Guido Bagglioli
CEO, Baggioli Pressofusione
Co-Founder, BM Castings
Sergio Mendoza
Co-founder
BM Castings
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View from the Top

Foreign Partners Strengthening Local Suppliers

By Alejandro Enríquez | Fri, 02/12/2021 - 06:00

Q: What helped BM Castings become a relevant player in the aluminum castings sector?

GB: We have one manufacturing plant in Europe and one in China. Four years ago, we had the idea that in the context of market relocation strategies we needed to look at North America. We met with Sergio, who was looking for a business partner to create new business opportunities. We are trying to be a diversified company and to target several markets with our products. Right now, we are 100 percent automotive because that is the industry in which we started, but we are looking forward to opening new business lines in the home appliances, industrial and medical segments.

SM: BM Castings was a greenfield project that started in 2016. Our first milestone was to ramp up operations and to launch our first manufacturing cell. We are now launching our second manufacturing cell and enjoying healthy growth.

At the beginning and due to the interest from a customer in developing local suppliers, we drafted a plan to become IATF:16949 certified rapidly. It was a great deal of work, but we were able to accomplish it due to the nature of the partnership between BMC and Baggioli. The partnership allowed us to bring the best of both worlds and make the project possible.

Q: What is the nature of the partnership between BM Castings and Baggioli Pressofusione?

GB: Our partnership is based on our mutual experience. On the one hand, we have a local entity with knowledge of the local market, the way it works, and all the details needed to succeed in the region. On the other, Baggioli provides technical expertise. We perform tooling development; we test the products in Italy and then we transfer them to BM Castings in Mexico.

Our experience allows us to manage projects from Europe and China. Our 10-year experience in China is also relevant for our new venture in the North American market because companies are transferring their operations to the region. Because we’ve understood the challenges in Asia, we have a really good opportunity to manage the challenges in North America as well.

Q: What opportunities do you see in the Mexican market?

GB: North America, and Mexico in particular, has a great chance to take over the business that is currently based in Asia. But a correct approach to the business is necessary. A great opportunity area is to develop a local supplier base, both in technological and business terms. If the industry fails to develop these capacities, the window of opportunity might close for the country.

SM: We are developing new projects for customers in Monterrey and soon in the Bajio area and the state of Mexico. We are trying to do as much as we can to grow responsibly, staying financially sound, and taking the right approach. In the last few months, we have been seeing a great deal of interest in increasing local content to meet USMCA’s rules of origin. USMCA’s impact will be stronger next year. It takes time to develop sources and to make sure the new suppliers meet your requirements. It takes time to relocate operations from China to Mexico. We are growing and our doors are open to potential customers.

Q: How do you support your customers in increasing their local content value (LCV)?

GB: Our raw material is processed locally. We purchase our raw material in Mexico and we add value in Mexico, as well. This is an added value for customers that want to meet their LCV requirements.

SM: We have solid local suppliers in Chihuahua, Monclova, and Veracruz. Availability of aluminum raw material is not a problem here in Mexico. We participate and have specialized, in the manufacturing of electronic components for vehicles. Our products manufactured in North America can be seen in Ford and GM vehicles.

Q: How has the pandemic influenced your plans and targets for 2020?

SM: We shut down operations on March 20 and were able to restart on June 1. Particularly in Chihuahua, tougher restrictions were applied to the automotive and the aerospace sectors. In the beginning, we were only allowed to bring in 30 percent of our workforce. After four weeks, it was 50 percent and then 60 percent at the end of August. The landscape is difficult for all automotive companies in the area but we trying to balance the situation as best we can.

We are launching two high-volume programs in the fall because we are trying to balance shifts and machine loads and schedule our production program to meet increasing demand. So far, we have been successful. We do not anticipate any problems but the sanitary contingency has increased our operating costs. We will see an impact on our finances, just like everybody else, and we are adapting accordingly. We are a socially responsible company and we are going to take care of our people, no matter what.

Q: What are your views on where the industry is heading?

SM: The automotive industry is recovering slowly. Of course, we are not expecting pre-pandemic levels soon. The recovery period remains uncertain but so far the signals are positive and we are optimistic about the future.

Mexican companies should find more opportunities with foreign companies like BM Castings did. Co-investment, whether in automotive or other sectors, helps to increase Mexico’s added value in manufacturing, and consequently, our GDP grows, salaries rise and overall quality of life improves. This model needs to be replicated by more local companies. The progress we have achieved so far is promising and we need to multiply it.

GB: The pandemic is something we all need to face. But let us not forget that market trends before the pandemic was also pointing to an overall decline in the industry. The political situation in the US is also affecting the industry. Nevertheless, the sector has all the elements for the market to recover soon and we should count on that.

 

BM Castings is a Mexican company located in the city of Chihuahua. Founded in 2016, the company is the result of Baggioli Pressofusione SpA’s greenfield project in Mexico and its focus on aluminum castings for electronic component manufacturing

Photo by:   BM Castings
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst