Queretaro’s Supplier Base Attracts Chinese AttentionSat, 09/01/2018 - 11:33
The presence of a strong Tier 1 supplier base in Queretaro is not only an advantage for OEMs in the Bajio region but also for lower-tier suppliers that see an opportunity to support their global customers in a new market, according to Vinod Miranda, COO of Cheersson México.
Cheersson, a Chinese Tier 2 supplier of precision stamped components and tooling systems, went the distance to establish and start production in Queretaro in 2016 to cater to its global clients. “The presence of most of our international customers in the state was the main driving force behind this project,” says Miranda.
Cheersson is already doing business with key Tier 1 players in China and other countries. According to Miranda, companies that need high volumes of precision stamping components are Cheersson México’s ideal customers. “We have a solid business relationship with the procurement departments of some Fortune 500 automotive companies in several locations around the world,” he says. Cheersson takes advantage of these global relationships to showcase the advantages of the stamping products and services it offers.
“Mexico’s automotive industry is growing, which results in opportunities for Cheersson to jump in and provide the goods and services in which it specializes,” says Miranda. The company does not only want to focus on the Bajio region but plans to cover all of Mexico and the US from its Queretaro plant. The company already caters to certain manufacturing operations in border town Ciudad Juarez, Chihuahua.
Cheersson’s operations in Queretaro already have strong presence with global OEMs such as Tesla in the US, but international clients in Mexico mean more opportunities and Cheersson México is preparing to ramp up its component production. “We are working with our clients in Mexico in the development stage of some components, adding machines, tools and preparing to boost production,” says Miranda. Automotive companies generally develop their components two to three years in advance of production and take longer to start producing when awarded a new contract to supply components, which means Cheersson has to work well in advance to supply future vehicle models. “Building production equipment or tools takes seven to nine months. Then it is necessary to have these tools validated, produce validation samples, measure them, get the customer’s approval and only then we can start production,” he adds.
Cheersson México has already doubled its production capacity within its first year of operations as it prepares to ramp up production. Participation of Mexican companies in Cheersson’s local supplier base has also helped the company overcome the challenges that a new manufacturing operation entails. According to Miranda, most of the products that Cheersson México needs are procured locally with the exception of some commodities. “We have to rely on suppliers in China, Japan and the US for some raw materials and components because suppliers of these products are not found locally,” he says. Bringing in local suppliers helps the company avoid imports and added tariffs as well. “We need to find a solid cost-benefit balance between the parts we procure from abroad and our local sourcing operations,” says Miranda.
Quality suppliers do not come easy and Cheersson has gone the distance to ensure Mexican companies meet its needs. “We hired the best talent that would help Cheersson México reach out to the Mexican supplier base,” says Miranda. The company then put in place a qualification process that screens suppliers. “This ensures that prospective suppliers have the necessary quality management systems, technology and financial capacity to deliver the products and quality demanded by Cheersson México,” says Miranda.
The company sees a gap in tooling development in Mexico but Cheersson has waded through this obstacle by producing tooling systems in-house. “Tooling suppliers in Mexico are not very good due to lack of precision tolerance capabilities and less competitive costs,” he says. “It is more cost-efficient to produce tooling and equipment in Asia and import it than building it locally, so Cheersson designs, fabricates and develops its tooling and automation equipment at its headquarters in China.”