This is an excerpt from the 2019 edition of Mexico Automotive Review. Don’t miss the opportunity to get the latest insights from key automotive players. Register now to get your tickets for Mexico Automotive Summit on October 2, 2019!
Alejandro Veraza is the Managing Country Director of TI Fluid Systems, a UK-US Tier 1 supplier of fuel, brake and powertrain components. He also presides the Automotive Cluster of San Luis Potosi, a civil association that represents the interests of automotive companies based in San Luis Potosi.
“Location, location, location” is more than just a catchphrase used by realtors to sell spaces in industrial parks. While remaining close to OEMs is important to keep logistics costs at bay, when this is coupled with quality and product innovation, it is easier to compete as a world-class Tier 1. “A good plant location offers versatility, which is key to remaining competitive and to cater to client demands,” says Alejandro Veraza, Managing Country Director for TI Fluid Systems.
A supplier of fuel, brake and powertrain components, TI Fluid Systems’ has a two-pronged localization strategy. The company is present in the most important automotive hubs worldwide, which according to Veraza allows it to take advantage of the new advances in each market. “Our operations are more or less equally divided between North America, Asia and Europe, so new advances in each market benefit the company at a global level,” he says. At the same time, the location of TI Fluid Systems’ ten Mexico plants plays a key role in the company’s strategy to differentiate from its competitors. “Our manufacturing facilities produce components for fluid-carrying systems in Ciudad Reynosa, right next to the US border, as well as in automotive hubs Monterrey, Puebla, San Luis Potosi and Tultitlan,” he says.
TI Fluid Systems’ plants in Mexico support local and international demand for fluid-carrying systems and components. The company ships part of its production for exports and has started supplying BMW’s and Daimler’s new facilities in San Luis Potosi and Aguascalientes, respectively. Eventually, it plans to enter Toyota’s supply chain in Mexico, although that goal would be handled by TI Fluid Systems’ plants in the US.
According to Veraza, TI Fluid Systems México is on track to achieve 5 percent annual growth thanks to new production projects at the Tultitlan and San Luis Potosi plants. This, however, will depend directly on OEM component demand. “We expect that supporting the newly arrived OEMs will help us reach our growth expectations a few months after their Mexico operations kick off,” says Veraza.
While remaining optimistic, Veraza also acknowledges the challenges in the US and Mexican markets that could affect the company’s growth. “Automotive plants in the US, including some of GM’s assembly operations, are closing while other clients are cutting back their production volumes. The launch of new projects in that market have also been delayed,” he says. These results mirror those in Mexico, where some carmakers reduced their vehicle output in 1H19. “This has had a direct impact on TI Automotive and the rest of the supply chain and will also impact our performance in 2H19,” says Veraza. Nevertheless, TI Automotive has found a rich opportunity in the exports market. According to Veraza, TI Fluid Systems’ component exports have enjoyed significant increases since 2016. “As long as we can continue to produce and export components, we will balance our dependence on the Mexican market,” he says.
At Mexico Automotive Summit 2019, Alejandro Veraza will represent the Automotive Cluster of San Luis Potosi during the Collaborative Efforts for Industrial Growth panel, which focuses on the efforts of automotive clusters to continue attracting investments to their regions and developing the capacities of their member-companies. Register now to find out more.