Despite Shortages, EVs, Hybrids Offer Big Opportunities

Q: What is Schunk’s main offer to the Mexican automotive industry?

A: Schunk has over 50 years of experience in Mexico and over 100 years in the global market. Our staff has an average of 15 years of experience, which is hard to find in other companies. We have few competitors, which are often new to the business and lack experience and sufficient, qualified personnel because the products we manufacture, such as carbon brushes and sintered pieces, are not common in Mexico. To manufacture these specific products, companies need highly-trained personnel. If they cannot be found in the market, they have to train them because there are no university courses focused on sintered material.

Q: What differentiates Schunk from its competitors across the world?

A: In the automotive industry, success is no longer based on the product itself but on the trust and partnership built among everyone involved in the supply chain. Products similar to ours could be bought in other markets, such as Asia. However, trust and long-term relationships are what the industry is actually looking for.

Our business is innovation-oriented due to its nature. Schunk is neither owned nor public; it is a foundation with a rotating board of directors whose job is to reinvest profits in new technologies. Schunk’s philosophy and financial stability provides our clients with peace of mind.

Q: How is your company adapting to the electric and hybrid vehicle trends?

A: Our reinvestment and innovation philosophy has allowed us to work closely with OEMs on electric and hybrid vehicles. While 90 percent of our products are used in internal combustion vehicles, we have several new developments for cleaner vehicles. Schunk is working directly with GM, Ford and Stellantis.

We also offer OEMs the opportunity to manufacture samples and prototypes without pressuring them to become shareholders. If our product works for the clients, then we sign the contract and expand production. With Schunk, clients can receive prior proof of the products.

Q: What opportunities has Schunk found in the automotive industry’s recent transformation?

A: Schunk has benefited from the automotive industry’s growth because we already worked with the main tiers across the world. Once clients expanded their operations, Schunk closed new deals to offer them the same service they receive in the EU, with the same machinery and raw material but in Mexico. For example, Schunk Mexico has worked with Japanese companies for over 20 years , which is not common due to the different business models and trust matters. Our vast experience with these companies allowed us to work with other Japanese businesses.

Schunk has also faced considerable challenges. Fifteen years ago, we worked in the appliances sector and moving to the automotive industry was not easy, as the latter industry had additional requirements, certifications and auditing. Professionalizing our processes for the automotive industry was a big challenge but now that sector represents 90 percent of our portfolio in Mexico.

Q: How have shortages affected Schunk and the rest of the industry?

A: The industry is facing shortages, not only of microchips. These shortages have caused cycles in the industry. When plants close, orders are canceled. But when plants reopen, orders are stacked. We need a smooth production plan to avoid those peaks. Planning has to be orderly, intelligent and aligned with the operations of our suppliers in the US, the EU and China. We address shortages through open, direct and timely communication with clients and suppliers.

Schunk increased its sales by 20 percent in 2020, despite the pandemic.

Q: What opportunities could the Mexican automotive industry exploit for continued growth?

A: Mexico has a young and experienced workforce, which is also well educated even in comparison to the EU or the US. Mexico has to leverage its human capital and not promote it as cheap; it is qualified, trained and experienced.

Mexico would also attract greater investment and more foreign companies by producing more complex products instead of focusing on commodities. This is what we do at Schunk: use our well-trained, qualified workforce to replicate what our company offers across the world, with the same quality but with a local touch in manufacturing, development, research and local engineering. We do not rely exclusively on our German headquarters because our goal is to have a more active role in Mexico.

Schunk offers mainly solutions for the automotive industry. The core products in Mexico are carbon products, such as carbon brushes and sintered metal products for different automotive applications. In parallel, the company is developing several solutions for electric vehicles.