Hauke Jungnitz
General Manager
BOS Automotive Products
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Insight

Comfort is Crucial in the Auto Parts Market

Mon, 09/01/2014 - 11:24

Clever engineers are taking care of advances in every aspect of a car, from lightweight materials to fuel efficiency to green tires. BOS Automotive is part of these advances, but with a particular bent on one element with an immediate impact on passengers: customer safety and comfort. According to Hauke Jungnitz, General Manager of BOS Automotive Products Irapuato, cost-optimized development and production processes have placed the company ahead of the pack as a key supplier of comfortfocused automotive products. Jungnitz is particularly keen on the importance of variation within the company’s product portfolio to ensure a smooth ride. “We have three main production areas: cargo covers and safety nets, sunshades, and armrests. All systems produced are functionally the same but range in variety from single-step operation, to multi-step, and electrical.” This full range allows for the accommodation of customer specifications from basic to the absolute high-end of quality

“There is a natural difference in cost. For example, a Maybach car is fancy when compared to a basic high volume model. The same variation is seen within our range of components,” explains Jungnitz. Although there are significant differences between BOS Automotive’s low-end and high-end products, Jungnitz explains that market demand has seen the low-end spectrum of the portfolio becoming loaded with many more features, which has helped the company to see demand grow. BOS Automotive decided upon a diverse product portfolio due to the advantages it brought in terms of clientele. “Diversity is an intrinsic strategy for our product development. It brings a strong and diverse customer base. The company does not depend on a single customer so if one goes down, another client comes up,” says Jungnitz. This is not the case for all suppliers, he adds, illustrating this claim with the example of seat suppliers that work in a capitalintensive industry. “They are required to produce within a 40km radius from the OEM due to the large volumes needing to be shipped. They often work order to order so they may even be forced to close a plant if they somehow fail to obtain the next order.”

The economic downturn spelled out a transformation period of the company, starting with its previous production model. BOS Automotive used the crisis to consolidate its North American manufacturing operations in Mexico and create a strong base in Irapuato with approximately 800 staff. This consolidation has put it in a favorable position to participate in the Mexican automotive boom. Strategically, BOS North American sales and development departments are located in Rochester Hills, Michigan in close proximity of the engineering and design centers of our customers in the Detroit area. “BOS used the crisis to consolidate. This entailed putting all our production in one place so the products would become more economical, and all aspects of our business that no longer offered possibilities for financial growth were grouped together,” says Carlos Casado, BOS Automotive’s CFO for North American Operations.

Another aspect that has constrained automotive players is human capital, which BOS is trying to take care of through internal recruitment. “We try to retain our people as much as possible, naturally, but we also try to promote internally to give professional growth opportunities in Irapuato, but also within the group to those with potential. Student trainees dot our ranks, but if they thrive with us, we offer them a place. This helps us get a highly motivated workforce,” says Jungnitz. However, this HR strategy is in danger from the entry of more auto parts players into Mexico, which will likely send salaries rising. To control this spiral, Jungnitz suggests the initiative of a human resources network that will provide information on the structure of salaries and ranges in the market. This could also help BOS Automotive address its talent gap. “Skilled labor is easy to find for simple assembly operations, but it becomes much more difficult to recruit at the specialist level and above, where operating machinery becomes more demanding.” says Jungnitz, adding that the sourcing of injection molding parts poses a fresh challenge for the company. “Plastics are an issue in Mexico so we often have to import the high-quality plastic used for interior parts. However, this leaves vast potential open for the local sourcing of plastic products. Mexican plastic suppliers need to develop specific knowhow, especially for interior parts.” According to Casado, recent tax changes, some of them significant for the industry, were rapidly processed to become effective in 2014. However, he feels these should have seen further discussion before becoming effective to allow companies to be better prepared in areas such as finances and operations. “We think that if BOS has to pay taxes, we should just do it. But to facilitate or to increase capital investments in the industry, consistency, easiness and transparency in laws and rules related to taxes, cash repatriations, and international trade laws should prevail, avoiding risks from sudden changes influenced by political agendas.” adds Casado. Despite this slight setback, Jungnitz denies that growth is off the table. “There is always room for growth in Mexico. BOS Automotive is considering immediate growth through the current expansion of its facility to expand its logistics and production area. BOS Automotive is here to stay.”