Ignacio García Albarrán
Vice President Mexico & Central America and Director General Mexico
Cummins
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View from the Top

Aligning Engine Capabilities with Industry Needs

Mon, 10/21/2013 - 13:37

Q: How is the Latin American division of Cummins contributing to the global objectives of the group?

A: Cummins is divided into four business units: engines, power generation, components such as filtration systems, and distribution. In order to strengthen our service we are positioned in strategic regions providing solutions to our clients. Our service network in Mexico and Central America is composed of 6,000 employees, five manufacturing plants and two distribution centers. Our distribution network is strategically positioned to service the entire Mexican and Central American region. This year’s sales in Mexico will reach around US$800 million, and we are also planning to increase this to US$1.1 billion in the coming three years. Cummins is currently purchasing US$700 million locally, of which US$400 million is exported to the US, and the remainder is used in our national plants. Most of our purchasing growth will come from forgings, filtration, raw material, electrical harnesses, castings, and products relating to the treatment of the engine’s exhaust system.

Q: What are the main strengths that enabled the company to become a national leader in engines and power equipment?

A: Cummins entered Mexico 50 years ago through a partnership with the Mexican-owned company DINA, and was originally established with a view to serving the heavy duty truck market. However, our product offering and technology leadership allowed us to serve other markets such as mid-range trucks, buses and off-road vehicles, which are often required in mining. Our ISX and ISM products are the most widely used products in the heavy duty truck market, and so far in 2013 we have proved to have a strong market share of 88%. The ISC and ISB motors that Cummins has developed have a 38% share of the midrange market; our engines have a 12% share of the urban bus market; and our power generators have a 60% market share. Today, we believe our technology will allow us to be a leader in natural gas engines for buses in the city and power generators in co-generation, providing superior economic alternatives with improved emission controls. Natural gas will be a distinctive strength that will allow us to maintain our leadership in the different segments of the market.

The Cummins business strategy is based on four principles: first, collaboration with equipment providers, with whom we work as one team so as to guarantee the greatest efficiency in the units; second, ensuring the supply of the required inventory and personnel directly to the mine; third, providing training sessions to the clients that require our equipment but not our services; and fourth, supporting our clients with three rebuild centers located in Merida, Hermosillo and Denver, at which we guarantee immediate repair.

Q: How are you collaborating with your equipment providers to deliver the final product as one reliable unit?

A: We work with our equipment providers to align Cummins capabilities with mining needs, building in-house technical capacity to deliver customized, mine-specific solutions and services no matter the hour, weather or location. One of Cummins’s strongest commercial allies is Komatsu; together we created a company called Cummins-Komatsu, in which Komatsu uses specific Cummins technology, assembles it, and puts the original Komatsu plate on it, as if it was built by them. Cummins does the same thing. We have other strategic commercial alliances with companies such as Ingersoll Rand, Atlas Copco, Agrekko, Liebherr, Belaz, Hitachi, and even Caterpillar, as well as with some Terex and Bucyrus equipment, mostly shovels. Most of these companies use only our engines, and through them we reach the country’s largest mining companies, such as Grupo Mexico, Goldcorp, Minera Frisco, and Peñoles.

Q: Cummins’s motto is ‘The right technology for our clients’. How is Cummins satisfying the exact needs of its clients while also contributing to their profitability?

A: Among many other applications, today Cummins provides solutions on shovels, haul trucks, front loaders, drills, and excavators. The engines provided for mining are designed in our design centers in England and in Columbus, Indiana. We design our engines according to the work cycle of our clients. Our people perform on-site analyses to understand the mine conditions, such as the surface and terrain to determine the levels of vibration required by the unit, and based on this they propose the right equipment, in some cases meaning equipment with lower yet sufficient horsepower and lower costs. Close collaboration with the truck constructors is important as we test the equipment at our clients’ sites, determining case by case the right torque, power or rpm for the equipment. Filter technology is another area of cost saving, and we design and manufacture the highest quality filtration systems that prevent any particles from entering the engine, as well as providing a quality maintenance service that extends each filter’s life.

Q: How is Cummins’ regional structure supporting its reputation as a provider of reliable and dependable products?

A: Having a regional structure allows us to make decisions about our resources for the whole region. In the case of our Mexican and Central American region, we have been able to provide the best service to mines in the states of Guerrero, Zacatecas and San Luis Potosi, as well as in Panama. Our clients know they can depend on Cummins whenever their machinery breaks down, or for product maintenance. Our people are also key to providing such a reliable and dependable service, and for that reason Cummins’ human resources department provides regular professional and technical training sessions for employees.

Q: What is the company’s strategy to improving the quality of life of its people and community?

A: Cummins has a foundation in Mexico that last year carried out 28,000 volunteer hours in nonprofit social programs, which included around 500 community activities. There are three areas of focus for the foundation: education, environment, and social justice. According to these criteria, and by number of projects, we make an annual investment in these projects. One of the most interesting projects is providing job opportunities to around 200 disabled people. Within this group there are six companies making products such as uniforms, promotional products and providing cleaning and gardening services, for example. All profits go to the Cummins foundation to support its activities. The Foundation is called Cummins Philanthropic Enterprises (CEFI), and it employs the people that work for it directly.

As for the environment, we have three main projects where we have made the biggest impact. The first is the creation of ‘Eco-Clubs’, which are educational groups in schools in which we teach children and their parents how to recycle, separate organic from inorganic waste, use less energy, and so on. Secondly, we have entered into an agreement with the University of San Luis Potosi to create a natural water filter that will clean one of the city’s main lakes, in the process hopefully creating a technology that will be replicable abroad. Finally, Cummins has acquired some land in the Sierra Gorda of Queretaro for preservation purposes, and to measure the effect of carbon dioxide emissions. Cummins is financing all three projects as a part of its commitment to the environment.