Supplier Development Secures the FutureSat, 09/01/2018 - 11:47
On track to produce 5 million vehicles a year by 2020, Mexico must develop its local supplier base, engage in product design operations and improve its infrastructure to make that growth a reality, says Franco Beltrametti, Director General of Alian Plastics.
“Mexico faces the challenge of developing its local supplier base and investing in logistics infrastructure,” he says. “A big wave is coming and we are not ready yet. OEMs such as GM are facing shortages and Tier 1s face difficulties catering to the demand from several automakers.” To weather this challenge, it is necessary for Mexican Tier 2s to evolve into Tier 1s and for Tier 3s to become Tier 2s. According to Beltrametti, this process is already starting thanks to the arrival of American, Asian and European OEMs and the resulting upturn in demand for components.
Rapid growth in any industry usually entails chaos and this was the case of the Mexican automotive market, says Beltrametti. “The 80 percent increase in vehicle sales that Mexico saw in the last decade caused turmoil in the local industry.” Alian Plastics learned to take advantage of this growth and eventually came out on top. The company used to solely provide plastic injection parts for the Mexican home appliances industry but shifted to solely producing automotive components in 2013. “We saw the potential for growth that the automotive industry offered and decided to focus all our operations on that industry,” he says.
Alian Plastics let go of its light plastic injection machines used to produce small plastic components and brought in heavier plastic injection machinery to manufacture larger parts. Beltrametti says the company chose to go for large parts as it is a market niche rarely attacked by local plastic injection companies. “We are a Tier 2 supplier that not only produces large-sized plastic components but that also does some assemblies for Tier 1s and OEMs,” he says. The company increased its sales by 90 percent between 2013 and 2017 and now caters to world-class Tier 1 suppliers, including Dräxlmaier, Faurecia, Magna and Premium Sound Solutions. Through these alliances, Alian Plastics components are used in vehicles of premium brands such as Tesla, Audi and Mercedes-Benz.
Beltrametti wants to harness the ongoing growth in demand and increase its sales 20 to 25 percent by 2020-2021. The company plans to double its plastic injection capacities to 600 ton per month from 300 ton and to grow its manufacturing area from 10,000m2 to 21,000m2. “Several Kia suppliers have shown interest in partnering with us but we are working at full capacity,” he says. “After this expansion we will be able to effectively work with them on long-term contracts.”
Ensuring the growth of the national industry is not the sole responsibility of the private sector, however, and for Beltrametti it is crucial for the private and public sectors to join efforts to develop suppliers and exploit the country’s potential. “Mexico offers many areas of opportunity to develop its automotive industry,” he says. “But, if Mexican suppliers fail to rise to the challenge, foreign companies may arrive to the country and engage in the operations local companies could be doing.”
Opening communication channels between all automotive players involved and sharing best practices is key to exploiting all possible opportunities, says Beltrametti. At the same time, investment in logistics infrastructure should be a priority for the Federal Government. “By locally manufacturing goods that would otherwise be produced in China, Europe or the US, Mexican suppliers can help clients save on logistics costs and reduce unscheduled downtime,” he says. However, Beltrametti says Mexico lacks the logistics routes and infrastructure necessary to support the production of 5 million vehicles a year.
On the R&D front, although some Mexican companies may still need technological support from European, Asian and American players to develop design and engineering capabilities, there are already several local design centers where Mexican engineers are collaborating in developing automotive technology. “Mexico is more than capable of participating in design and engineering operations to develop components for high-end vehicles,” he points out. “Delphi and Continental have opened design centers in Mexico and Zacua is already producing made-in-Mexico electric cars.”