Supplier Evolves, Now Caters to Own Manufacturing NeedsSat, 09/01/2018 - 10:09
Q: How important is Queretaro to Brose’s global operations?
A: Brose has achieved exponential growth in Mexico overall but especially in Queretaro. Our operations in the country outsell the company’s plants in Germany and represent between 10 and 12 percent of Brose’s global operations. This has prompted the company to invest €170 million (US$210.9 million) in a new plant located in the Aerotech Industrial Park in Queretaro that will focus on seat-frame manufacturing.
Q: What challenges and opportunities does greater automation bring to Mexican labor?
A: Automotive components and manufacturing processes require increasing amounts of advanced technology, which means relying on human labor alone is no longer possible. While job creation may be harmed in the short term because of this, there is an area of opportunity for local labor. Technicians and operators will still be needed to operate even highly automated processes but they will be forced to gain skills that meet the needs of the automotive industry.
Q: Why is staff turnover so challenging in the automotive industry?
A: The automotive industry is highly competitive but does not offer the best salaries. Compared to industries such as pharma or food and beverages, automotive companies have smaller profit margins and less leeway to offer higher paychecks. At the same time, it is difficult for automotive companies to hire people coming from other industries due to the training they require to work effectively in the sector. As a result, people tend to leave their job when offered small salary increases because they see that as a path to growth within the industry.
Brose trusts and empowers its workers. We created an internal Quality University where operators can receive training in quality procedures, gain certifications and reach better salaries. Additionally, our Queretaro – El Marqués plant offers a world-class lunch service for employees and a well-equipped gym where workers can exercise. Brose’s staff turnover rate was close to 42 percent annually in 2014 but after implementing labor-oriented strategies we reduced that to 14.4 percent in 2017. This number is even below Queretaro’s turnover average of 25 percent.
Q: What challenges does a German supplier such as Brose face when approaching US or Japanese companies?
A: Brose is well-integrated with US companies and we are leaders among German companies. However, working with Asian companies can be more difficult because they usually prefer to have suppliers from their home country. Even so, Brose has increased its collaboration with Asian automakers operating in Mexico. We now supply Honda and Nissan with fifth-door liftgates produced in Queretaro. We also have 12 manufacturing plants in China and continue to invest there to boost our position in the Asian market.
Q: How easily can local manufacturing suppliers integrate into Brose’s supply chain?
A: Most of our resources come from Germany, the US and China. However, we have an ongoing strategy to find suppliers around the world and bring them to where our operations are. Brose has managed to attract several Italian and German suppliers that want to supply Brose from Queretaro.
One of the main challenges that Brose has faced in Mexico is finding local suppliers. Technology complexity is constantly growing but the supplier base has not developed at the same pace, which is why we must rely on foreign production. There are some suppliers that we can and should develop, but others lack the necessary technology to participate in the industry. Die production, in particular, is a gap that the country must fill. We need to bring heavy die-casting parts from Italy and Germany because they are not produced locally. If this technology could be sourced locally, Brose could gain more from its investments in Mexico.