Camshaft Maker Seeks to Broaden Reach Among OEMSMon, 09/01/2014 - 12:13
Recovering from the depths of the 2008 financial crisis by quadrupling your production capacity at the behest of a major OEM is no mean feat. This is exactly what Arbomex did when Chrysler, having clawed itself back from the brink, asked the Mexican company to provide camshafts for a batch of 880,000 engines. This represented a US$35 million investment and involved a production capacity four times larger than Arbomex had at the time. With other contracts pouring in, the company went from producing 500,000 to 4 million camshafts in just two years. Despite this expansion, Arbomex could barely keep up and Chrysler initially had to reduce its requested volume of camshafts. But according to its CEO Mario Rodríguez, Arbomex was able to survive due to the support it received from its direct and tool machine suppliers, especially the ones from Germany and the US. “In reality, we owe the survival of our company to our suppliers and the faith our board had in Arbomex.”
Working with a well-known international OEM such as Chrysler had its benefits and challenges. “We learned a lot from working for Chrysler. We have developed into an international standard supplier thanks to them,” explains Rodríguez. “But working with Chrysler meant high exposure, which put extra pressure on the company.” Arbomex unarguably reaped the benefits of its success, but Rodríguez says a failure would have been highly visible. “We were representing both our business and our country,” says Rodríguez, adding that due to its positive results, Arbomex is now the Mexican leader in producing and supplying camshafts for the automotive industry, supplying the likes of Daimler Trucks, Detroit Diesel, and Linamar.
Arbomex has over 30 years of experience in manufacturing precision cast products and tooling, such as crankshafts, wheel hubs, and its most successful product, camshafts. Arbomex’s plant in Tlalnepantla produces components for tooling production, supplied by Grupo Carborundum and Engine Power Components, while its Celaya facility makes precision cast products. Although it has been working since the 1970s, it was not until 2001 that it entered the automotive industry. This proved a wise move, as today, 80% of Arbomex’s total sales come from this industry.
However, finding the right customers at first was not as simple as knocking on doors and demonstrating products. Rodríguez, says he has to be very careful when deciding which potential customers and partners to approach. “They must fit a profile which will ensure a win-win deal for both parties. Joint ventures will play an important part in the growth of Arbomex for the near future, but we have to be cautious,” he says. Early on, Arbomex showed a penchant for an elite clientele as it approached only the leaders in the OEM market to convince them of the quality of its products and its processes. For Rodríguez, the strategy was simple: his company benefited from what he refers to as a Japanese work scheme, far different to most Mexican firms of Arbomex’s size. “This allowed us to focus on the twin aims of constantly seeking to innovate while reducing costs and making the business more efficient,” says Rodríguez.
This attitude seems to have struck a chord with the market, given Arbomex’s solid market share with OEMs and in the aftermarket. “When Arbomex needed to diversify its business line and increase its inclusion in the aftermarket, Chrysler seemed to be the perfect match. The collaboration between the two companies began with a two-year project to provide V8 camshafts for Chrysler engines. This proved to be a huge challenge but we already had experience in the production of camshafts and were able to deliver. Arbomex was even able to reduce maintenance costs on these engines by 30% without affecting the quality of the final product,” explains Rodríguez. “The demand for ductile iron camshafts is increasing. The process that we have developed for these has resulted in added value for the Arbomex brand, since assembled camshafts are 30% more expensive than iron camshafts. The company is investing in a small camshaft assembly line, allowing Arbomex to cover all three types of camshafts: ductile irons, chill iron, and assembled.”
Rodríguez is aware of the company’s dependence on Chrysler, and would be happy to see this reduce to around 50% if such a move increased overall sales. “Arbomex is targeting new clients. We recently travelled to Germany to visit BMW and have been working hard to get in with them,” he comments.