Tier 1 Experience Meets Tier 2 AmbitionThu, 09/01/2016 - 14:43
Q: How important is the Mexican market for Tachi-S’ global operations?
A: Our Mexican operations are the company’s largest in the world in production volumes and human capital. The Mexican branch’s group participation far exceeds even China, making us Latin America’s benchmark. Since 2014, Tachi-S México’s production has grown over 30 percent as a Tier 1 and Tier 2 supplier. Within the same time span, the company opened two additional plants in Mexico to cover demand. Our growth is contingent on our clients’ development, which we almost always parallel.
Q: To what extent has the company’s participation with OEMs grown?
A: We are now Nissan Mexicana’s main seat provider, supplying close to 90 percent of all three of its plants. Setex Automotive Mexico, one of Tachi-S’ subsidiaries, covers all of Honda’s requirements in Celaya and Guadalajara. Together, these companies hold 25 percent of Mexico’s light vehicle market share. We believe that Toyota, Daimler and Mazda will open up an array of new opportunities but we must move promptly. Just-in-time operations require seating suppliers to neighbor OEM manufacturing plants and create long-term relationships from the day of their establishment. Under those circumstances, suppliers are normally brought to the OEM’s host country from their country of origin unless a new business platform is created in the market. Therefore, Tier 2 business opportunities are more common. Joint ventures to meet OEM’s demand are also a possibility.
Q: What are Tachi-S’ expectations regarding the premium and luxury market in light of Mercedes-Benz and Infiniti entering Aguascalientes?
A: We are certified to supply premium brands, allowing us to work with Infiniti. As Mercedes-Benz will soon enter the market, we will work to secure a contract with them. Given their product diversity, multiple elements have to be factored in including customization and Tachi-S will be expected to obtain new certifications. Standard vehicle seating has 30 different variations, while premium brands can reach 300. Our mechanisms and processes must be up to par to ensure premium brands trust us to be their suppliers. Automation is the best way to secure compliance. We are forthright about offering this in our operations. Metal handling and seat filling processes have high automation levels in contrast with assembling and covers operations but we incorporate automation where possible.
Q: How much has Tachi-S’ Tier 2 segment grown in recent years?
A: New projects as indirect suppliers are in the pipeline for 2017 and 2018. Tachi-S is evaluating the viability of alliances with new Tier 1 suppliers to meet OEMs’ demand. Although we may not work with some OEMs in their Mexican operations, we have business with them abroad, which increases the probability of us supplying them locally.
Considering Tachi-S’ multiple operations in America including Brazil and the US, we saw a business opportunity to expand our Tier 2 business area, which grew 100 percent in two years. The large number of companies in our group made this expansion much easier although we also supply companies outside the circle. Our extensive understanding of the industry’s requirements as Tier 1 and Tier 2 suppliers gives us an edge on competition. We project 25 percent growth with external companies over the next three years as capital for plant expansions is secured.