Coats: Local Production and a Close Customer RelationshipBy Alejandro Enríquez | Tue, 07/07/2020 - 07:00
Three elements factor heavily on an OEM’s list of needs in Mexico: lightweighting, fuel efficiency and regional content requirements. Working with a global company that has a local presence and R&D operations can be a major advantage when ticking those boxes, according to Wenevir Maldonado, Commercial Director Latin America North of Coats México.
The 264-year-old British company is diversifying its Mexico operations toward new industrial sectors and plans to take advantage of its innovation and local manufacturing operations to further penetrate the Mexican automotive industry. “Our core business is apparel and footwear but the presence of the world’s most important automotive OEMs in the country and the continuous arrival of FDI have made this sector a key target for Coats México,” says Maldonado.
The company navigated COVID-19 waters without losing product orders for 2020 and 2021. “Before this situation, we expected to grow 50 percent annually. We will now adjust our forecast on a quarterly basis. We will have to wait and see where the industry is headed. In mid-April, we stopped delivering products to the automotive industry. We will have to readjust our numbers, but we will remain close to our clients,” says Maldonado. So far, no OEMs have withdrawn their production orders with Coats for 2020 and 2021.
The company projects its automotive manufacturing operations will increase by 25 percent in 2019 with sales increasing by 45 percent compared to 2018’s figures. Coats will reach these goals by developing new solutions that meet client needs, working together with OEMs and taking advantage of its three innovation centers to understand and remain ahead of automotive suppliers’ demands, Maldonado says.
Automotive suppliers based in Mexico look for high performance materials to offer a quality guarantee and create value for OEMs and consumers. “For Coats, this means improving our productive capacity through the local implementation of new technologies to offer top-notch, made-in-Mexico products,” says Maldonado. This is a twofold strategy; Coats' automotive clients gain access to cutting edge materials with increased performance, while at the same easily complying with higher rules of origin.
Addressing the industry’s demand for lightweighting, Coats is working on the development of carbon-fiber-based composite materials like Synergex and Lattice, which can substitute metal and plastic in some vehicle components. “These composite materials come in handy when striving to meet OEMs’ vehicle weight objectives,” says Maldonado. Composite materials are lighter, more flexible and resistant than aluminum and can be woven through design software and thermoforming technology, thus reducing waste and weight.
Coats’ recent purchases have also strengthened the company’s offering for the automotive industry. In 2016, the company acquired Gotex, a Spanish manufacturer of composite materials and tapes with automotive applications. In 2017, it acquired Patrick Yarns, which focuses on high-performance, smart threads. “We are planning to use more conductive threads for heated seats and steering wheels,” says Maldonado. “These threads can replace components that have a metal structure to reduce their weight and cost.”
Stricter demands regarding regional content percentages established in USMCA have also created an opportunity for Coats’ factories in Orizaba and Tlaxcala. “Most of our competitors use threads imported from Asia and Europe, so Coats can offer an edge to companies wanting to increase their regional content for the North American market,” says Maldonado. The company already has close collaborations with all European OEMs with assembly operations in Mexico, as well as with Ford, GM and FCA Group.
Asian companies, on the other hand, have been a challenge, according to Maldonado, but she expects Mexico’s free trade-agreement network will be a great advantage when approaching these companies. “Asian automotive companies tend to have agreements with thread suppliers in their home countries,” says Maldonado. “However, if they want their products to qualify as regional content, they need to localize their product sourcing strategies.”