Felipe García Salinas
Director of Finance and Administration
MAHLE
/
Insight

Proximate Supply Strategy Driving Expansion

Tue, 09/15/2015 - 13:14

Certain global manufacturers had the vision and the foresight to begin supporting their OEM clients from the get go, giving Mexico a real head start in achieving the reputation it holds today. MAHLE made the decision to establish a manufacturing presence in Mexico in the early 1990s. At that time, the company’s automotive customers were looking for local supply as they began expanding their engine production in Mexico. However, the decision to build the first facility in Mexico was based on a broader strategy, which is the company’s commitment to supplying products from facilities that are close to its customers’ manufacturing locations. “The company’s presence in Mexico has played a significant role in the group’s overall sales growth since its arrival,” explains Felipe García Salinas, Director of Finance and Administration at MAHLE Componentes de Motor de México. “Since 2008, sales have tripled out of MAHLE production facilities in this country. Last year MAHLE’s total sales were more than US$10 billion, while sales in Mexico were around US$1.1 billion. During 2015, we are expecting a sales increase of around 5%. Not only have we participated in the increased vehicle production that has taken place here, but we have also increased our level of exports.

When MAHLE began supplying pistons out of the Ramos Arizpe facility in 1995, it became the first OEM piston supplier with a presence in Mexico. The company originally bought 11.5 hectares, but had visions of permanently growing in the area. The first phase included just one building with one piston machining line, but the plant is now working at 85% capacity, with 75% of its production being exported to the US and Canada, and the remaining 25% targeted toward the domestic market.

MAHLE is now supplying nearly all major OEMs that are producing engines and vehicles in Mexico, including FCA, Ford, GM, Honda, Nissan, and Volkswagen. The company supplies them with a wide array of products, including pistons and complete power cell units, cylinder liners, piston rings, engine bearings, connecting rods, air intake modules, air cleaner modules, tank ventilation modules, oil coolers, thermostats, and heat exchangers for engines and transmissions. Thanks to the company’s recent acquisition of Behr, a German company specializing in automotive air conditioning and engine cooling systems, MAHLE’s product portfolio has grown significantly. This merger brought complete exhaust gas recirculation modules, as well as intake systems with integrated charge air coolers to MAHLE’s inventory.

With such a broad range of products, MAHLE’s structure has to be comprised of a number of business units. In Mexico, the company has four business units and a service area. The first, BU1, produces pistons, connecting rods, liners, piston rings, and bearings. BU2 is responsible for filter systems, manifolds, and oil coolers. BU3 covers thermal systems, radiators, compressors, and heat exchangers. Finally, BU4 is dedicated to the aftermarket side of things. The Ramos Arizpe service area provides finance, accounting, treasury, human resources, IT, and legal services to all the other business units. MAHLE also has a sales office that maintains close contact to its local customers.

In line with MAHLE’s growth strategies, the company held the grand opening ceremony for a new US$59 million, 367,000ft2 plant in Ramos Arizpe in June 2015. The facility produces HVAC modules and heat exchangers for passenger cars and commercial vehicles, and is part of the company’s thermal management business unit. “The subject of efficient thermal management is particularly significant for new generations of vehicles, as fuel consumption and CO2 emissions can be further reduced,” states García Salinas Sr. “This can also be seen in the increasing significance of alternative drive systems, from hybrid cars to vehicles with purely electric or fuel cell drive systems.” Also in June, as part of MAHLE’s Filtration and Engine Peripherals business unit, the company officially opened a new US$19 million, 193,000ft2 facility in Celaya. The plant is expected to employ 450 people by 2019 and will produce air ducts, air intake manifolds, air cleaner systems, and carbon canisters. With Audi, BMW, Ford, Mazda, and Toyota all choosing areas near Celaya for their operations, MAHLE is presented with ample opportunities to continue its reign of success, while also bolstering the local supply chain in the region.