Image credits: Iberdrola
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News Article

Take Control of Costs to Maximize Profits in Manufacturing

By Cas Biekmann | Wed, 11/11/2020 - 16:26

Despite numerous COVID-19 setbacks, Mexico’s automotive sector has fantastic long-term potential. Nevertheless, to foster competitiveness during tough times, Mexico needs to be able to rely on its supply chain. Quality clean energy is an absolute must in this regard.

“Mexico has recently surpassed South Korea as the sixth-largest vehicle producer in the world,” Oscar Silva, Partner Leader of the Global Strategy Group at KPMG, told Mexico Automotive Review (MAR). He identifies even more room for growth, and points out that many companies are already accelerating their plans to relocate their operations to Mexico. “Less than 5 percent of vehicle production will take place in Europe in the long term. Mexico has also gained momentum due to the status of the US-China trade relationship.”

Issues remain, however. Manufacturing dropped steeply during the first months of the lockdown, and as a consequence, future investments became more uncertain and cash flow has been strained. By keeping a clear head and identifying where improvements can be made, companies can detect and move to resolve the issues they face, said Manuel Nieblas, Manufacturing Industry Leader Partner at Deloitte, in a MAR interview: “Crises are opportunities. We are living the worst crisis in economic history. These processes can be complicated but this moment provides the opportunity to think about what companies are doing right and where they can improve.”

 

ENSURE RELIABILITY, MAXIMIZE PROFITS
For an industry that uses great amounts of energy such as the automotive sector, electricity supply is an opportunity area for improvements. This is where companies like energy giant Iberdrola come in, providing ideal solutions, says Vicente Aparicio, Commercial Director Mexico. “This is the role that Iberdrola aims to play in Mexico: to provide our clients with low-cost, reliable energy so that they can offer fair prices inside and outside of the country. During the COVID-19 pandemic, this has become even more relevant as companies are looking to save on costs more than ever before.”

Reliability and costs are essential, along with other related factors. KPMG’s 21st consecutive Global Automotive Executive Survey shows that one trend that is dominating the discussion among automotive decision-makers is sustainability. Forty-two percent of executives and consumers believe that sustainability will be a crucial factor that will set companies apart from their competition. This is a trend that every manufacturer will need to keep in mind for the future and partnering with a company like Iberdrola can help pave the path toward sustainability. “Renewable energy in particular is a strong part of the company’s DNA. We are the biggest developer of wind energy on a global level and we want to expand clean energy’s footprint even further. Iberdrola operates numerous renewable power plants in Mexico and seeks to expand on this front because companies in the automotive sector increasingly are demanding sustainable energy to meet their own commitments,” Aparicio explains.

Given the uniqueness of each company, the solutions they employ should also be tailored to maximize profits. “Many energy users in Mexico are tied to the usual tariff structure. Iberdrola breaks with this paradigm and works to come up with a measured solution,” says Aparicio. He adds that Iberdrola takes pride in providing added value for its clients, depending on the energy they require. This could be 100 percent renewable energy if needed, or even a solar installation on the client’s rooftop through the company’s Smart Solar solution, which has the benefit of requiring zero investment from the client. In addition, Iberdrola positions itself as an ally in other areas too. For example, for Mexico’s burgeoning electric and hybrid vehicle market, the company is playing an important role in the implementation of recharging stations. For more information on what Iberdrola can offer the industry, click here.

The data used in this article was sourced from:  
MAR, Iberdrola, KPMG
Photo by:   Iberdrola
Cas Biekmann Cas Biekmann Journalist and Industry Analyst