International Vote of Confidence in Puebla

Q: How has Gestamp’s US$75 million investment in its second plant in Puebla contributed to the company?

A: Our strategy has always been project-oriented. We are expanding our original production facility in Puebla to target the new Volkswagen Tiguan’s production. We have a defined plan to target opportunities with other OEMs involving the construction of a new facility in the Bajio region. Edscha, which is also part of our Group, is starting a new project in San Luis Potosi that will be a great contribution to our future operations in the Bajio.

With our second Puebla plant, we launched the first phase in 2014 to stamp Class-A outer-body panels for Volkswagen. This year we launched a second production phase, mainly producing components for the new Audi Q5 that will be manufactured in San Jose Chiapa in Puebla. We plan to add two more press-hardening lines as well as welding operations but we are content with the way the plant is working to date. We also can confirm that we will bring our hydroforming process to Mexico, as well as our press-hardening operations. Gestamp manages assembly operations and eventually chassis and axle components will be added to our portfolio.

Q: How significant is Mexico to Gestamp’s international business model?

A: Mexico is the sixth biggest market worldwide for Gestamp. The country is now the sixth largest auto parts manufacturer and also the fastest growing region in North America. There are possible business ventures with Japanese OEMs, with whom we did not have a strong relationship. That is no longer the case, as we work with Honda in the US and have established an office in Japan to strengthen relationships with these customers. Having received a Development Award from Honda for our operations in West Virginia, our goal is to develop similar connections in Mexico. Our expectations for the Mexican market are positive and 2016 will be a consolidation year for our latest projects. We are increasing content and sales turnover in the country. By 2018 we will secure new business that will expand our sales even further.

Q: How is Gestamp’s latest issuance of bonds going to affect the company’s global operations?

A: We issued bonds in 2013, which helped us finance the projects now being consolidated in Mexico. Now, we have issued €500 million (US$568 million) at even more competitive rates than in 2013. This shows that the market trusts Gestamp, especially considering the initial quantity was €400 million (US$455 million). The vote of confidence will help us finance future projects and Mexico is among the company’s top priorities to receive these resources.

Q: How is Gestamp developing its R&D activities in Mexico?

A: Gestamp operates several R&D centers around the world, all of which are close to OEMs. Our new tooling shop in Puebla specializes in new dies and production of press-hardening tools is an added value for our customers, avoiding the need to import tools from Europe, South America or Canada. We want to have a stronger regional presence to be more self-sufficient and plan resource distribution across our markets. OEMs tend to award projects to the same company in different regions. This will probably be the case for Daimler’s production in Aguascalientes, as well as Ford’s and BMW’s sites in San Luis Potosi. Mexico ought to have its own engineering operations supported by the Gestamp group’s international offices.

Few competitors match our technological level, so we have worked extremely hard to develop our own human talent. We collaborate with several universities and we hired 35 graduates in 2014, 12 of whom stayed at our Puebla plant while the rest were sent to different international locations. This shows that not only are we developing talent, we are also exporting it. Our priority is to hire and train staff at our existing facilities so that in one or two years they can move to our new production sites as experts in their fields. We are also adding a tooling school to service all our Mexican facilities. This is a virgin market and the Mexican tool market’s potential is immense, so any efforts will benefit the country significantly.