Impact of Technological Advancement of Supply Chain Cooperation

The summit’s following panel was facilitated by Oscar Albín, Executive President of INA, who presented the topic of innovation in manufacturing and the panelists. Mexico is competing with other emerging economies for the top position, but has shown to be a successful manufacturing country thus far, especially in the automotive sector.

Mario Rodríguez, CEO of Arbomex, a company with expertise in powertrains and combustion, “chose a model of ceaseless innovating in order to be able to compete,” and have invited schools and employees to contribute to innovations in both design and processing. Frank Hezel, Vice President of BASF’s Coatings Division in Mexico and Central America, also cited innovation developing human talent in the region via universities and suppliers. Both Arbomex and Tremec have taken risks and invested in expensive prototypes to be able to gain contracts with OEMS. Antonio Herrera, Managing Director of Tremec, entered the discussion sharing that by creating prototypes they were able to see that technology was not keeping up with their ideas or innovation, so the company invested in equipment in order to be able to produce the latest technology.

Rodríguez referred to a company that benefited from investment in innovation, who requested quotes for welding for parts. BASF was able to reduce the total cost of parts for this company by 30%, and reduced weight from 7kg to 5.2kgs. “BASF is trying to move from creating commodities to tailored products,” expands Hezel.

Another company that continues to invest in human capital is Gestamp, which has R&D centers across five continents, to cater to vehicle OEMs and regulations that demand increasingly high quality standards. Erwin Polo Feldmann, the Vice President of Gestamp Mexico mentioned that short term cost can discourage companies from investing in innovation, but that Gestamp has continued to push to meet security standards, while taking risks in developing technology in order to stand out in the industry interested in new industries. By working with CONALEP and the Technological College of Puebla, among others, 80-100 undergrads are inserted into sophisticated 18 month apprenticeships. Gestamp allocates positions in Spain, Mexico, US or Switzerland to 50 students that are chosen as new hires. This type of program has a huge short term cost, and Polo Feldmann alluded to the companies’ concern as to whether graduates will be loyal to the company in order to return the investment through innovation at a later date.

The moderator, Albín said that clients are not always willing to pay for innovation, unless it is hidden in the final price. This is creating a gap in the auto parts industry as more technology is being developed while lower costs continue to be demanded.

Hezel touched on the problem of the lack of second language speakers, “BASF expects the demand to grow for engineers that can speak more than one language.” Various companies are actively working with universities in order to correct this, communicating the needs of the industry, but an entity that speaks on behalf of the industry as a whole is still needed. Having mentioned that Mexico exports talent and that labor mobility is very high, he warned of the danger of young workers looking for opportunities abroad leading to the industry losing valuable workers.

Herrera, who also represents the Queretaro cluster, explained that Tremex is facing a challenge of mobility in the Bajio region, resulting in a huge demand for Human Capital. Herrera insisted that the industry specialists cannot wait for the government to do everything. Companies have a responsibility to develop human capital and fulfill the deficits left in educative institutes when government funds cannot.
Rodriguez commented “the government of Celaya created a Mexico-Japan alliance 25 years ago to develop talent, creating the degree of Technician, which resulted in the government requesting 9,000 technicians in 2014.” He agreed that entrepreneurs and companies are responsible for developing talent, not just the government.

Albín concluded by mentioning the 0.4% of GDP that is reinvested in R&D in Mexico, which is insufficient compared to other countries. In defense of the low level of investment in Mexico, Herrera suggested that the economic situation has not made R&D any easier, and pointed out that Tremec, for example, has already begun to increase this, using investigation centers such as CEDESI more intensely. “We have already seen excellent results, but positive results see a time lag of a few years and must include this in their long-term plan.”