Capable Talent, Strong Local Suppliers Equal Recipe for SuccessSat, 09/01/2018 - 10:46
Maintaining a leading position in a growing industry can be challenging but finding new development opportunities supported by a competitive cost structure can help keep a company ahead of its competitors, says Francisco Díaz, Commercial Director Engine of Donaldson Latin America.
“We have worked on developing a competitive cost structure that allows us to grow not only regionally but also internationally through exports to Europe, the US and Asia,” says Díaz. For more than 30 years, filtering solution provider Donaldson has based its strategy in Mexico on two simple principles: developing the technical capabilities of its local workforce and growing its sourcing of local talent.
Although separate at first glance, both of these ideas are rooted on the capabilities of the Mexican labor force, which Díaz sees as one of the best growth opportunities for the Mexican industry. “Beyond competitive labor costs, Mexico has the advantage of a world-class workforce with an impeccable work culture,” he says.
Although Donaldson has learned to take advantage of the capabilities of the local workforce when training its own team, Díaz explains that local companies must follow suit to become more competitive in a global environment. “Mexican companies looking to participate in our supply chain must develop the skills and technical knowledge of their operative, administrative and technical workforce,” he explains.
Mexico and Latin America represent the third most important manufacturing region for Donaldson. Globally, the company’s revenue grows at an annual rate of 6 percent and Díaz says Mexico’s contribution has been significant in these results. “The company’s two manufacturing plants in Aguascalientes are working at full capacity, delivering 16 million liquid filters and 10 million air filters per year,” he says.
The company is analyzing how best to grow its global manufacturing operations and in Mexico, Díaz sees great potential for the company to boost its competitiveness by focusing on design and engineering operations for products and tooling equipment. “These are still greenfield areas for Donaldson in Mexico but it is the next logical step to secure the company’s ongoing development in the country,” he says. “Mexico is still behind when compared to other first-world automotive hubs, which is why it must shed its mindset of a manufacturing or even maquila country.”
Finding new development opportunities is key for companies like Donaldson as the current political and commercial uncertainty can lead to bigger hurdles in the future. Amid the negotiations of a NAFTA 2.0 agreement, regional content rules are still on the table and could face an increase to up to 80 percent from the current 62.5 percent. Donaldson’s operations have a competitive level of regional content but Díaz says that if changes were made to the agreement, Donaldson would have to invest more resources to help automakers meet new regulations. Still, the company remains positive in its projections for the near future. “If we had to, we could operate under stricter regionalization standards,” he says.
The company participates in both the original equipment and the aftermarket segments. “At the moment, our operations are 40 percent oriented to original equipment and 60 percent to the aftermarket,” says Díaz. “Our goal is to remain a leading company in filtering solutions for both segments, maintaining a 6 percent global annual growth rate in 2018.”