Keeping up with New Opportunities

Audi’s arrival to Puebla opened a door for new suppliers in the area, but it also created challenges for those wanting to become part of the OEM’s supply chain. “Audi looks for certified providers that are already transitioning to more advanced manufacturing techniques. For example, there used to be much less demand for anti-scratch additives. These are now coveted products among high-end manufacturers,” says Luis Espinosa, CEO of Productos Químicos Industriales de Puebla (PROQUIPUSA).

In August 2019, Audi said its plant in San Jose Chiapa, Puebla, would the first in the country to be completely wastewater-free. The company’s next step is to increase the use of green electric power sources by 2020. “When OEMs look for national suppliers, these suppliers need to have a differentiator in their products. This requires a significant change in products, certifications and a focus on social responsibility,” said Espinosa.

In recent years, brands like Tesla, Volkswagen, Audi and BMW have also experimented with products made with recyclable materials, which has opened a window of opportunity for local companies. In the case of PROQUIPUSA, Espinosa says the company sells additives to reinforce reusable plastic for use in a variety of products. “We had to work for 20 years to become a Tier 2 company with the plastics we handle.”

According to Espinosa, PROQUIPUSA and several other Puebla manufacturers had to work on their quality and standards to compete against components coming from Monterrey or Mexico City. Eventually, CANACINTRA supported the Puebla supply chain to develop and integrate to meet the needs of the OEMs in the state. “With this local dynamic, PROQUIPUSA benefited from offering products with more efficient logistics,” says Espinosa.

Despite this local boost, the current political and economic environment does not help the sector, says Espinosa, who cites a precarious landscape in terms of security and legal assurances from the government. “There is a great deal of uncertainty that affects mostly large companies.” The industry does not stop, however, companies like PROQUIPUSA are still betting on the market. “We will continue to invest in the domestic market and we will focus on replacing the imports with local content production,” Espinosa says.