Growing Opportunities for Extruded Aluminum ComponentsTue, 09/15/2015 - 16:25
Q: What have been the highlights since the entry of Whitehall Industries into the Mexican market?
A: Whitehall Industries entered the Mexican market and established its plant in San Miguel de Allende in 2011. At the time we were exporting a significant percentage of our production in the US to customers that had moved their assembly operations to Mexico. Our customers were interested in creating a local supply chain, so we established operations in Mexico in order to meet a growing demand given that Mexico represents about 10% of our overall sales. We are aware of the significant growth that OEMs such as Honda, Daimler, and GM are experiencing, and these players continue to demand local suppliers. Our client base in Mexico has a long- standing relationship with Whitehall in the US. These clients have moved their operation to Mexico as Tier 1 suppliers over a number of years, and it was natural for us to follow. Our primary clients in Mexico are automotive sunroof manufacturers like Inalfa, Webasto, and Inteva Roof Systems, and in the convertible market we also have major clients, such as Webasto-Edscha Cabrio. We are currently a Tier 1 supplier for GM and Tesla, but we largely conduct Tier 2 business in Mexico. Our future growth strategy is to make ourselves available to OEMs directly.
Q: How is the company attracting additional Tier 1 clients?
A: Our business consists of aluminum and extruded products. Currently, the US Corporate Average Fuel Economy Federal Standard (CAFE) is being revised, and new requirements will be established. By 2015 the CAFE standard for automotive companies will be 54.5 miles per gallon, which will require OEMs to redesign their cars and use lightweight materials. Aluminum is a key material that will be used to implement this strategy, and our company is in a strong position to provide lightweight components with this material. We are currently testing high-strength aluminum alloys and adapting our practices to exceed the average industry performance. The high-strength aluminum alloy that Whitehall is producing is 10% stronger than standard industry guidelines, resulting in a benefit for OEM clients. The challenge lies in making aluminum as strong as previously used steel components.
Q: What is Whitehall doing to develop a strong supply base in Mexico?
A: In alignment with our growth strategy, we will bring technology and raw materials from the US if necessary. In fact, 100% of our raw materials are currently imported from our plant in Kentucky. If Whitehall was to enter into a partnership, we would seek a company with expertise in the areas of extrusion and ultimate finishing of products. For instance, most of our products are given an anodized finish, and it is difficult to find companies that can provide a process that meets automotive standards. Aluminum extruders in Mexico use a high percentage of secondary filler, which is essentially made by remelting scrap aluminum. For automotive requirements it is necessary to use pure primary aluminum, and these requirements represent a shift in the extrusion industry. The OEMs are not willing to accept the risk of employing secondary material or accept the liability that could result from that. A useful application for recycled material is making aluminum frames for a window or a door. If those components split or break, the risk for the user is minimal. However, failure in a critical component of a vehicle can have more serious implications. For the extrusion industry in Mexico and the parts that it produces, secondary use of materials is suitable, but for crucial components, higher quality aluminum is required.
Q: Whitehall is famous for its aluminum roof tracks. What percentage of this product is made and sold in Mexico?
A: Whitehall Industries currently supplies over 70% of the rails for the sunroof market across the NAFTA region. All production in San Miguel is devoted to the automotive market, and our products are sold to customers in Mexico. Currently, our production of sunroof rails is roughly 20,000 units per day. Our company relies heavily on engineering resources and technical support for our customers. In the sunroof market, clients want glass panels at the top of the vehicle to be larger. We are a market leader in panoramic roofs, in which the entire vehicle roof consists of glass, as opposed to a small window. To accommodate these designs, it is necessary to bend the extrusion profiles so they can match the curvature of the roof. We are using extremely precise technologies, allowing us to bend parts and hold tolerances that many of our competitors cannot.