ISGO Manufacturing: High-Precission Fills Supply Chain GapBy Alejandro Enríquez | Fri, 07/10/2020 - 17:03
Q: How have you innovated in your technological processes to offer the best products at the most competitive costs, while complying with automotive industry specifications?
IG: ISGO has a team of engineers dedicated to innovating and to giving our customers ideas on how to save costs while complying with automotive standards and regulations. Our main raw materials are plastic-based resins. Last year, we worked on compounding plastic with natural-fiber elements to build a lighter and cheaper product with unique properties. This development was made with the help of CONACYT and other local universities and organizations.
NT: ISGO Manufacturing’s value proposition lies in our investment in state-of-the-art technology. We have refurbished our equipment to solidify our bet on high-precision and high-volume products. Simple plastics with no added value are used by many companies, whereas only a few can handle precision plastics. ISGO has specialized in engineering and quality operations for such products, from pre-production to mass production. A big differentiator is our know-how to manufacture high-precision and safe components, which not many companies can offer. We manufacture petrol pumps, seat recliners, sunroofs and fuse connectors. In particular, we provide radiator components for Audi’s Q5 model.
Q: How important is the automotive sector for ISGO and what have been your strategies to attract new clients from the pool of suppliers investing in the country?
IG: Over 75 percent of our operations are in the automotive sector. We have offices in Detroit and Frankfurt to be in close contact with engineers and to be involved in the early development stages of a product. We normally work with OEMs and Tier 1 suppliers three years before a vehicle is released, so we can review components together.
NT: Our plant in San Luis Potosi is focused 100 percent on the automotive industry. Our customers have realized ISGO pieces are precise and complex components, which they also confirm when they visit us at the plant. We are one of the few plastic injection companies in Mexico to have a mold workshop capable of producing new tooling components and performing engineering operations for our clients. We have around three years of experience producing molds. We can produce 20 per year and we are looking to increase this volume. In addition, our sister company ISGO Tool and Die provides repair and engineering services, which are widely welcomed by our customers. This added advantage has attracted more customers that request precision products with very limited tolerances.
We want to set a trend for plastic injection in terms of volume. Our goal is to work on molds with 40 to 60 cavities that can offer greater precision and speed. We are also looking to become a Tier 1 supplier. We already sell products to OEMs through Tier 1 suppliers but now we are preparing a project to become a Tier 1 supplier for Audi.
Q: What is ISGO’s strategy to promote its tooling and injected plastic components?
IG: We opened a tool shop at our San Luis Potosi site. We have already started to build tools for Volkswagen, Audi and some other clients. However, to approach potential customers, we have to go where decisions are taken, meaning Germany and the US.
NT: We have a strong sales force that is constantly in contact with Tier 1s and OEMs. Additionally, we have sales offices in Detroit and Frankfurt and we have a strong relationship with the Automotive Cluster of San Luis Potosi and CLAUT.
Q: What are the main opportunities that lightweighting provides ISGO’s global operations?
IG: We started several projects to develop engine parts that are traditionally metal-made. We are looking for lighter and more affordable plastic combinations that can perform well in highly demanding environments.
JT: This is a big opportunity. Since we are a plastics company, sustainability is always a priority. Our R&D is focused on natural fiber mixtures with resins and polypropylene for plastic injection to create more ecological components. Some of these initiatives have been presented to OEMs already.
Q: How are local players addressing the issues related to gaps in the supply chain to help the overall production chain grow?
NT: The biggest gaps in the plastics supply chain are high-precision and high-volume pieces. Another is supplying directly to OEMs since they import most of these components. In Mexico, plastic imports account for US$8 million to US$10 million. We are confident we are capable of bridging this gap.
Q: What are ISGO’s most important growth and expansion plans for 2019 and 2020?
IG: Our sales in Mexico have grown an average 35 percent in the last 20 years and there is an opportunity to grow around 20 percent per year for the next five to 10 years. We are constantly improving our capacities so we can offer more options to satisfy automotive market needs. We opened a second plant in Monterrey in 2018 and in 2019 we opened a smaller plant in Puebla with around 10 machines. This plant is most likely to grow in the short term. In the future, we may expand these plants or open a new one in northern Mexico, either in Ciudad Juarez or Tijuana.
NT: We have closed most of our projects for 2020 in 2019. Our strongest plans are for our plant in Puebla. We just launched a big project this year called W167 for a Tier 1 supplier to support Mercedes-Benz’s production in Aguascalientes. We aim to grow around 10-15 percent in 2020.
Q: What are the most important challenges that Mexican automotive companies face to participate in international supply chains?
IG: The rules of the game in the automotive sector are different from other industries. This industry is very specific in its requirements and is always looking for perfect quality and delivery. Mexican automotive companies need to develop the skills to be aligned with market demands.
JT: One of the main challenges is talent retention, from management to engineering positions and technicians. The turnover rate is around 12-18 percent among several companies in San Luis Potosi. At ISGO, we started with a 12 percent turnover rate in 2017. We have maintained a 5 percent turnover rate for eight months, mainly by taking care of the people we invest in.
ISGO Manufacturing is a Mexican custom injection-molding and assembly company. It was founded in Monterrey in 1967 and supplies automotive, electronics, consumer, packaging and cosmetic products and components