Carlos Turner
CEO
Katcon Global
/
Insight

Placing Trust in Monterrey for Design

Fri, 09/01/2017 - 12:41

The Mexican automotive industry is dominated by international companies that mostly bring manufacturing operations to the country, generally leaving design, innovation and engineering operations in their home countries. Carlos Turner, CEO of Katcon Global, thinks the next big step for suppliers is to offer their manufacturing capabilities in tandem with local design and engineering to their clients in Mexico.

Turner has an ace up his sleeve to give Katcon’s Mexican operations a boost. “Having engineering capabilities in Mexico is a proven advantage for OEM’s that choose Katcon as their supplier. It benefits the development process to provide technical solutions locally without the unnecessary delays and complications of having to touch base with headquarters all the time,” he says. But Turner wants to go a step further by increasing its Monterrey Engineering Center’s responsibility in their R&D and innovation projects as well.

The company has design and engineering services in Monterrey, Michigan, Luxembourg and Shanghai. Projects are assigned to each office depending on the clients’ location and each center’s expertise and workload. Instead of depending exclusively on the 3.4 million vehicles manufactured in Mexico and its potential growth, the company makes global plans to drive its own expansion. This means also competing for business in China’s 28 million-vehicle market, while looking to supply components for the 12.2 million vehicles made in the US and the combined production of more than 23 million cars from Japan, Germany, South Korea and India, the other four largest car manufacturers in the world.

China became Katcon’s largest market in 2016. According to Turner, in 2017 the company will generate over 50 percent of its global turnover from this market. China has fueled Katcon’s growth of approximately 17 percent per year since 2014 and will continue to generate a substantial portion of its revenue growth over the next couple of years. Turner sees the company’s growth accelerating in 2017 thanks to the new contracts Katcon has closed with Chinese OEMs. “We will grow at an average of 24 percent per year until 2020 and we will need to open two more manufacturing facilities in China by the end of this year, plus at least one more in 2018.”

One reason behind Katcon’s expansion efforts outside Mexico is that what appears to be an opportunity with the arrival of a new OEM to the country may in fact turn into a threat for the local supply base. Arriving OEMs tend to bring their trusted Tier 1 suppliers from their home countries to mitigate risk. “The early stages of an OEM’s establishment represent a threat as much as an opportunity for local suppliers,” he says. “With new OEMs coming to Mexico, new suppliers arrive each year, adding competition and increasing installed capacity for many commodities. Even when they do not bring their suppliers, OEM’s prefer to work with a global partner if they already have operations in Mexico. This is why we believe it to be imperative to become a global supplier in today’s automotive environment.”

Katcon Global chooses to innovate in its offering, helping automakers meet stringent environmental regulations around the globe. The Environmental Protection Agency’s goals of reaching fuel efficiency of at least 23.1 km/L and CO2 emissions of no more than 101 g/km led the company to experiment with advanced materials for lightweight components. This is in addition to its established operations focused on exhaust parts. These innovations are all happening in the company’s R&D center in Monterrey. Katcon began studying the application of advanced materials in automotive components in 2014, starting with a manufacturing cell focused on carbonfiber components. In 2015, the company took another step toward lightweight trends, working on steel and aluminum substitution for structural components, using composites instead.

Even as advanced materials become a priority for Katcon, Turner understands that new technology-development processes can be a precarious investment. “Not all technology developments are embraced by the market and in the automotive industry, new products must be thoroughly tested to ensure their reliability and safety before moving them into volume manufacturing,” he says. “If the technology proves effective, manufacturing process must also be evaluated for potential obstacles in production, supply or even international trade.”