Everardo Ávila
Managing Director
Leoni Mexico
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Insight

Weight Reduction Through Innovative Cabling

Mon, 09/01/2014 - 12:20

The automotive industry’s necessary focus on continued quality drives technological innovation right down the value chain. For Leoni, a German leader in the production of cables, cable systems, and wires, this has proven to be true. The firm focuses on pre-finished and ready- to-install systems which have been adjusted to each of the 32 sites where it operates worldwide, including three locations in Mexico: Sonora, Durango, and Chihuahua. The first two are focused on the production of wire harnesses, while the Chihuahua facility specializes in manufacturing cables. The latter is that Leoni is counting on to earn a stronger position in the American market. Located in Ciudad Cuauhtemoc, this plant began operations in 1998 with just a small warehouse but was producing cables by 1999. In the years of the financial crisis, the Chihuahua plant only had 200 employees but now it has closer to 700, after Leoni Cable invested around US$50 million over the past four years.

Leoni’s automotive cables business unit is the leading manufacturer of single-core automotive cables globally. This positioning has come of the back of the company harnessing the market’s latest trends, such as weight reduction. For example, the company is improving special conductors and finding ways to reduce the cables’ diameter. To achieve this, Leoni has been working for two years with aluminum cables for batteries that will replace the 35mm battery cable. “We are producing this aluminum cable in a 13mm size to replace existing 35mm cables, reducing the weight and the amount of materials used down to a third,” says Everardo Ávila, Managing Director of Leoni Mexico. “Another device in Leoni’s innovation catalog consists of a coaxial cable used for telematics that can be installed in GPS, cameras, and radios. With telematics becoming in increasing demand for the automotive industry, this cable allows for different options in a single component while reducing weight because fewer elements are used. Leoni is already coordinating with its suppliers to determine the specifications of materials used in conductors, with a copper-steel mix being most frequently used in the company’s cables.”

Mexico has become an important part of Leoni’s international strategy, given the growth seen in the NAFTA region. “While other emerging markets are experiencing  stable growth, the Mexican market is growing exponentially and will continue to do so for the next 20 to 25 years,” says Ávila. The production of the Cuauhtémoc plant covers 20%-25% of the North American market for cables, and should reach 30% of the market by 2016. “The situation will probably be different six years from now, and we will have invested in other regions by then. But at this moment, we see Mexico as the future,” states Ávila. Leoni is very aware of the fact that the North American market is three to four years behind the European market in terms of automotive technology. “While in Europe, all new cars have GPS, a camera, and different applications, we are just beginning to see these features becoming commonplace in the US,” says Ávila. Leoni has the advantage of knowing the European trends, and is developing the cables and the technology to suit them. This gives Leoni’s American plants the ability to pick up on European tendencies and include them in their production lines. “By doing this, customers do not have to develop new technology on their own or find a different supplier as we already have the type of cable they seek, which is likely to have been approved in Europe,” Ávila tells. Leoni works closely with its customers to develop solutions that best fit their requirements and needs, and can even design off-the-shelf cables and compounds to best suit the requirements of clients with specific needs.

Its ambition to stay ahead of market conditions is what pushed the growth of Leoni’s Mexican operations, even in the midst of the 2008 economic recession that shook the automotive industry. During this period, the company made a risky decision by investing in new technologies and equipment in the Chihuahua plant. This was done as part of a strategy to prepare for the years following the economic crisis. “We started to think about the future during the recession and began investing in technology, equipment, and talent in order to be prepared. Our idea was to be able to offer clients interesting products while our competitors were figuring out what to do once the crisis was over. We took a gamble and it paid off,” explains Ávila. As more OEMs are coming into the country, Leoni Cable is sure its business will grow. “If strong German companies such as Audi or Volkswagen have set up operations in Mexico, it is because they see that this market will stay strong for the next years,” assures Ávila. The companies coming to Mexico need suppliers to cover their needs in the region. Being a German company, Leoni is well-known by other European firms as they have worked together in other countries. In this sense, Mexico will provide new business opportunities with familiar faces. “Having the same suppliers in a new country ensures equal quality and confidence,” states Ávila.