Transforming a Company According to Market TrendsBy Alejandro Salas | Thu, 01/23/2020 - 16:18
Q: Now that DuPont is again a standalone entity, what is the company’s strategy to maintain its leadership in the specialty materials market?
A: DuPont has successfully completed its separation from Dow and Corteva Agriscience and is now the main supplier of innovation in specialized solutions in material science. We deliver an added value to clients through our four business divisions: transportation and industrial, security and construction, nutrition and biosciences, and electronics and imaging. Specifically, the transportation and industrial division covers car transportation, advanced mobility, healthcare, end-consumer products and home appliances. For automotive applications, we have structural adhesives and advanced lubricants and greases that support special temperatures or friction. Our Kalrez and Vespel division offers polymer solutions and we also have seals with high chemical and thermic resistance.
We reviewed our portfolio and even though adhesives and lubricants came from a shared portfolio originally from Dow, now they belong to DuPont. This segment is focused on the automotive industry with advanced and specialized solutions. We are supplying OEMs with structural adhesives to build the car structure. We also have a glass-bonding adhesive for attaching the windshield to the body and brake fluid, lubricants and greases that go directly to the OEMs. Furthermore, we help these companies design the components that go into the car, before they are integrated.
Q: What are the main trends impacting DuPont’s technology development processes?
A: Lightweighting, sustainability and comfort remain macro trends for combustion, hybrid and electric cars. We have a special program called AHEAD™ (Accelerating Hybrid-Electric Autonomous Driving) to address these challenges. Today, 30 percent of our global profit comes from AHEAD’s technology developments. This rate is similar in Mexico, since every vehicle in the US carries at least one auto part produced in Mexico. Regarding EVs, battery cooling is one of the biggest challenges. We are tackling it through advanced polymers for cooling battery lines and specialty adhesives to improve connectivity and battery performance.
For both combustion and electric vehicles, temperature, lightweighting and safety are important. Gasoline cars rely on four-cylinder or even three-cylinder engines that require adequate temperature management and companies need materials to handle that. Regarding weight, an average car today weighs around 1.5 to 1.7 tons, of which 500kg are plastic. Companies are increasingly looking at plastic and depending on its composition and how it is bonded with the car’s structure, plastic can be even more resistant to impact and tension than metal. Safety, meanwhile, is embedded in DuPont’s core values. Our materials help to mitigate the consequences of car accidents and increase passenger safety.
Q: What will be Mexico’s role in increasing DuPont’s profit margins and how will your automotive operations contribute to further growth?
A: Mexico has 26 OEM plants, 11 of them built in the last five years. This has a multiplier effect for the local industry despite the global 5 percent contraction in manufacturing operations. Due to its supplier base and location, Mexico’s automotive industry remains steady. The country keeps production levels at around 4 million units and the auto parts business grew 6 percent in June 2019 compared to 2018. We see a promising future for the sector even though the production goal of 5 million units has been delayed to 2022. Opportunities remain, investments keep coming and as new OEMs arrive to the country, so do their suppliers.
The entire industry needs to adapt. Ford stopped operations at its Cuautitlan plant for renovations to produce around 100,000 EVs in the next few years. This opens an opportunity for our specialized solutions to improve resource management. The industry needs to reduce total production costs, which requires improvements in processes, manufacturing and logistics. We are working with our clients to find those savings.
Q: How can Mexico contribute to DuPont’s technology development process?
A: Mexico has moved from manufacturing to engineering and technology development. OEMs have engineering centers in Toluca, Mexico City and Puebla where they design auto parts, systems or subsystems. Global OEMs and suppliers are starting to develop technology locally, as well. For example, we design engine air ducts for US OEMs.
The results of Mexico’s transformation are reflected in government data, which show that 110,000 engineers graduate ever year, more than in Japan, Germany or Italy. We have young and well-prepared people for R&D. It is true that traditional engineering centers remain in Japan, Germany and the US, but Mexico has the definite makings of a design country and for DuPont, this is very promising. We have R&D teams all over the world. In Mexico, we have teams in Toluca and Mexico City working on a joint US-Mexico-Italy venture to develop powertrain components.
Q: Now that USMCA is in process of being ratified, how have conditions improved for OEMs and suppliers?
A: Uncertainty has diminished. Even though USMCA has been ratified only in Mexico, the industry is confident that the agreement will eventually be ratified since the modifications are beneficial for all three countries. USMCA will bring opportunities to Mexico. The current feeling of uncertainty relates to the US-China trade war. But even in the worst scenario, Mexico will emerge as the biggest winner. According to the American Chamber of Commerce, during 1H19 Mexico surpassed Canada and China as the US’ biggest trade partner regardless of any political complexities. Our trade relationship will thrive through exports and mutual input needs. In any scenario, we will be here to support our trade partners to maintain our 10-year double-digit growth rate.
Q: What is DuPont’s priority for the automotive industry?
A: The AHEAD™ program is essential as it represents our efforts toward the future of mobility. We are directing many financial and human resources toward R&D in these areas, so we can provide for this trend’s needs.
Eventually, gasoline and diesel cars will disappear. This transformation will reshape the industry and players need to adjust. When transforming our business model to participate in the solutions of the future, we are certain powertrains will no longer be necessary since electric cells, different transmissions and sensors are coming. A washing machine has an average of 11 sensors, a car has around 350 sensors and an autonomous vehicle will require at least 3,000 sensors. Comfort is also key. Today, you can do more in your car than what you could in your office since there is an entire comfort and safety network to support you. These trends will continue as the industry aims for a lighter, more comfortable and more efficient car. It is a matter of sustainability and lower emissions. AHEAD’s initiative is addressing these trends at the global level. We are working with Renault on advanced mobility solutions and we participated in transforming London’s black cabs into hybrid vehicles.