Michael von Keitz
Managing Director of Industrial Solutions
ThyssenKrupp System Engineering
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View from the Top

Targeting the Middle to Double Size

Thu, 09/01/2016 - 22:15

Q: How can ThyssenKrupp help companies gain a stronger presence in the Mexican automotive market?

A: ThyssenKrupp System Engineering provides customized engineering automation solutions for automotive OEMs, Tier 1 and Tier 2 companies. The group decided to establish a service office in the state of Queretaro in 1999 to locally manage projects and avoid the cost of specialists and goods coming from Germany. We provide services to the new Ford plants in the states of Chihuahua and Guanajuato and for FCA’s plants in Toluca in the State of Mexico and Saltillo, Coahuila. We also work with GM, Audi and Volkswagen.

We have a large number of clients but we hope to double our size in Mexico. We need to make changes to increase our competitiveness. When a new OEM shows interest in the country, we provide support and insight on the local market. However, most of the support comes from Germany and the US. OEMs, such as Audi, Nissan or BMW tend to make their purchase decisions overseas so we only provide local support for supply selection.

The extent of our operations in Mexico might seem limited but we position ourselves by taking on assignments with teams from different companies in the US and Germany. We help them acquire local projects and provide intelligence on possible new business opportunities.

Q: How is ThyssenKrupp System Engineering targeting its potential customers and updating its services to appeal to all companies in the region?

A: ThyssenKrupp is targeting medium-sized enterprises, which we believe are being neglected by our competitors. Bigger companies have no interest in participating with smaller businesses, while our smaller competitors lack the financial ability to attend to this particular market segment. We are approaching manufacturing businesses, especially in engine assembly, gearboxes and axles, to supply Tier 1 companies with the entire axle assembly line. We have contributed to shared assembly projects with Tier 1 companies between Mexico, the US and Germany. Hence our focus on OEMs, including heavy equipment manufacturers such as John Deere.

We offer international project management and broad experience handling multinational ventures. Our comprehensive knowledge of the local market can provide companies with strategies to follow. Our direct working relationship with robotic suppliers such as KUKA, ABB and all other major suppliers offers additional benefits. For pneumatics, we work with FESTO and SMC. Since we are a global company, we have worldwide purchasing agreements with every major equipment company. As few suppliers are based in Mexico our working relationship is limited. We hope that more suppliers will manufacture their products locally in the future, to improve prices and customer service through competition.

Q: How has ThyssenKrupp System Engineering overcome challenges in local industry?

A: Mexico offers many opportunities but there are several hurdles to overcome. For ThyssenKrupp, one of the most complicated hurdles is companies finding the necessary funds to finance projects. The exchange rate will probably create challenges in 2017 and will force companies to increase their costs. Our suppliers’ materials and the components of our equipment are produced outside Mexico and priced in dollars, directly affecting our costs and prices.

While automotive is growing promisingly in the Bajio region, the industry ought to expand to new locations to avoid heavily concentrating in one corridor. OEMs must take advantage of business opportunities in different parts of the country. The Mexican market will continue to experience moderate growth and ThyssenKrupp wants to take advantage of favorable conditions to double its sales figures in the next three or four years. The company’s focus on being more competitive and working more with subcontractors is a way of lowering ThyssenKrupp’s costs. We are trying to grow internally with the best staff.