Ignacio Sanz
Director Mexico
Kayser Automotive
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Kayser Automotive, Adapting to The Future

By Alejandro Enríquez | Mon, 12/07/2020 - 17:05

Q: How has Kayser Automotive adapted to the ongoing pandemic?

A: We are adapting to change. The company that survives is not the strongest or the smartest but the one that adapts to change faster. Kayser Automotive has the advantage of being a very flexible family company. We know companies in the area that have gone bankrupt. We are being very careful since there will continue to be a great deal of uncertainty in the coming months. For example, the pandemic has greatly affected two of our competitors. With them at risk, the pandemic could be opening a window if they fail to adapt. Our industry is really dynamic and decisions at Kayser Automotive can be made rapidly. If a supplier fails its customer, we can be there quickly. It is not only a matter of product but also offering good service.

At the peak of the pandemic, we needed to comply with the government’s strict measures to resume operations. There was also close communication between the members of the auto cluster and local companies in Puebla, which helped. We shared our strategies for resuming operations, and that made it easier for everyone.

Q: What has allowed Kayser Automotive to remain a relevant automotive player?

A: We arrived in Mexico in 1998. We arrived in Puebla mostly due to our projects with Volkswagen. When we got here, we recognized the advantages of the Mexican market, not only due to potential customers but also due to its qualified labor. We grew our business with other German automakers and then with US OEMs.

What allowed us to thrive was our technical competitiveness and the fact that we take a conservative approach to our investments according to our technical and sales growth. Our core business is in plastic subsystems for fuel and engines. We are aware that in the future, vehicles will cease to have fuel systems. Consequently, Kayser Automotive is also working on thermo management for EVs, seat comfort, and sensor technology subsystems for autonomous vehicles.

Growth plans will not be achieved in 2020 due to the pandemic, nevertheless, we began new projects with customers such as Ford and Nissan, which has balanced smoothly the overall downward trend seen during the peak months of the industry shutdowns. We still have ongoing projects, with Volkswagen for example. Our target now is to alleviate the impact of the pandemic as much as we can. So we will remain cautious while this health situation persists, in the understanding that our economic stability will not be recovered for the rest of 2020.

Q: How do you expect electrification to change the industry?

A: We are a supplier of ICE components. Meanwhile, we work in three regions that embrace electric vehicles differently: China, Europe, and North America. Of course, emerging markets are also on our radar but trends do not permeate these regions in the same way. China will embrace EVs the quickest, followed by Europe and lastly, North America, with exception of California. Our manufacturing footprint in North America will take time to adapt to these new trends. We expect an increasing market share for hybrid vehicles before EVs take over the market.

Q: How are you strengthening your local footprint?

A: Between 60 and 65 percent of our products are manufactured with local components from the North American region. The other 35 percent comes from Europe. This is mainly because of two reasons. First, our German customers provided us with the partnerships they have in Europe. Second, many components come from other Kayser Automotive plants in Europe.

Given the state of the US-China relationship, people are looking at North America in terms of nearshoring practices. We have a very focused purchasing strategy to find local suppliers that have the quality and capacity we require. We are aware that USMCA’s rules of origin will drive greater percentages of local content. We see potential in different companies across the different automotive clusters, particularly in the Bajio area, Monterrey, and the border region.

Mexico has many advantages compared to the US or Germany. We have professionals and operators eager to learn while in more experienced markets, changes can be difficult to embrace. The technology gap in the automotive sector between Mexico and developed countries is narrowing considerably. At Kayser Automotive, we also enjoy exporting our talent to other plants around the world.

Q: How is Kayser Automotive embracing the future?

A: One of our strategies is to strengthen our partnerships with OEMs through different products. We have an advantage given the high added value of our broad portfolio. There is also a trend where Tier 1 manufacturers are ceasing the production of some components and choosing to outsource them. We can support them in this decision.

 

Kayser Automotive is a German automotive supplier focused on fuel and engine subsystems for internal combustion engine (ICE) vehicles. The company landed in Mexico in 1998 and has Volkswagen, Audi, BMW, Mercedes, Ford, FCA, GM, and Nissan among its customers.

Photo by:   Kayser Automotive
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst