/
Analysis

Patience and Capital Key to Success for Truck Suppliers

Mon, 09/01/2014 - 12:50

Being a supplier for major truck OEMs is no easy task. It requires a number of capabilities that companies need to maintain over time in order to prove that they can live up to the highest standards expected of them. Sisamex is one such Mexican company that has been successfully working with some of the biggest truck OEMs and has even been awarded for doing so. Sisamex’s product portfolio includes axles, brakes, and gears for commercial vehicles, but it also operates in heavy vehicles and medium-sized trucks and pick- up trucks. Restructured in 2003, Sisamex is a joint venture between Grupo Quimmco and Meritor Inc, with each side bringing its own advantages to the mix. Grupo Quimmco has other companies that can supply Sisamex, providing good integration. Meritor is responsible for products, engineering, and the commercial side of the business. 

For the last ten years, the company has been steadily increasing its market share to around 60% for rear axles, 20% to 30% for front axles, between 50% and 70% for brakes, and 20% for drive shafts, according to Armando Augusto Mirandez Jr., former President of Sisamex and current Project Director of Grupo Quimmco. He sees this result as stemming from Sisamex’s great capacity for execution. In 2011, the company invested heavily in process technology in order to place itself ahead of the curve. According to Mirandez Jr., such investments mean Sisamex can ensure state-of- the-art procedures and keep up with the highest quality standards. “Gear cutting sparked a major evolution in our processes. This helped us develop better flexibility as a focus for our plants, so we are comfortable in handling medium and small volumes of products,” explains Mirandez Jr. “These endeavors have become more important since commercial vehicles and their unique specifications require extremely precise processes. These processes are sophisticated and keep the customers pleased, as the company maintains its competitiveness based on the quality of its products.”

Sisamex has three plants in Monterrey and is focused on keeping its manufacturing processes located in Mexico. “As new OEMs come in, there will be more business for commercial trucks. Almost all the big players of this sector are present in Mexico. Even Volkswagen’s Brazilian subsidiary now has trucks being made by MAN in Queretaro,” says Mirandez Jr. 20% of the company’s production is directly exported from Mexico, but this figure rises as 80% of production by adding indirect exports based on products being integrated into trucks that end up in another country. The company exports to Brazil, China, Australia, and the US but Mexico remains Sisamex’s main market.

Sisamex’s main focus is to use its expertise and its ability to acquire new business. For example, Sisamex supplies Daimler with shafts for its new transmission line that will be launched in 2015. In order to supply Daimler, Sisamex had to invest in new machinery and capacity building. “This is the first time Daimler has produced this part outside its plant in Germany, and Sisamex is the one company that can do this within the Mexican industry,” explains Mirandez Jr. Daimler is Sisamex’s biggest customer and has helped the company grow by allowing it to manufacture the designs provided by Daimler’s lauded engineering teams. One interesting fact that Sisamex has to deal with is that most heavy vehicles in Mexico are outdated and purchases of new and more advanced trucks are low. However, Mirandez Jr. points out that the real problem does not lie in Mexicans renewing their trucks, but in Americans having to learn to keep their trucks for more time. By doing this, the flow of second-hand trucks would tarry and customers would look at opportunities to buy more new trucks. “Designers have made better products and extended warranties, so it makes sense to keep the trucks for longer,” explains the former President of Sisamex.

“Supplier development is a medium to long-term activity. This is not well understood by many companies in Mexico. It involves a difficult process in which firms have to make investments that might take as much as six or seven years to pay off. We identify the suppliers, we make sure the industry is familiar with them, and work to make sure they can stay competitive in the long-term.” Looking to the future, Sisamex does not forecast any significant growth in the truck business for 2014. Mirandez Jr. believes this is because the automotive industry, especially the truck sector, is still recovering from the 2008-2011 crisis and because the Mexican economy did not see expected growth in 2013.