Generac's New Factory To Meet Greater Need For Flexible PowerBy Cas Biekmann | Tue, 06/29/2021 - 12:00
Q: How has demand for Generac’s power solutions evolved during the pandemic?
A: Flexibility and power backup are prominent topics in Mexico and across the world. The pandemic has posed new challenges and this has proved to be an opportunity for Generac since many people had not thought about backup energy for their home environment. It was necessary at a hospital, but not at home. The shift to home office changed this thinking. Today, many professionals require reliable and continuous electricity supply. In addition, crucial medical equipment also is now being used at home after many hospitals have found themselves saturated as a result of the pandemic. Here, too, continuous energy is essential. This situation has resulted in an increase in domestic demand for Generac's equipment outside of the commercial and industrial (C&I) segment. Our 1Q21 was successful because the Mexican market required generators powered by gas and diesel and used for various applications. The gas shortage in February that led to blackouts in northern Mexico further fostered this sense of urgency.
Q: What are Generac’s options for flexible power and what are the benefits?
A: Generac has two main product lines in the area of backup power generation. The first is based on diesel, which is the most widely used in the Mexican market. However, our other products that run on natural gas or liquefied petroleum gas (LP) are steadily growing in terms of demand. Each of these fuels has unique advantages and disadvantages. For instance, demand for gas products is growing because of their lower carbon emissions. On the other hand, diesel-based backup generation is not suitable for round-the-clock power production. In this case, gas is much more viable. February's blackouts demonstrated that the country requires more flexible options, like diesel, in terms of power production.
Q: Generac offers renewable solar with storage solutions for domestic users in the US. How has this solution developed?
A: Generac, began offering this solar-based solution to domestic users in the US in 2019. This business has been very successful, surpassing all expectations in terms of sales. In fact, the high US demand for the solution has delayed its rollout for the Mexican market. Nevertheless, we are ready to launch the product in Mexico this year. In parts of the US, such as California, solar plus storage is already well-developed in both the C&I and domestic areas. In Mexico, the only backup for solar energy is electricity from the grid. If the grid fails and the sun does not shine, there is no source of electricity. As a result, we expect a great deal of demand in Mexico for Generac's storage solution in the residential segment.
Q: What are the strategic benefits of the new MX$600 million Hidalgo manufacturing plant?
A: Our state-of-the-art manufacturing facility, located at the PLATAH industrial park in Hidalgo, boasts 35,000m2. We moved the production from three factories in Mexico City to Platah, then we now focus our operations on this new plant instead. This will allow for better efficiency and higher manufacturing capabilities. The plant will mostly provide products for the Mexican market, but we are also starting to export. At the Hidalgo plant, we are also developing specialized solutions for the global telecoms industry.
The competitive advantages in Hidalgo will benefit our logistics, allowing for fast connections with Mexico City, as well as the Bajio and the southern part of Mexico. In addition to the state of Hidalgo’s help in installing our operations at the growing PLATAH industrial park, the state boasts a young, professional, diverse and specialized workforce.
Q: How is Generac looking to focus its R&D efforts?
A: Our engineering department at PLATAH is always developing new solutions or adapting our traditional diesel solutions to new standards, which help to make products more flexible and competitive. To enhance our R&D center, we entered a partnership with the Tecnologico de Monterrey University. Mexico has great engineers with vast technical knowledge, which has been a key attraction for many companies.
Q: What goals are you hoping to obtain by the end of 2021?
A: Due to the high demand in Mexico, we are growing our manufacturing capabilities and delivering our diesel-based solutions as efficiently as we can. Given the supply and delivery challenges brought on by the pandemic, we are growing our operations to minimize the impact on our clients.
The company is also planning to introduce new technologies into the market. Generac is the world’s largest supplier of gas-based generators for residential users. In Mexico, our goal is to improve the adoption of these solutions. Moreover, we are working to expand our clean energy portfolio. Mexico is ready for energy solutions that have greater technical specifications, as well as higher flexibility and performance. Generac also offers portable solutions, which we will expand in Mexico as well. The local market has a growing need for energy and its industry is expanding constantly. Generac is completely in tune with the country’s main actors, offering flexible technological options to meet their needs. We believe deeply in Mexico’s development.
Generac Mexico is part of the Generac Power Systems group. The company provides power generators for the residential, commercial and industrial segments.