Antonio Hernández Jardínez
Accountant
Corporativo Shernand
/
Insight

Moving Up the Supply Chain to Serve OEMS Directly

Tue, 09/15/2015 - 13:28

With so many players entering the Mexican market, there is a perfect opportunity for local companies to expand their business in the automotive segment. While some are trying to become Tier 2 and Tier 3 suppliers, others want to expand their existing operations, targeting OEMs directly with their products. Furthermore, there are those who seek to make an entry into the automotive industry, acquiring companies that already have a strong presence in the market. Within this last category, Corporativo Shernand has found a robust niche.

Corporativo Shernand is an investment group that includes many business divisions, one of them related to automotive fibers and bonding technology. The corporation initiated this project in 2015 through the acquisition of American Textil, a Tier 2 supplier with more than 500 employees and 74 years of experience in Mexico. American Textil has been in the automotive segment for 35 years, beginning with 20% of its business in this sector. Now, through American Textil, Corporativo Shernand can service companies like Johnson Controls and Sage Automotive Interiors with specialized textiles for seating, headliner systems, and other accessories. These two companies now represent 60% of American Textil’s business, allowing it to target final customers like Nissan, Honda, Chrysler, GM, Volkswagen, and Ford. At the moment, Corporativo Shernand is working on a global strategy for American Textil, which would take the company from a Tier 2 to a Tier 1 supplier status. Tachi-S awarded Sage Automotive Interiors a quality recognition that also made American Textil a valuable Tier 2 supplier. This is one of the main reasons Corporativo Shernand decided to invest, according to Antonio Hernández Jardínez, Accountant of Corporativo Shernand. However, the corporation is now looking to establish new relationships to allow American Textil to target the OEM market directly. “Most OEMs already have two or three textile suppliers as part of their business strategy. For example, Volkswagen, Audi, and Porsche have four different textile suppliers, the main one being Johnson Controls. We are suppliers for this company, but we are working to establish a direct relationship with these OEMs, starting in 2016,” states Hernández. “However, given that these manufacturers work in various locations throughout the world, we need to find proper partners in each of these sites.”

Corporativo Shernand decided to move American Textil’s operations to Puerto Interior, Guanajuato. “Obviously, this presented new opportunities for the company. If you already have a market, an identified need, and a product with the necessary recognition, the only thing you need is a supplier that meets all your requirements,” explains Hernández. In terms of its client network, one of Corporativo Shernand’s priorities for American Textil was to work on its presence within its existing network. The company is now focusing on supplying the necessary products for two of Volkswagen’s models, which would generate a 20-25% growth for American Textil on a global scale. Meanwhile, the company already holds an established position in the Asian segment thanks to its agreement with Sage. As a supplier of Tachi-S, the company has developed a strong relationship with Nissan, meaning American Textil has a significant presence in Nissan’s plants in Aguascalientes. “Even though other textile companies are establishing in the country, we have the expertise and market knowledge as advantages for working with any OEM in Mexico,” states Hernández.

The real challenge to take American Textil to a highly competitive level was the automation of its entire manufacturing process. The company’s operations include weaving, knitting, tentering, dyeing, cutting, and bonding, and Corporativo Shernand’s goal was to increase the efficiency of all these stages. Weaving is a purely technical process and American Textil is one of the few companies in the region that can offer tentering and dyeing solutions, but knitting required specific sensors to detect weight, resistance, tension, and density of the fabric. The ultimate goal is to reduce American Textil’s waste, improving the current 6% it creates. “Our clients are always looking for the most profitable process, which means there is an opportunity to improve and become more efficient,” declares Hernández. “Particularly in our dye house, we have worked on water treatment strategies to make our process more sustainable, and we have two artisanal wells for all of our water extraction operations. Nevertheless, automation could reduce our consumption significantly.”