose’s University Engineering Center in Queretaro push Mexico to take the next step from manufacturing to innovating?

A: We were the first company in Mexico to invest in a university. We created an innovation center to develop technology locally using equipment financed by our investors. Mexico is not well known for academic innovation but through these investments we are becoming better prepared to create and innovate in processes and products.

Q: Can Mexico become a regional leader in technological innovation?

A: Queretaro used to be a manufacturing-only site but the costs of performing engineering in the US rose sharply, leading some to bring not only manufacturing but design to low-cost countries such as Mexico. Our plant in Queretaro, for example, manages 55 different engineering capabilities that previously were performed in the US and Germany.

Q: Aside from the renewable energy transition and education investment, what are Brose’s plans in Mexico for the remainder of the year?

A: Our 55,000m2 plant sells to about 60 different customers but we are struggling with space because we are growing continuously and launching new programs. This year, we are launching four new product lines, catering to Tesla, BMW and Volkswagen.