Eduardo Melón
Plant Manager
View from the Top

Mexico to See Fastest Growth in LATAM

Thu, 09/01/2016 - 09:48

Q: How do Inaumex’s Mexican operations relate to its global strategy?

A: Inaumex is a Tier 1 supplier with Spanish roots that supplies major OEMs. Considering our group’s small operations, comprised of around 400 people worldwide, it is not unusual for us to work directly with OEMs. Our global operations saw a 25 percent turnover in sales in 2015 and Mexico is expected to grow significantly in the short term. Although Inaumex’s European plant will not expand quickly, we foresee our plants in China and Mexico behaving differently. Our Mexican facilities will double production by 2017. For the most part, Inaumex Mexico manufactures stabilizer links and suspension chassis modules. Suspension ball joints will soon be included as well.

Q: How capable is Inaumex of catering to domestic demand in Mexico’s booming automotive sector?

A: Demand in Mexico’s industry is rising and indicators suggest this trend will continue. Most of our products are sold in markets other than NAFTA, primarily China and Europe. Customer expectations rise every year, forcing us to systematically improve our operations to meet and exceed these expectations. Resource allocation is crucial. We cannot be too eager to grow before consolidating projects that are already in the pipeline.

Mexico’s production plant and Detroit’s technical and engineering center help Inaumex cover regional demand. Although the company’s sales and engineering strategy is defined in Europe, project management and customer contact is handled through our production facility. Design and engineering activities are also performed in Europe but ongoing communication is maintained between our headquarters and our Mexican operations. Due to their proximity to the client, Mexican plant officials lead project management while our headquarters’ technical center performs testing and engineering.

Q: How is Inaumex targeting new OEMs entering the country, such as Toyota, Audi and BMW?

A: Although commercial relationships with OEMs have not yet been secured in Mexico, we do work with some in Europe. The company has strong relationships with Nissan, Toyota and BMW and is working to retain business in Mexico. Ford and Honda are the company’s main focus for 2016. That being said, we are targeting Mazda as it would be an excellent boost to our position in the market.

Q: How have new global trends such as lightweight materials and space reduction impacted Inaumex?

A: Large truck consumption in the US is on the rise, especially since fuel prices continue to plummet. Many of Inaumex’s components have transitioned from steel to plastic and for some components we have begun using our patented hybrid material, which combines both steel with plastic. Over 50 percent of our European projects are being manufactured in plastic and hybrid materials. Mexico will see this technology enter the market in the short term as Inaumex is investing in its first plastic injection line.

Creating a strong supplier network in Mexico has been one of Inaumex’s greatest challenges, following industry growth that limited raw material availability. We expect our products to be manufactured with 90 percent local content but due to the exchange rate and the market’s limitations, domestic production costs may exceed those of European imports. Importing its components has been Inaumex’s strategy for the past three years. To stop doing this, we believe new steel market regulations must be put in place to improve the quality of local suppliers.

Q: How will rising labor costs associated with specialization impact the country’s competitiveness?

A: Mexico’s competitiveness is not contingent on labor costs. Economic growth is accompanied by increased salaries, as is standard in any business. But the market is behaving strangely, as there is a lack of human capital to cover the large demand that resulted from five years of booming industry growth. We expect educational institutions to catch up soon and training the appropriate human capital for domestic industries. Automated companies like Inaumex do not need large volumes of employees; they need prepared professionals with the right skillset.