Spanish Company Tests Mexican NetworkTue, 09/15/2015 - 16:38
Imagine the frustration if every time a car hit a bump, the radio stopped working. Now imagine that you could not start the car on hot days, because it was not parked in the shade. Both situations seem unlikely, but they use the same principle as leaving a cell phone in the sun all day or punching the screen every five minutes. Automotive electronics are just as delicate and precise as any other system, but they are required to function under the most extreme conditions. Whether it is mechanic vibration, electromagnetic interference or high temperatures, these components must withstand a variety of problems, which is precisely the area where Relats applies more than 50 years of experience.
Relats is a family-owned company whose general business is to offer sleeves for protection against temperature, mechanical abrasion, noise, and other general impacts. This is a segment that has normally been dominated by major companies, which is why they are working on establishing direct relationships with OEMs. Additionally, the company is currently exploring the possibility of moving into hybrid and electric engine components. Relats started to invest in these products more than ten years ago, and now the company is focusing on producing sleeves for these engines. The main advantage of this company is that it can offer high quality products at lower prices than what could be found in Europe.
Upon arrival in Mexico in 2010, the company sought adequate distribution channels, as well as a partner with local knowledge of the market. Mainly, the company was worried about local wages, and other potential legal and political obstacles the country may present. For that reason, Relats established a 65%-35% joint venture with Textiles León in order to secure a strategic partner for its raw material acquisitions, and two years later it purchased the whole company. Currently, Relats expects a turnover of US$5.5 million, and given its development the estimate is relatively conservative. According to Jordi Coll, Director General of Relats Mexico, most of this growth is due to the global contracts the company has with OEMs in Germany, Spain, and the US. “Even if we have manufacturing operations in Mexico, our clients and contracts are global. Therefore, policies determined at our headquarters in Spain affect all Relats plants, which is why we must be absolutely sure that we can cover all requisites that our clients demand when they assign us a project.”
Relats is still a young company in Mexico, which means there are still some areas of opportunity. Regarding its production operations, Relats’ plant is currently working at 50% of its full capacity, mainly because all the machinery has been recently imported, and the workers are still developing the appropriate skills to enable the plant to reach its full potential. Similarly, the company continues to import approximately 60% of its raw materials and semi- finished products from Spain.
Relats works with a global strategy, and even though Mexico holds 20% of its entire business, the rest is in North America and Europe. This means that their plants in Mexico, North Africa, and China are part of a project to create the necessary synergies with OEMs to obtain global projects. At the moment, one of the company’s goals is to open a new plant in Vietnam, since it will open the doors to enter the Japanese market. “Manufacturing in South Asia is a requisite for supplying many Japanese companies. This was the same predicament we encountered ten years ago, when we could not collaborate on key projects in the American market since we did not have a manufacturing plant in Mexico.”
At the moment, Relats is trying to establish a new relationship with Lear Corporation. This project has been negotiated with Lear Spain, and it consists of manufacturing textile sleeves for its automotive plant in Honduras. However, before establishing any commitment, Lear representatives will visit the plant to make sure Relats’ processes meet the necessary quality standards at the lowest possible price. “We work closely with OEMs to inform them of any new development we might include in our operations, assuring them that our processes are fully controlled. Furthermore, we normally visit these OEMs to make sure that the services we offer our Tier 1 clients cover the OEMs’ demands,” claims Coll. “We never invest in a new machine or process if we cannot predict the final result, or if we know the OEM will not approve these results.”