Diversification, Investment for the Electric Leap

As automakers start to move away from internal combustion engines and toward electric or hybrid powertrains, suppliers must find ways to prepare for future needs. For Daniel Romero, Americas Automotive Division Manager of Schunk Carbon Technology, the key to a successful leap toward electrification is in product diversification, investment and the development of new product applications.
“Only 150,000 vehicles of the 15 million produced in North America are electric and it will take around 15-20 years for electric mobility to become a thing in Mexico,” says Romero. While that may be true, the company is getting ready for the next big leap in the automotive industry. “We cannot sit around and wait for the trend to overrun us,” he says.
Putting his money where his mouth is, Romero is promoting a new mechanical carbon applications (MCA) business line that includes radial bearings and washers made of electrographite focused on water/vacuum pumps and exhaust gas recirculation applications. The company has mostly focused on the production of carbon brushes for starter motors. Romero highlights this business as the most consolidated and successful line of Schunk Carbon Technology in Mexico after an expected sales total of 52 million carbon brushes in 2018 versus the 32 million units sold in 2017. One of the drivers for this growth was a change in Schunk Carbon Technology’s client portfolio. After SEG Automotive North America acquired Bosch’s starters and generators business unit, demand for Schunk’s products for that segment reached the 1 million-unit mark in 2017. In 2018, Romero expects to sell 3 million components to SEG alone and over 10 million by 2020. “Through this collaboration, our brushes are present in the entire North American market in OEM production of FCA, Audi, Volkswagen and Ford,” he says. “We are also supplying Brazil directly from Mexico and have started to work with Asian companies that seek success to the NAFTA region, such as Mazda, Toyota, Kia and Hyundai as a Tier 4 company.”
Growth in comfort systems has also helped Schunk Carbon Technology in its quest for new business. The common use of features such as electric seats, sunroofs and automatic windows prompted a 25 percent growth rate in the company’s comfort systems strategic business unit in 2017. Now, Romero sees another opportunity for the company in the recently established production operations from premium brands BMW and Mercedes Benz. “Our products are already used by Mercedes Benz and BMW in Germany and some of them are already manufactured in Mexico,” he says. “There is a great chance that these companies will also turn to us when producing in Mexico.”
Romero says Schunk Sintermetal, Schunk Group’s division present in Mexico and focused on sintered products, has also experienced growth thanks to the investment made in a new plant in Ocoyoacac. “We are producing components for Continental at this plant and expect it to generate revenue of US$15-20 million per year that will double or triple as we expand our capacity,” he points out.
Diversifying into the electromobility market, however, will help the company remain competitive in a changing industry landscape. “Mechanical carbon applications are the future of Schunk Carbon Technology,” says Romero. “We need to widen our portfolio to substitute brushes for products that can be used in the electric and hybrid vehicle market.” The company also sees an opportunity in the production of injection thermosets for vehicle water pumps given the projected size of the global market. “We sell HELLA Automotive around US$9 million worth of pump components per year but we think this market is worth around US$20 million,” says Romero.
As an emerging market characterized by a qualified labor and a high level of service supported by a free-trade agreement network and strategic access to the North American European and Asian markets, Mexico has been a well-rounded investment destination for the Germany-based Schunk Group. The company has brought several new projects to its local Schunk Carbon Technology and Schunk Sintermetal operations, according to Romero, and the country’s quality production standards have proven an added value not only for Schunk but for the general German investment coming to the country. “Cost, service and quality are the three advantages that Schunk has found in Mexico,” he says.