Improved Local Supply Options for Aluminum Die CastingMon, 09/01/2014 - 16:21
Q: What role has Mexico played in Ahresty’s global and regional operations since you set up shop in Zacatecas?
A: Ahresty has over 60 years of experience in the production of aluminum die casting but in recent years, its global strategy has undergone some change. Our production volume in Japan has been reduced and has moved to North America, China, and India. It is in these three regions that Ahresty is expecting significant growth. There are also two plants in the NAFTA region: one in the state of Ohio and another in Zacatecas. There are several reasons why Ahresty decided to establish a base in Zacatecas, such as its geographical position near main customers like Nissan and JATCO in Aguascalientes.
Q: How much has Ahresty invested in order to accommodate growing demand from its client base and how has this investment been allocated?
A: In order to accommodate this growing demand, Ahresty invested US$200 million in six main stages, spanning from 2006 until today. When operations began, the initial investment was US$50 million. In the early stages of the Mexican die casting plant, its production capacity was focused on supplying Nissan with a wide range of components. Operations began with three assembly lines but another two lines were added when JATCO joined our client list. In terms of machinery, Ahresty experienced a fast expansion in the space of three to four years. At the beginning, we had seven small die casting machines with a capacity of 362kg, and ten big machines with a capacity of 1,020kg. There are now 22 die casting machines but this expansion means additional training and human capital is needed.
Q: What factors were taken into consideration before Ahresty invested in the new plant?
A: Many factors were considered including geographical location, availability of human capital, and client demand, but when we began our expansion in Zacatecas, these factors took a backseat as the demand from our clients was very strong and we needed to increase our production regardless. The decision to open a new Ahresty plant is still yet to be finalized and the decision-making process might take two to three years. Japanese companies tend to be located in close proximity to OEM clients. We would like to be located near the Honda and Mazda plant in the state of Guanajuato but the following factors have to be met: proximity to the OEM, price of land, labor cost and availability, and finding managers who are skilled and capable.
Q: What strategies has Ahresty developed to align the increasing demand from clients with the sourcing of skilled labor?
A: Having both low and high skilled workers is important for Ahresty, especially as capacity is increasing. In this region, one of the challenges we have encountered is hiring experienced people as technicians or supervisors for the plants. These roles are important in order to efficiently operate and maintain a high level of quality and security. As a result, we have begun to provide education and training for operators, while the next step will be to offer training for other levels, such as technicians. In order to improve the performance of our workers, we are cooperating with local universities such as the Technological University of Zacatecas. We decided to send some Mexican workers to Japan to receive training, which was not as beneficial as expected due to communication difficulties. The Zacatecas plant has 1,600 employees and 20 Japanese workers. Salaries in China are increasing, so one of the biggest advantages of the Mexican plant is its low labor costs. There are a number of Japanese companies planning to establish themselves in the region so we have to be careful in order not to create a salary spiral.
Q: How has Ahresty tried to develop and create a supplier base in Mexico?
A: We used to source 80% of our aluminum material locally, while 20% was imported from the US, but this year we are importing 50% from the US despite high logistics costs, and we are sourcing 50% locally. The reason behind the drop of locally sourced material is because it is difficult to obtain scrap materials in Mexico due to the very long lifespan of vehicles. As the volume of production rapidly increases in the automotive industry, the need for this resource increases too. Ahresty has had to import more scrap from the US in order to compensate for the lack of availability in the Mexican market. In the past, we had two local suppliers, but as the demand increased, they did not have the capacity or the financial backup to keep up.