Metal Machinert Toolmaker Wants More Local ContentMon, 09/01/2014 - 16:44
Although the automotive sector in Mexico is booming, growth has come slower than expected for distributors of machinery such as Disma Metalmecánica (Disma). As more OEMs are establishing in the country, the talk has been all about how the secondary industry will become stronger. But Disma is aware of how hard it is to try and sell to OEMs, as these companies are not always fully confident about local distributors. Often enough, Disma has found that OEMs bring their machinery with them from their home country. “We have participated in different seminars, where we have seen that the main investment decisions are being taken outside of Mexico. This means that it is difficult for us, as a local distributor, to participate in the industry. There is a lack of trust from executives in other countries about the quality of local suppliers,” explains Rosario Soto Barrionuevo, President of Disma Metalmecánica. “They often see Mexico as a low-cost manufacturing hub without trusting in our local experience to develop a product. Companies still look for international brands to assist them.”
Disma is a distributor of machine tools for cutting and forming sheet, plate, profiles, tubing, aluminum, and PVC components, many of which are used in the automotive industry. The company has seen more success in the heavy duty segment than with OEMs. This has made the bus sector important for Disma, given its heavy use of metals which requires machinery for steel laminating and other processes that it has provided to the likes of Volvo. Beyond this, the machinery that Disma has sold to major clients like Nissan and Volkswagen has been approved for prototypes or testing. This means that while it is used in the labs or the maintenance procedures of OEMs, Disma’s equipment has not found its way to the production line as of now. “Mexico only has three or four companies that sell this type of machinery and have the metal working experience necessary to fully assist and support clients in their operations. Disma is one of those few companies, and distributes primarily to Tier 1 to Tier 3 suppliers,” states Soto Barrionuevo. Disma’s General Manager, Roberto Flores, explains why these segments are the right targets. “Those companies pose fewer problems as they are already used to sourcing locally. Normally, satellite companies that revolve around OEMs look for local assistance.” Playing both ends, Disma is now seeing more business on the service side than for machinery sales.
Although Disma is keen on expanding its portfolio to a wider array of products, it acknowledges that Mexican companies lack the high-tech awareness to compete with the international companies coming to the country. For Soto Barrionuevo, the Mexican government could help to level the playing field by providing assistance and incentives to support the homegrown members of the automotive industry. “When the government talks about the Mexican automotive industry, it really is just talking about international automotive companies established in the country,” she says. “The Mexican government seems unaware of the importance of the domestic industry. The government loves that Audi is here and that Nissan and Volkswagen are growing, but it ignores the Mexican industry that is supplying those big OEMs. There have been no effective policies to boost the local industry.” The current administration of President Enrique Peña Nieto has begun to roll out products in order to bring new equipment through a friendlier financing scheme for SMEs. For example, a laser-cutting machine can receive up to 60% financing with a very competitive interest rate, while the SME will have to pay the remaining 40%. “A few Disma customers that are developing automotive parts have participated in this program. We are beginning to see certain efforts, so we really hope these programs work out,” says Soto Barrionuevo.
Disma is one of the first companies of its size in Mexico to have hit upon the use of technological apps for its clients. One of its apps is a calculator providing equations for folding, rolling, and puncturing, which was downloaded over 6,000 times in its first year. “This app service is wellestablished worldwide but it has barely taken off in Mexico. It is a benefit that we provide to our customers, but it also represents a marketing strategy that positions our brand among the end users of the machines we sell,” explains Flores. The company has five different apps, including one that provides instructional videos about machines after their picture is scanned from a magazine.
If the Mexican market remains as stable as it has been in the last few years, Disma is looking for exponential annual growth of up to 20%. “However, we do not have a lot of influence in the automotive industry, so the continued boom of the sector in Mexico would not necessarily have a major reflection on our results. We are expecting to see 15% to 20% growth for 2014 and 2015, but this will not all be fueled by the automotive industry,” says Soto Barrionuevo. Nevertheless, Disma will continue to approach Tier 1, 2, and 3 suppliers for OEMs, while prioritizing the bus and heavy duty sectors which offer the company its best opportunities for growth.