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Insight

Process Improvements Unlocking New Opportunities

Tue, 09/15/2015 - 16:23

German suppliers in Mexico are continuously increasing in numbers, with many arriving to support their home nation’s OEMs. However, this trend does not stop with Tier 1 companies, as German Tier 2 suppliers are following in the wake of the country’s surge in popularity, presenting good news for the Mexican supply chain. Kern-Liebers is one of these suppliers, showing continued support for its existing clients in Mexico. Globally, Kern-Liebers has more than 60 companies, most of them with approximately 100 members of staff. Additionally, the company’s headquarters employs around 2,800 people, giving it the capabilities to establish facilities near its customers. The company supplies highly precise metal parts for complex electric engine, braking, and safety systems. Extremely specialized in different materials, Kern-Liebers possesses a high level of experience in stamping and bending processes that cannot normally be carried out in Mexico.

The combination of the macroeconomic situation in the US and Mexico’s market growth has made the country very attractive for Kern-Liebers. This has led to the decision to invest in a plant extension, as well as another plant for its wire spring business in Queretaro. Its existing plant has now been expanded from 4,400m2 to 12,900m2 and the new plant will span 10,400m2. “In Mexico, we have the convenience of performing our design and manufacturing processes in-house, with heat treatments and surface finishing being the only ones that need to be outsourced,” states Christian Suhling, Managing Director of Kern-Liebers Mexico. “The company has a wealth of experience with producing small and complex stamped and bent parts in Mexico, but we are now exploring fine blanking technology that requires even more precision. This will lead to bigger presses to serve the precision requirements in bigger parts that many customers require from us.”

As well as manufacturing clips and slipper pads to fix caliper and braking systems, one of the company’s largest projects is with electric engine housings. Previously, it was necessary to use high quantities of materials for this, but the company has since unlocked huge market potential by updating its processes. Kern-Liebers is also seeing opportunities with support and connection systems for engines, due to many manufacturers attempting to replace these parts with plastic. According to Suhling, given the high temperatures reached by the engine, metal components remain the best choice in these instances, as they can be used to connect the engine with external plastic parts.

While Mexico is offering many promising opportunities for the company, Suhling has noticed certain issues that the country has yet to solve. “Looking at the total cost of labor, Mexico is not really that cheap,” he says. “The workforce could be more efficient, and local steel mills do not comply with the necessary automotive requirements, meaning that we still need to import most of our material from Germany, the US, or China.” Equipment has also been a major issue for the company, which found it challenging to upgrade to more modern machinery during the 2008 financial crisis. As a result, the company had to implement strong cost reduction strategies and prove the value of the local operations to its corporate offices. Even so, Kern-Liebers now seems to be recovering, as it expects a 40% revenue increase in Mexico during 2015. Suhling sees that Mexico is starting to form a technology oriented supplier base, so he is investing the company’s resources in modernization and new equipment, with a goal to replace India and China as the main focus for the company’s global managing operations. “We still need to compete with the sizeable US market, but Mexico is definitely a focal point of of Kern- Liebers’ strategy,” he concludes.