Steady Investment to Keep Up With Growing DemandTue, 09/15/2015 - 13:00
Q: Out of the products that Bosch manufactures, which represent the highest value for Bosch in Mexico?
A: The electromechanical components often have long-term and stable high value. This is because electro mechanics have a high requirement of precision, are less affected by price erosion, and possess high material value. Furthermore, since the requirements for precision and quality are increasing around the world, expectations of product performance are rising alongside them. On the electronics side, there is high value at the moment of innovation, but that value decreases as soon as certain products go to mass market. In terms of semiconductors and PCBs, volumes are very high, with some manufacturing processes being demanding and critical from an environmental point of view. This means that plant side investments are often major and the scale of production is crucial. This fact, combined with the incredible volumes that must be produced, means that a solid amount of world demand is now produced by us and others in China to reach a scale that many other countries may not reach. Mexico’s opportunity lies in combining these base products and platforms into many customer-specific variants that are often quite high-tech. While we can produce some PCBs here, as well as importing others, it is important to finish the final product in the same location because of the high value added and the high number of variations.
Q: What steps has Bosch been taking to ensure that it can meet the increased manufacturing demand from the automotive industry?
A: The overall plan for Mexico was to invest around €460 million (US$515 million) between 2012 and 2017. Bosch tends to have major build-outs occurring at two sites at the same time - one in progress and one in the starting phase. In line with this structure, part of the investment was committed to our Toluca plant, which is now complete. Juarez is in the development stage, with San Luis Potosi up next, followed by Aguascalientes. The company’s approach is to pace our plant investments based on demand, localization, and complexity, usually giving us a stable investment level in Mexico of about US$100 million per year. This steady pace is what gives the company more confidence that it is handling these investments well. Some of the products that we supply to OEMs are of high value, so OEMs need them to be sourced locally, especially if their vehicles are exported to multiple markets. In line with this, we devised a localization plan together with the customers, helping to formulate the ideal handover steps for both imported products and locally produced products.
Q: How does Bosch approach the challenge of competing with the influx of cheap, low-quality, imported aftermarket products from Asia?
A: The aftermarket in Mexico is going through a metamorphosis. There is high demand for auto parts and workshop retail in Mexico because of the amount of old cars on the road. However, with the increased availability of new vehicles through financing, we see a growing market that will favor branded dealerships. In between these two extremes, our large chain of Bosch Car Services has a considerable opportunity to grow. Since quality is crucial for safety, Bosch will focus on training at a workshop and retail level to ensure that price and quality differences are clearly communicated to the customer. To this end we need to have shorter training sessions, and higher interaction frequency.
Q: What kind of new innovations can we expect to see from Bosch in the coming years?
A: Bosch produces a new patent every 30 minutes and we spend almost 10% of our sales revenue on R&D. Consumer- oriented, visible products become more practical and more well-known as they are used. This is not innovative in terms of technology only, but in terms of thinking harder about how to create products’ features that have immediately clear and visible benefits. Energy and energy conversion is another subject in which we can innovate well and the amount of ideas we are developing in this field is large. We must use less, store more, and regain more energy in order to increase customer value while decreasing environmental impact. Within the automotive sector, we are working on technology that will stop a motor when going downhill. We call this sailing, which is a way of saving considerable amounts of energy, and is similar to our start-stop system that many are now experiencing in their cars. These innovations are just a couple of our many examples that show how Bosch can save money for the user, while making mobility more environmentally friendly.