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The automotive sector is adapting to one challenge after another. Companies in Mexico first secured their operations thus preventing any risks to their employees. Then, af ter a historic hiccup in Mexican production, operations slowly resumed only to face a shortage of critical supplies, from semiconductors to plastic injection parts. Now, companies in Nor th America are facing logistics constraints when bringing components from Asia as container prices have skyrocketed. The immediate challenges, however, do not faze OEMs from their needed transformation from car manufacturers to mobility providers. Connected, autonomous, shared and electric vehicles are strongly influencing manufacturing operations, driving material technology innovations and strengthening Industry 4.0 capabilities. Get to know the shortcomings and opportunities in the sector directly from those shaping its future at Mexico Automotive Summit Echo.
4
C on f e r ence I m p act How would you rate the quality of the conference program and speakers?
111
companies
196
Breakdown by job title
6%
Greatly exceeds expectations 39% Exceeds expectations 50% Meets expectations 6% Below expectations
conference participants
55
speakers 4%
7
sponsors
Conference social media impact 4,949 direct impressions during MBF
3,050
visitors to the conference website
Pre-conference social media impact 10,494 direct pre-conference LinkedIn impressions
2.97% click through rate during MBF
3.70% pre-conference click through rate
5.82% conference engagement rate
7.30% pre-conference engagement rate
President/Board member/Partner 14% CEO/CFO/COO/ Director General/ Country Manager 19% VP/Director 29% Plant Manager/ Manager 2% Purchasing Manager/Director 9% Sales Manager / Sales Director 14% Engineer/Analyst 5% Coordinator 4% Associate
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participants
How would you rate the quality of the matchmaking on Brella?
Matchmaking intentions
957
matchmaking communications
95
1:1 meetings conducted
17% Exceeds expectations 67% Meets expectations 17% Below expectations
773 Trading Total
1,414
31 Recruitment 186 Investment
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C om p an y Attendance •
3C Metrology SA de CV
•
Jaguar Land Rover
•
ABB
•
KASO & ASOCIADOS SA DE CV
•
ALD Automotive
•
Kia Mexico
•
ALT Technologies
•
Kikoya
•
AMDA
•
KPMG
•
American Industries
•
Lavartex
•
AMN International
•
LeasePlan Mexico
•
Arbomex
•
MAN Truck & Bus México
•
ARIDRA
•
MAZDA MEXICO
•
Auto Cluster
•
Mercado Libre México
•
Autocluster del Estado de Chihuahua
•
Mexicircutor SA de CV
•
Automated Logistics System, LLC
•
Mexico Business
•
Automotive Cluster of San Luis Potosí
•
MexicoView
•
AWS
•
Michelin
•
BCW
•
Minsait
•
BHTC México S.A. de C.V.
•
Mitsubishi Motors
•
Bosch Mexico
•
MOLD SERVICE
•
CANACINTRA PUEBLA
•
MUBEA
•
Circutor
•
Nemak
•
Clauteodmex
•
Netcon
•
CLAUZ
•
Neuron Business Group
•
Cluster Automotriz de Nuevo León AC
•
Newlink México
•
Clúster Automotriz Zona Centro
•
Nissan Mexicana
•
Clusther Automotiz Ags
•
PELT
•
COFOCE
•
PPG
•
Creative Foam de México, S. de R.L. de C.V.
•
Qualcomm
•
Cuadrante
•
Rassini
•
Daimler
•
•
DHLSC
•
Distribuidores del Istmo
•
RER Energy Group
•
DuPont Latin America
•
Robert Bosch Mexico
•
E-DRIVE
•
Rockwell Automation
•
Enel Energia
•
SAMES KREMLIN
•
Evonik Industries de Mexico SA de CV
•
SAP
•
EWS LTD MX
•
Scania
Red Nacional de Clusters de la Industria Automotriz, A.C.
•
Faurecia
•
Secretaría de Desarrollo Económico de Tamaulipas
•
Financiera Bepensa
•
SKF Mexico
•
FlowSmart
•
Sonavox Mexico
•
Ford Motor Company
•
Spencer Stuart
•
Forefront Power
•
State Government of Baja California
•
Frost & Sullivan
•
Stellantis
•
FUMEC
•
TASSM
•
GED
•
Tecnológico de Monterrey
•
General Motors
•
TIBA MEXICO
•
GML
•
Top Management
•
Gobierno de Ontario, Embajada
•
Toyota
de Canadá en México
•
Traffilog
•
GOBIERNO DEL ESTADO DE PUEBLA
•
UNADM
•
Helmut Fischer
•
Universal Robots
•
Hinduja Tech
•
Vehículo Emblema
•
Hino Motors Sales Mexico
•
Vera & Asociados
•
HK Strategies
•
Volvo
•
Honda de Mexico
•
Von Wobeser y Sierra
•
Iberdrola México
•
Wallenius Wilhelmsen Ocean
•
Industria Nacional de Autopartes AC
•
Warren Automotive de Mexico
•
Infor
•
Yanfeng México
•
Informe Confidencial
6
P r og r am D ay 1
09:00
MEXICO’S AUTOMOTIVE INDUSTRY INVESTMENT OPPORTUNITIES OUTLOOK
Speaker: Iker Jiménez, Director General of Impulso Económico Global 09:30
THE FOUNDATIONS OF THE AUTOMOTIVE INDUSTRY OF THE FUTURE
Moderator: Alejandro Salas, Managing Editor at Mexico Business Panelists: Manuel Montoya, President of the National Automotive Cluster Network Osvaldo Belmont, Technical Director of AMIA Alberto Bustamante, Director of INA 10:30
GLOBAL VEHICLE DEMAND OUTLOOK AND SUPPLY CHAIN RESILIENCY
Speaker: Guido Vildozo, Automotive Vice President LATAM of IHS Markit 12:00
MEXICO’S GREEN VEHICLES MANUFACTURING POTENTIAL
Moderator: Elisa Crespo, Executive President at Automotive Cluster of the State of Mexico Panelists: Elias Massri, CEO of Giant Motors Latinoamérica Nazareth Black, CEO of Zacua Mexico Mónica Samudio, Country Managing Director of Circutor Marcelo Ortiz, Global Business Development Director of Nemak Oswaldo Cacheux, Planning Director of Hino Motors Sales México 13:15
TOWARD A MORE SUSTAINABLE TRANSPORTATION: GREEN HEAVY VEHICLES
Moderator: Miguel Elizalde, President of ANPACT Panelists: Gilberto Ramírez, Director of Strategic Planning & Business Development at Volvo Trucks & Mack Truck Raúl Rodríguez, Business Transformation Solutions Director of Scania Mexico Jesus Gomez, Director of Market Development and Product Portfolio at Daimler Trucks Mexico
15:00
TELEMATICS & THE FUTURE OF SMART FLEET MANAGEMENT
Moderator: Israel Escutia, Director General of Invarat México Panelists: Fernando Ardura, Chief Business Officer of Traffilog Marco Lizarde, Business Unit DHL Consultant at DHL Kent Bjertrup, Regional Director - Latin America of ALD Automotive Mauricio Medina, CEO of TIP Mexico 16:00
TECHNOLOGY INFRASTRUCTURE FOR VEHICLE SALES
Moderator: Guillermo Rosales, Deputy General Director at AMDA Panelists: Regina Granados, CEO of LeasePlan Raul Peñafiel, Director General of Jaguar Land Rover México Jorge Vallejo, President & CEO of Mitsubishi Motors de México Miguel Barbeyto, President of Mazda
7
PR O G R A M D AY 2
09:00
TURNING POINT FOR THE AUTOMOTIVE SECTOR
Speaker: Edgar Estrada, Director of Volkswagen Mexico 09:30
NEW INVESTMENTS CONTINUE TO LAND IN THE COUNTRY
Moderator: Florian Hanft, General Manager of Sonavox Mexico Panelists: Lorena Isla, LATAM Director of Frost & Sullivan Paulina Gonzalez, Monterrey Director of American Industries Francisco García, Director General of NETCON 10:15
REINFORCING NORTH AMERICA SUPPLY CHAIN
Moderator: Mónica Doger, President of the Automotive Cluster Puelba & Tlaxcala Panelists: Ruben Lostal, Location Manager of MUBEA Martín Toscano, President of Evonik Víctor Galvan, Senior Manager at KPMG Cristobal Magallanes, Automotive Sales Director of SKF 12:00
MATERIAL TECHNOLOGY: ADAPTING TO INDUSTRY NEEDS
Moderator: Luis González, President at Automotive Cluster SLP Panelists: Juan José Zaragoza, President LATAM of DuPont Adriana Macouzet, Vice President Latin America and General Manager of PPG Pierre-Louis Dubourdea, President and CEO of Central America and Mexico at Michelin Elvia Bedolla, Plant Manager at LAVARTEX 13:00
MEXICO, A LAND FOR SUPPLY CHAIN INNOVATION
Moderator: Carlos Canseco, Director of the Queretaro Logistics Cluster Panelists: Karla Góngora, R&D Mexico Director of Faurecia Eduardo Watty, Sales Vice President Mobility Solutions of Bosch Mexico Alejandro Rojo, Director of Tecnológico de Monterrey’s Automotive Mechatronics Research Center René Antaño, Science Director at CIDETEQ 15:00
SEMICONDUCTORS AND VEHICLE CONNECTIVITY
Moderator: Ricardo Anaya, Product Manager at Qualcomm 15:30
NEW INVESTMENTS CONTINUE TO LAND IN THE COUNTRY
Moderator: Sergio Bautista, Robotics Local Business Unit Manager of ABB Panelists: José Riveró, Country Manager of Infor Javier Vallejo, Senior Manager of Architect Solutions at AWS Abraham Sosa, Director of Global Accounts in Latin America at Universal Robots. 16:30
SUPPLIERS AND OEMS, PARTNERS IN REACHING CARBON NEUTRALITY
Moderator: Luis Vera, Managing Partner at Vera & Asociados Panelists: Pablo Rivero, Country Manager of Fore Front Power Ana Núñez, Digital Supply Chain Hub Lead of SAP América Latina
8
C on f e r ence H ighlights ELECTRIFICATION OF THE AUTOMOTIVE SECTOR IS A PRIORITY: SRE The automotive sector has taken center
up since the former North American Free
stage in the transition to clean energy
Trade Agreement (NAFTA).”
a s b o t h c a r m a ke r s a n d g ove r n m e n t institutions work to reduce its carbon
To boost this sector, SRE and the Ministry
footprint. However, achieving this goal
of Economy have created a strategy for
does not depend on the efforts of a few
th e a uto m otive se c to r with th e g o a l
but on all players in the ecosystem, said
of “electrif ying transpor t,” Almícar
Iker Almícar Jiménez Martínez, General
stressed. With the suppor t of the US ,
Director of Global Economic Impulse at
h e adde d , th ese age ncies will create
the Ministry of Foreign Affairs (SRE).
a plan to accelerate the transition to the widespread use of electric vehicles
SRE is focusing on six strategic sectors:
and the transformation of the industry.
mobilit y, a e rospace , h ealth scie nces ,
This plan includes the development of
infrastructure, information technologies
interdisciplinary working groups that will
and automotive. In the latter, SRE has
create transport electrification scenarios,
identified transportation as one of the
assess the challenges involved and present
main sources of greenhouse gas emissions
a roadmap. “This has to be an effort of
in Mexico, leading the country to “face
governments , academia and societ y,”
great challenges in the face of global
Almícar said. “We all have to participate
carbon footprint reduction requirements,”
to be on the same page and make this
said Almícar. “ We have realized that a
transition as smooth as possible.”
rapid transition and a strong transformation a re re q uire d . We wa nt this se c tor to
The creation of strategic value chains, not
become a new one in the next few years.”.
only under the USMCA framework but also at a global level, brings great opportunities for Mexico and the automotive sector,
“We have realized that a rapid transition
said Almícar, adding that the country has
and a strong transformation are required. We
the potential to become a production
want this sector to become a new one in the
and distribution hub. “Today Mexico has
next few years ”
enough strongholds to attract investment.”
Iker Jiménez Director General of Impulso Económico Global
T h e e l e c tr i fi c ati o n s tr ate g y th at th e industry is experiencing in the US also provides a great opportunity for Mexico to create a local value chain in auto parts production and automotive assembly.
Mexico is currently the four th largest automotive manufacturing country in the
“The automotive sector in Mexico has a
world, producing about 20 percent of all
wealth of experience in parts production,
light vehicles in North America. It is also
assembly and distribution of high-quality
the largest contributor to the country’s
vehicles ,” said Almícar. “ We can take
manufacturing GDP at 25 percent,
advantage of the experience we have
accounting for a third of total exports.
acquired and apply it to the new global
“All of these achievements have been built
interests of sustainability.”
MEXICO NEEDS ROADMAP TO REACH THE AUTO SECTOR OF THE FUTURE The automotive sector is still recovering
the supply chain. While the sector endures,
from the pandemic despite the looming
it needs support from all industry players
challenge presented by shortages across
to properly overcome these obstacles.
9
C on f e r ence H ighlights The automotive sector represents only
rely less on certain semiconductors have
a small part of the total semiconductor
impacted the entire supply chain, added
m a r ket b u t u n ex p e c te d d e m a n d h a s
Montoya . Under these circumstances ,
led to shortages across manufacturing
re cove r y of prod uc tion lin es will not
i n d u s t r i e s . O n l y 1 0 p e r c e n t o f to t a l
arrive until 2H22, said Oswaldo Belmont,
semiconductor chips head to the
Technical Director of AMIA.
automotive industry, being the Americas the last region in semiconductor demand,
While the sector is dealing with
according to INA. “Semiconductors for the
semiconductor
automotive sector are manufactured in
also undergoing one of its deepest
five factories, mainly in Asia. The demand
transformations as OEMs shift to CASE
for semiconductors from other devices
mobility. CASE mobility transformation
has risen causing a consequential lack of
re q uire s a u n iq u e s trate gy fo r eve r y
supplies for the automotive sector,” said
stage, explained Belmont, so there is no
Alberto Bustamante, Director of INA.
one-size-fits-all solution. “EV production
shortages,
it
is
is conditioned by bat ter y produc tion Logistic s costs have also driven up a
otherwise there may be more vehicles
shortage of different supplies. “Price of
in global markets. As for connectivity,
containers has risen up to 100 percent per
vehicles will be connec ted to the
container. For instance, from Shanghai to
inf rastru c ture , s ave lives a n d re d u ce
Lo n g B e a ch th e re g ula r cos t ra n g e d
accidents but for vehicle autonomy we
between US$2,000 and US$3,000; now it
need a solid infrastructure. Shared mobility
costs about US$8,000. This has delayed
a l s o d r ive s th e s e c to r to a d i ff e re nt
production globally,” said Bustamante.
paradigm in terms of vehicle ownership and new business models, in which users
“Triple helix collaboration is essential to just not be
can access a vehicle only temporarily.”
a technology importer. Companies in Mexico should work together with local universities in
Another problem to advance electrification
product development. It is also
is poor battery life and high costs, said
important for universities to approach
Montoya. “If the battery technology is not
to companies. Guanajuato, for instance,
sufficiently advanced and has a similar
is inaugurating an Industry 4.0 hub
cost to an ICE vehicle, EV will remain a
hand in hand with the automotive
niche market.” However, these challenges
cluster, which can be effective to
have not stopped electrification as EV
implement such projects at real
sales are experiencing solid growth rates
manufacturing plants”
in Mexico, in some cases growing by over
Manuel Montoya
100 percent, said Bustamante. But for
President of the National Automotive Cluster Network
EVs to truly penetrate the market there must be support from the government. “Companies should not be driving infrastructure on their own; they need to be sported by government policies and
Manuel M ontoya , President of the
a proactive regulation. The sector needs
Automotive Cluster Network, said that
charging corridors, such as the one in the
even though there are projects to bring
Bajio, built with the support of the federal
semiconductor manufacturing operations
government,” said Bustamante.
to North America, these may take time. “ Semiconductor factories are already
There still a need for regulation cohesive to
building new plants but it is not a simple as
assure competitiveness, said Bustamante.
that; it takes between 18 and 24 months to
“We are fifth largest auto part producer in
ramp up operations,” said Montoya. OEMs
the world with US$94 billion in play. This
production halts or shifts to models that
drives the country to build regulations
10
C on f e r ence H ighlights th at a s su re it s co m p etitive n e s s . T h e
to companies. Guanajuato, for instance, is
automotive sector in Mexico is larger
inaugurating an Industry 4.0 hub hand in
than the oil and gas and remittances
hand with the automotive cluster, which
sectors, even larger than tourism. Millions
c a n b e e ff e c ti ve to i m p l e m e n t s u c h
of families rely on the automotive sector.”
projects at real manufacturing plants,”
A cohesive public policy will serve as a
said Montoya.
roadmap for the sector to embark in the challenges brought by its transformation
The triple helix approach has helped the
while coping with existing challenges, said
auto sector in Mexico succeed. “Success
Bustamante. “From the government side
stories in the automotive sector are based
we need to create coherent public policy
on the triple helix, with human capital
to draft roadmaps for the sector. In terms
answering to the needs of the sector,
of regulations. It should seek for a balance
while companies providing them with job
between cost and benefits. We need to
opportunities with the support of local
acknowledge what other countries do in
governments for new plants arriving to
terms of certifications and homologations
the state. Also, there should be more
and define which are the most important
communication within the academia for a
elements of the sector to regulate.”
larger interaction,” said Belmont.
Collaboration is not restricted to
Solid collaboration has allowed the sector
governments and businesses; academia
to develop suppliers and engineering
a l s o p l a y s a k e y r o l e . “ Tr i p l e h e l i x
centers in Mexico. “The two largest trends
collaboration is essential to just not be
locally are the USMCA and the arrival of
a technology impor ter. Companies in
engineering centers. These centers are
Mexico should work together with local
arriving to Mexico because the country
universities in product development. It is
has engineers. Engineering centers are
also important for universities to approach
bringing more added value,” said Montoya.
MEXICO’S GREEN VEHICLE MANUFACTURING POTENTIAL Driven by the need to reduce its carbon
According to data f rom th e N ational
fo otprint, th e a utom otive in d ustr y is
Institute of Statistic s and G eography
undergoing one of its most significant
(INEGI), during 1H21 , sales of non-
transformations in many years. As supply
connectable hybrid vehicles and electric
chains undergo major disruptions, vehicle
cars increased, said Elisa Crespo Ferrer,
te c h n o l o g i e s evo l ve a n d c o n s u m e r s
Executive President of Cluster Automotriz
change their preferences, the adaptability
Regional Estado de México. Nationally, the
and resilience of companies in the
State of Mexico had the highest number
automotive sector has become essential
of electric vehicle sales during the first
for all players in the ecosystem.
half of the year with 110 transactions.
11
C on f e r ence H ighlights Mexico City comes in second place with
this is less of an issue because the driver is
102 sales, followed by Nuevo Leon with 29
clear about the route, how many kilometers
and Jalisco with 25.
they will drive and where they can charge it,” he explains. Today an electric car can
G iant M otors , which seven years ago
achieve 500 kilometers of range. Another
began a nationwide electrification project
of these misconceptions is that the lack of
in the truck sector, developed the country’s
infrastructure makes it almost impossible to
first all-electric truck twinned with an
own one of these cars and, while “Mexico still
internal combustion engine. “Today we
lags far behind in mobility infrastructure in
have almost 2,000 zero-emission vehicles
comparison to other countries,” the transition
on the road,” said Elias Massri, CEO of
between increased demand for EVs and
Giant Motors. For the company, however,
infrastructure supply will come hand in hand.
this has not been an easy process as it
Currently, most OEMs marketing such cars
started out testing lead-acid batteries and
already include the installation of in-home
worked its way up to the lithium batteries
charging centers, Massri added.
it uses today.. Circutor, a transnational company focused on energy efficiency, currently provides
“Mexico still lags far behind in mobility
about 80 percent of the current market
infrastructure in comparison to other
for EV charging centers in Mexico. Today,
countries,” the transition between
the company is also focusing on battery
increased demand for EVs and
innovation for cars, said Monica Samudio,
infrastructure supply will come hand in
Country Managing Director for Mexico and
hand. Currently, most OEMs marketing
Central America of Circutor.
such cars already include the installation of in-home charging
The price of elec tric vehicles is also
centers”
preventing many consumers from buying
Elias Massri
one. However, Massri explains, it is necessary
CEO of Giant Motors Latinoamérica
to consider that the long-term cost of an EV is much lower compared to that of an internal combustion engine, “starting with the fact that you never have to spend more on fuel.”
In this transition, auto parts suppliers play a key role in supporting OEMs develop
A key step in this transition are hybrid
new technologies. “Resources are not
vehicles, which have been the go-to option
unlimited for anyone and it is necessary to
for consumers just entering this emerging
face these new challenges together and
market, said Oswaldo Cacheux, Planning
on a fast track,” said Marcelo Ortiz, Global
Director of Hino Motors Sales Mexico.
Business Development Director of Nemak.
Currently, the Japanese-based company has
Along with the knowledge that these two
established itself in Mexico as the only brand
industry players can share, Ortiz said that
with this technology for light commercial
blending their networking pool is also a big
vehicles ranging from 4.5 tonnes to 7.2
step towards listening more closely to the
tonnes gross vehicle weight, Cacheux said.
consumer and the entire supply chain to
To date, the brand has sold more than
provide better solutions. “What has made
1,500 units in the Mexican market, with
you successful in the past will not necessarily
particular success among manufacturers
make you prosper in the future,” he said.
and wholesalers of sweets and snacks, dairy products and logistics companies.
The myths surrounding electric vehicles, however, are still present in the market. The
Under these circumstances, resilience
mileage that such a car can achieve is one of
allows companies to overcome the hurdles
them, Massri said. “With commercial vehicles,
that electrification has brought to the
12
C on f e r ence H ighlights market, according to Mexican electric
an electric vehicle works,” said Nazareth
ve hicle m a n uf a c ture r Z a cua . Limite d
Black, CEO of Zacua Mexico. “We always
education regarding clean energy has
approach the consumer through education
not allowed the massification of EVs to
to break down any misconceptions they
accelerate. “Many people do not know how
may have.”
IN THE SHORT TERM, SUPPLY WILL DRIVE DEMAND The automotive industry was hit hard by the
China and the US. However, pandemic-related
COVID-19 pandemic and its negative effects
disruptions and supply chain bottlenecks will
are still expected to continue affecting the
continue impacting the sector for the next 12
sector during 2022. The recovery, expected for
to 18 months.
2023, depends on demand behavior, supply chain resiliency and the changing needs of
T h e i n d u s tr y is m ovi n g fo r wa rd a n d
the market and countries’ regulations. These
a u to m o ti ve i n n ova ti o n s to d ay co m e
trends will shift the approach taken by OEMs
from electronics rather than mechanics.
and the entire value chain across the world,
As automakers speed up toward CASE
according to global analytics firm IHS Markit.
m o b i l i t y, s e m i c o n d u c to r c h i p s h ave become essential. A single alteration in
“We expect a great reset for the industry,
the supply chain could result in a massive
which will be paralyzed depending on how
impact for the entire sector. With 3Q21
many units can be manufactured, not on what
close to its end, semiconductor shortage
consumers want. There are no inventories; it
impact forecast for 2021 is over 10.5 million
will be a great reset. Supply will drive demand,
units globally and 2 million units for North
not the other way around,” said Guido Vildozo,
America, according to Vildozo.
Senior Manager, Americas Light Vehicle Sales Forecasting at IHS Markit.
“When the Delta variant spread across South East Asia, which are Tier 2, Tier 3 and
The industry’s recovery will be guided by the
semiconductor chips suppliers, the problem
supply chain, which has suffered shortages as
got worse because they just entered the
vehicle output levels cannot keep pace. The
stage of lockdowns and the economy
expected global light vehicle sales forecast
shutdown and reopening cycle usually takes
for 2021 is of 80.5 million, said Vildozo,
between 6 and 8 months. Considering that
thanks to the positive effects of vaccination
the shutdowns began in July, the situation
programs and an increase in demand to
will be normalized by the end of 1Q22,
pre-pandemic levels in key markets, such as
limiting 2022’s production,” said Vildozo.
13
C on f e r ence H ighlights Regularizing the value chain is a complex
tendency of combustion engine will now be
challenge considering the pandemic different
negative,” said Vildozo.
progress globally, macroeconomic factors and governments’ decisions. IHS Markit’s
Raw materials and production cycles will be
global light vehicle sales outlook for 2022 has
the main challenges for the coming years.
an 82.62-million-unit base, with 80.62 million
Governments’ decisions and regulations
units with a pessimistic view and 86.46 as
will also set the tone. As years go by,
an optimistic forecast. For North America,
stringency increases. The US President Joe
the outlook ranges from 14.9 to 16 million
Biden set the goal of having 50 percent of
light vehicle sales for 2022. Regularization
EVs by 2030. Regulations could constantly
of the value chain will not arrive until 2H22,
change the approach of the industry, warned
according to the analysis.
Vildozo. However, OEMs make decisions according to their strongest markets. While
A respite might arrive earlier with more
some automakers have a balanced global
semiconductor plants. Technology giant
coverage, others mainly rely on 2 or 3 key
Bosch’s new €1 billion (US$1. 2 billion)
markets, said Vildozo. “We have seen diverse
semiconductor chip plant began operating
announcements by automakers. Volkswagen
in last August. As vehicles get smarter, more
targets full electrification by 2035 due to
semiconductors are needed. “The fact that
its sales footprints in China and the EU,
we actually started to build this plant a
which have strong regulations. Toyota’s
couple of years ago shows that we expected
electrification process is slower due to its
the demand to go up dramatically,” said to
balanced market across the world. However,
CNBC Herald Kroeger, Member of the Bosch
it announced 15 new EVs and millions in
Management Board.
investment,” said Vildozo.
Electrification to Change the Entire Industry
For electrification to happen, customers, OEMs and governments are the three key players. Emerging markets, such as Mexico,
Electrification is the key trend driving the
will move toward a different direction,
automotive industry. While OEMs cannot
according to industry leaders in the country,
approach it in the same way in developed
since there are other priorities to attend before
and emerging markets, there is an aggressive
electrification. Combustion engine vehicles
tendency toward EVs. Between 2018 and
and HEVs are expected to continue having
2028, there will be 241 light vehicle launches,
an important presence in the Mexican market.
according to IHS Markit. Electrification “is progressing seriously,” Manufacturing of EVs will be completely
said Vildozo. However, considering the
different from traditional combustion
industry’s low profit margins and the high
engine vehicles and processes will also differ
costs of EVs technology, the production
between BEVs, HEVs and PHEVs. “By 2030
volume “will be relatively low initially and
we will have a very different industry, with
OEMs will continue relying on combustion
less platforms and complexity. It will be
e n g i n e ve h i c l e s to g e n e r a te p ro fi t s .
highly electrified, but with a reduced range
Suppliers and consumers will pay the high
of products. In North America, from 2022 the
costs of EVs,” said Vildozo.
14
C on f e r ence H ighlights HEAVY VEHICLES IN THE ROAD TO SUSTAINABILITY Tr a n s p o r t ati o n i s o n e of th e l a rg e s t
has made important advances on BEVs
sources of greenhouse gas emissions in
and FCEVs with powertrain solutions,” said
Mexico, which also has an old vehicle park
Jesús Gómez, Market Development and
with an average age of 19 years; some of
Product Portfolio of Daimler Trucks Mexico.
these vehicles are over 40 years old. The
Daimler is Mexico’s largest heavy vehicle
path toward greener vehicles is already set
producer, exporter and seller. Its goal is to
but
offer a vehicle fleet totally free of carbon
getting
there
relies
on
a
multistakeholder approach, agree OEMs.
emissions by 2039. “ In the meantime, we continue to reduce our energy and
“With many of our products being used for 10 years on average, if we want to reach our goals by 2050, by 2040 we should manufacture only fossil-free vehicles”
water consumption to reduce our carbon footprint in all our business units.” Scania, a leading provider of commercial ve h i cl e te c h n o l o g i e s , i s a l s o m a k i n g
Gilberto Ramírez
sustainable transportation a priority. “At
Director of Strategic Planning & Business Development at Volvo Trucks & Mack Truck
Scania we are aware that global warming remains an issue and ac t proac tively in finding a solution. We have different te c h n o l o g i e s av a i l a b l e f o r d i ff e r e n t markets that include vehicles powered by
Mexican authorities are changing regulations
hydrogen, ethanol, biogas, LP gas, natural
to address greenhouse gas emissions and
gas and electricity, among others. We are
provide cleaner transportation. NOM-044-
aware we are living a transition period,
SEMARNAT, for example, regulates vehicle
in which technologies will last longer.
efficiency and greener fuel consumption
Scania adapts to customers’ need,” said
using technologies such as EPA 10 and
Raúl Rodríguez , Business Transformation
EURO VI. However, the poor availability
Solutions Director at Scania México. Scania
of u ltra - l ow-su lf u r d i e se l m a ke s th e
plans that by 2050 all its units will be
implementation of the NOM a challenge.
powered by alternative sources. By 2025,
“NOM-044 regulates diesel emissions and
50 percent of its production processes
the manufacturing of this technology. Heavy
will use renewable energy and as part of
vehicle manufacturers must comply with this
the UN Global Pact Scania will continue to
regulation but to do so we need to have ultra-
work to promote sustainability.
low-sulfur diesel available to use EPA 10 and EURO VI technologies. We are working with
For Mack Trucks and Volvo Buses, two of
SEMARNAT to acquire more information to
the top 10 brands in the Mexican commercial
apply this regulation and create new ones.
vehicle market, sustainable transportation
This norm will reduce emissions in new
is also essential. Volvo plans to comply with
vehicles but it cannot reduce emissions in the
the goals set in the Paris Agreement by
old vehicles that are already on the streets,”
2050. “This is the greatest challenge of our
said Miguel Elizalde, President of ANPACT,
generation but sustainable transportation
the national association of heavy vehicle
solutions are essential for a society to thrive,”
manufacturers.
says Gilberto Ramírez, Director of Strategic Planning & Business Development at Volvo
Heavy vehicle manufacturers have clear
Group Mexico. “With many of our products
strategies to comply with increasingly
being used for 10 years on average, if we
stringent environmental regulations and
want to reach our goals by 2050, by 2040 we
reduce their carbon footprint. “The need
should manufacture only fossil-free vehicles,”
for sustainable mobility solutions will
says Ramírez. By 2030, 30 percent of Volvo
remain as long as there are cities. Daimler
Group’s production will be fossil-free vehicles.
15
C on f e r ence H ighlights Sustainabilit y is not only achieve d
In transition to more extensive green vehicle
by a vehicle portfolio; it also requires
technologies, fuel efficiency for both buses
proficient aftersales services, training and
and trucks is key. “Efficiency is essential.
technology. “Sustainability in aftersales
We are transitioning to more sustainable
has also been important for us. We offer
vehicles but current models should be more
remanufactured components that maximize
efficient too,” said Ramírez. Efficiency will
the units’ per formance in operations .
lead to greener technologies. “Reducing
The remanufac tured components are
fuel consumption is highly beneficial for
considered ecological in terms of recovery
transportation. Acquiring technologies for
and component assembly,” said Gómez.
fuel efficiency will generate greater profits.
Scania is focusing on training vehicle
Infrastructure is also essential for vehicle
operators to reach greater efficiency.
operations. Ultra-low sulfur diesel will
“Training drivers can improve fuel efficiency
promote greener technologies,” said Gómez.
by 5 percent. We are launching flexible maintenance programs and changing our
To reach a sustainable transportation,
approach based on our clients’ operations.
multistakeholder partnerships are essential,
Finally, we are digitalizing our fleet by
said Scania’s Rodriguez: “We need to work
connecting our vehicles, which allows us
from four perspectives: industry chambers,
to detect the ideal time for maintenance,”
governments, OEMs and clients. This should
said Rodríguez.
be an ongoing work,” he said
TELEMATICS ARE CRUCIAL FOR SMART FLEET MANAGEMENT Telematics is no longer a luxury in fleet
“Telematics is about connected cars, which
m a n ag e m e nt b ut a key reso urce fo r
will collect data to monitor everything related
companies to smartly manage their assets
to the vehicle from its location to the drivers’
with positive cost-benefit solutions to
behavior. They even give the possibility to
maximize profits and reduce risks effectively.
monitor the condition of the vehicle. We can
While implementing telematics in Mexico
collect all this data and offer it so customers
would be a win-win proposition for all players
can take safe, well-informed decisions,”
involved, there are diverse challenges in the
said Kent Bjertrup, CEO-Mexico of ALD
way, agreed industry experts.
Automotive.
16
C on f e r ence H ighlights Telematics systems are installed in vehicles
attending the demands of 111 sectors of the
and send data to track the location and
Mexican economy and mobilizing over 550
performance of the vehicle and the behavior
million tons of merchandise, according to
of the driver. Information can be sent digitally
the National Chamber of Cargo Transport
to the company’s servers or through mobile
(CANACAR).
applications. These systems are more complex than a GPS, which only provides
“Telematics is already a reality in most of
a limited set of data such as the real-time
trucks in Mexico. But in countries such as
position of vehicles.
the US it is no longer an alternative, but an obligation. In cargo transportation, telematics
“Telematics is a reality. The technology is
help prevent accidents. It detects system
already here; it is just about implementing it
failures, routes, traffic and drivers’ behavior
correctly. It is profitable to use it; the real cost
in real time. Telematics became crucial to
would be not to do it. If you are going to use
offer a better service to customers while
telematics, you need to have a complete
reducing costs and becoming more efficient.
implementation program rather than only
It should not be seen as an expense, but as
buying the systems. A GPS is no longer
an investment,” said Mauricio Medina, CEO of
enough to know everything about your fleet,”
TIP México.
said Fernando Ardura, Chief Business Officer of Traffilog.
Telematics do not only help when vehicles are
“Telematics is a reality. The technology is
on the road but also while the fleet is parked in
already here; it is just about
the company or in shipping terminals, where
implementing it correctly. It is
vehicles could also suffer damages, said
profitable to use it; the real cost would
Rafael Lajud, General Director of Invarat. The
be not to do it. If you are going to use
integration of the whole services offered by
telematics, you need to have a
telematics is key for the companies to make
complete implementation program
better decisions, added Lajud.
rather than only buying the systems. A GPS is no longer enough to know
Digitalization is drastically changing the
everything about your fleet”
logistic s industr y. Fleet management
Fernando Ardura Chief Business Officer of Traffilog
software helps companies managing large databases of information, with records such as vehicles purchased or leased, maintenance schedules, service histories, operating expenses and financial data.
Companies need to know that their light or
These systems re duce administrative
heavy vehicle fleets are safe and profitable,
processes and can set alerts and
according to Ardura. Telematics provides
send emails.
this knowledge. With the precise data it collects, fleet management companies
The opportunities that technology offers
can maximize fuel usage, one of their most
come with challenges for companies and
important expenses. Knowing the behavior
telematics is not the exception. “Mexico
of drivers allows companies to improve their
presents a lot of challenges, with a very
habits and become more efficient. “A correct
complex road network, security issues
use of advanced telematics allows you to do
and many suppliers. The key to achieve
preventive maintenance rather than corrective
perfect shipping is standardization, to
maintenance to vehicles. Smart maintenance
lower costs and achieve consolidation,
often means a longer useful life of the units,”
with a clear legal framework to get a real
said Ardura.
win-win deal for every player involved. Standardization will boost investment,”
The auto transport business contributed
said Marco Lizarde, Business Unit DHL
with 3.4 percent of Mexico’s GDP in 2019,
Consultant. The four main pillars for a
17
C on f e r ence H ighlights correct integration are data analytics, data
and make it look beautiful but it is all
master, software and good transportations
about implementation, investing time and
practices, said Lizarde. “It is all about
changing the behavior of drivers,” said
investment. You need to know where data
Bjiertrup.
is going to be stored. Software systems are key and they have to intercommunicate
Telematics is becoming massive across the
with other systems. We need to integrate
world in the insurance sector. Insurance
our systems.”
policies costs need a correct balance; “if they are too expensive, clients will go
Several business owners, carriers and fleet
to another company and if they are too
management leaders often have a short-
cheap, accident rates will skyrocket and
term vision regarding telematics and the
it will no longer be a profitable business,”
implementation of complex technology
said Ardura. This technology applied to
systems. “We have to be more constructive
the insurance business analyses the habits
when explaining the benefits of these
of the client, combining a broad range of
systems. We should not offer our products as
information from the user’s age to their
small, separated services but as a complete
driving habits, allowing both the company
and integral solution for fleet management
and client to reach fair rates.
companies that will help them reduce costs and maximize profits,” said Lajud.
While investing in telematics systems could be costly for companies, not doing
A correct use of telematics also needs
it could be worse. “You have to measure
to set clear goals and meet them. “Data
to improve,” said Medina. Once achieving
is ex tre m ely complic ate d , on e n e e ds
s t a n d a r d iz a t i o n o f t h e s y s te m s a n d
to understand it, organize it and then
enough investments, the entire industry
work with it, linking it to the objectives
could be benefited from the information
already defined. We can program data
that telematics provides.
TECHNOLOGY INFRASTRUCTURE: ESSENTIAL FOR VEHICLE SALES A s consum e r prefe re nces evolve d in
care that the human factor has brought to
response to the pandemic, the automotive
the carmaker. “AI has delivered a lot to the
industry had to adapt its processes to the
industry and it is impressive but companies
new way of doing business. In this new
have to find a balance between the digital
dynamic, technology has stepped in to
and the physical experience.”
assist and improve the sales process for OEMs. However, the challenges for the entire
One of the issues challenging the industry
ecosystem to fully embrace the digital sphere
is budget. To overcome this challenge, said
are still abundant.
Jorge Vallejo, President and CEO at Mitsubishi Motors de Mexico, many misconceptions
Technology has positioned itself as a partner
have to be overcome, ranging from dealers
of the automotive industry, helping brands
to the sales force. “While there are teams that
reach their consumers in a different and
are exceeding their goals by using all these
sometimes more immediate way, said Miguel
tools in their processes, there are others
Barbeyto, President of Mazda Mexico. “In the
that are not going to be able to change
automotive industry for some time now we
their mindset and use these tools to their
have seen the evolution of technology in leaps
favor,” he explained, “It all starts with seeing
and bounds. However, the transformation
technology as an ally and not as a risk.”
that consumer preferences are going through has set great challenges for the entire
Data provided by tools such as IA cannot
ecosystem.” At Mazda, Barbeyto added, it
remain only in the hands of a few, but
has been key not to neglect the detail and
must be shared with distributors and
18
C on f e r ence H ighlights producers in order to “unify efforts,” said
attractive while simultaneously improving
Vallejo. According to Google’s Community
the customer experience.”
Mobility Report, search volume for the best deals on cars and trucks grew 70
The customer experience, however, does
percent globally in March 2020 compared
not end when the check is signed and
to the same period last year. “This means
that is where digital tools play a key role
that people are increasingly turning to
in customer retention and satisfaction, said
any digital tool to compare car models
Regina Granados, CEO of LeasePlan Mexico,
and prices.”
a leasing company operating in more than 30 countries and with more than 13 years of
The luxury automotive sector also had to
experience in Mexico. “Selling is much easier
take the leap into the digital world, driven
if your customers are satisfied and if it is a
by the fact that in recent months the
word-of-mouth recommendation.”
concept of luxury has been redefined in the minds of consumers, said Raúl Peñafiel,
Customer onboarding through technology
Managing Director of Jaguar Land Rover.
has become a central part of automotive
“ We now have customer profiles that
companies’ strategy in recent months.
buy a Land Rover but do not show their
But entering as a technology provider is
preferences in the way they dress,” he
not easy in this industry, said Joaquín
said. “Customers have a broader definition
Rivera, CEO and Co-Founder of Kikoya,
of what is a luxury to them.” Faced with
a technology provider that specializes in
this scenario, Jaguar Land Rover has relied
credit origination processes. “We perceive
on technology to balance the “dichotomy
a need to own and control end-to-end
between being increasingly efficient and
processes,” said Rivera.
THE NEW AUTO SECTOR NEEDS TECHNOLOGY Technology and digitalization had steadily
Estrada, General Director of Volkswagen
been changing the automotive industry for
Brand Mexico.
the past few years. However, the pandemic accelerated these processes , pushing
“We had been working with innovative
the sector to its biggest transformation
projects in Mexico years before COVID-19,
i n t h e c e n t u r y, a c c o r d i n g t o E d g a r
but when the pandemic hit everything
19
C on f e r ence H ighlights was pushed for ward . For instance, in
to the World Bank. Mexico holds great
2019 we started working with a mobile
potential for the automotive industr y
application so our customers could watch
thanks to its young, 28-year-old average
their car service on real time and receive
population, and the possibilities to access
online quotations and budgets. The goal
to bigger percentages of the population.
was to deliver the app by 2024 but the
The big opportunities will come once the
pandemic changed everything and the
inequality that prevails in the countr y
pilot version was launched two weeks
i s a d d re s s e d . O n l y 5 p e rce n t of th e
ago,” said Estrada.
129-million population is able buy a new car, according to Estrada, but there are
Volkswagen takes innovation seriously and
between 1 million and 1. 5 million units
recently announced the implementation of
available for sale in the Mexican market.
AI and robotics in its North America plants, including the two located in Mexico. This
During 2020, the Mexican industry went
will increase their productivit y by 30
through its worst period in modern history.
percent. The German automaker will also
In April, less than 35,000 light vehicles
invest US$1 billion during the coming years
were sold. One year later, sales bounced
in its three plants: Silao in Guanajuato,
back to over 83,500 units, a 139 percent
Chattanooga in Tennessee and Puebla.
increase, according to INEGI.
Vo l k s w a g e n ’s g o a l i s t o i m p l e m e n t te c h n o l o g y s u c h a s c l o u d s o f t wa r e ,
In addition to the impact COVID-19 caused
intelligent robots and AI, which require
in sales and exports, the pandemic boosted
exhaustive training and c apacitation .
shortages in supplies, mainly semiconductor
With the unified sof tware launch , the
chips, which have become essential as
a u to m a ke r w i l l b e a b l e to o p t i m i ze
automakers move toward electric vehicles
collaboration between its plants, upgrade
(EVs). The semiconductor shortage disrupted
the work environment for its employees
supply chain across the world and by the end
and suppliers and improve the overall
of 2021, they impacted the production of over
manufacturing process.
10.5 million units globally and 2 million units in North America, according to IHS Markit.
D espite the pandemic , M exico is still co n s i d e re d a n a t tr a c ti ve m a r ke t f o r
“Semiconductors shortages have forced us
foreign investment. The Mexican economy
to adjust our sales levels across the world,
is in the Top 20 worldwide, according
including Mexico. These are challenging
20
C on f e r ence H ighlights times, no one knows when the supply
Interconnectivity and dynamism are key to
chain will return to normal. It has become
the light vehicle market, especially as SUVs
a bottleneck. However, we took advantage
take the spotlight in North America.
of those times when production stopped to strengthen our processes,” said Estrada.
Technology continues to drive drastic ch a n g e s in th e a uto m otive in d u s tr y.
Electrification is arriving ever ywhere,
Volkswagen is embracing digitalization and
according to Estrada, who explained that
opened the first City Store of North America
Volkswagen has already an important
in Mexico City and one of its first five in the
presence with EVs in countries where
world, according to Estrada. “This is the new
infrastructure is ready for this technology,
way to interact with customers. During the
such as the EU, the US and Canada. Mobility
past 100 years, clients visited traditional
is eventually going to become electric in
dealers. City Store is a completely different
Mexico, but combustion engines and HEVs
concept, with a new customer journey
will continue to dominate the Mexican
where clients will see the vehicles through
market, according to industry experts.
augmented reality, interact and receive online quotations and assistance.”
“ Volkswagen has the ID family of EVs across the world. Our future vision includes
While the industry continues moving toward
bringing them to Mexico, which is why we
electrification, technology also continues
continuously work with other brands and
changing the way production, sales and
the public and private sectors to generate
exports work. It will also continue improving
synergies and make electrification a reality
the entire customer experience, from driving
for Mexico in the near future,” said Estrada.
to car service and second-hand market.
UNDERSTANDING LOCAL SCENARIOS: KEY TO RAMP UP OPERATIONS With numerous trade agreements , an
should work with local stakeholders to seize
i d e a l l o c a t i o n a n d a yo u n g , h i g h l y -
regional benefits, said industry experts.
qualified workforce, Mexico is an attractive destination for the automotive industry.
“Mexico is the place to be if you work in
B u t p ro d u c i n g i n th e co u ntr y i s n ot
the automotive business,” said Florian
necessarily easy and companies aiming to
Hanft, CEO México of SONAVOX, a Chinese
land manufacturing operations in Mexico
Tier 1 supplier that landed manufacturing
21
C on f e r ence H ighlights operations in the country less than five
Frost & Sullivan. “It is important to have
years ago. Sonavox’s venture in Tlaxcala,
local suppliers really close. In Mexico there
o n e of M exico’s sm a ll e s t s t ate s , wa s
are large Tier 1 suppliers facing challenges
considered ‘successful ’ thanks to the
at their own supply chains, particularly
company’s close collaboration with the
because of the lack of certain components.
state government and the local automotive
It is important to work together with local
cluster. “When Sonovox chose to come to
stakeholders to develop a sustainable
Mexico we explored different locations
ecosystem. Companies should also think
and decided that Tlaxcala was where we
about sustainability,”
wanted to be. Tlaxcala is the smallest state o f M e x i c o a n d w e h ave b e e n r e a l l y
While companies such as Sonavox have
successful based on three pillars. First, the
come landed operations in Mexico on
government made an incredible effort and
their own, others recommend the use of a
we have kept in close contact with them.
Shelter service provider. The reason is that
Second, the state has made investments
shelters “provide certainty” in bringing
in dual education programs that support
operations into the country. “You need to
th e in d u s tr y. Fin a lly, th e a uto m otive
have the knowhow to operate in Mexico
cluster helped us to address to the cultural
and companies need a partner to support
differences we faced as a Chines company.
them in this regard,” said Paulina Gónzalez,
Thanks to these three pillars, we managed
Regional Director of American Industries.
to successfully ramp up operations,” said
International companies also need to
Hanft. After successfully ramping up its
identify the ideal site to land their operations
manufacturing operations of sound
by closely analyzing the strengths and
components for Ford, Volkswagen Mexico,
weaknesses of each region, which will allow
Volkswagen N or th Americ a and Audi
them to estimate how much they’ll truly
p r o j e c t s , S o n a vo x i d e n t i fi e d t h a t a
need to invest to get their operations up
com pre h e nsive un de rsta n ding of th e
to speed. “Companies need to create cost
region was key. “We need to have someone
of business model to determine how much
that knows the country. You cannot arrive
are they going to spend in the country. This
assuming everything will work as in your
model should take into account all the fine
home country,” said Hanft.
print. Companies need to take into account the final destination of their products,
“We have seen that Mexico has shifted from a Maquila country, which it was when NAFTA entered into force. Now, Mexico is a country that adds value. Local plants are not only recognized in their municipality or state; Mexican plants are acknowledged by global headquarters thanks to their productivity levels”
Lorena Isla
LATAM Director of Frost & Sullivan
whether they should produce only for the local market, for exports to the US or other countries or both,” said González. One of Mexico’s key strengths is its labor force, which allows companies to increase the added value they offer. “We have seen that Mexico has shifted from a Maquila country, which it was when NAFTA entered into force. Now, Mexico is a country that adds value. Local plants are not only recognized in their municipality or state; Mexican plants are acknowledged by global headquarters thanks to their productivity
Companies that want to stablish in Mexico
levels,” said Lorena Isla, LATAM Director at
must understand the local ecosystem
Frost & Sullivan.
of each region in the countr y and the manufacturing ecosystem those regions
“ Mexico has become a leader in auto
support, explained Lorena Isla, Mobility
parts manufacturing. We have seen added
Director Latin America at consulting firm
value through worker’s productivity and
22
C on f e r ence H ighlights commitment, not only due to labor costs,”
their Mexican teams work. It is not the same
said Gonzalez. Having Mexican teams has
as was 20 years ago. Now, there is a large
been essential for a successful landing,
number of professionals and we need to
explained Hanft. “Companies need to let
embrace this country’s culture,” he said.
REINFORCING NORTH AMERICA’S SUPPLY CHAIN Supply chains in all industries have taken
regions. “It has been hurt but we have been
a hit from disruptive events that have
one of the countries that have been hit the
gone beyond the pandemic. High demand
least,” he said. “That is a good sign and a
for semiconductors and tight supply, the
positive indication that we have lost our fear
blockade in the Suez Canal that is still
of the new USMCA and that it will bring a lot
wreaking havoc and the new USMCA have
of opportunities.” Today, he added, Mexico
posed enormous challenges for numerous
stands as a global production hub for the
industries, especially automotive. Mexico,
aerospace and automotive sector, not only
however, holds a privileged position to put
driven by its proximity to the US market,
itself ahead of other regions in the world.
but also by its potential as an exporter to other regions.
In recent years, national, regional and multinational companies have flocked to
Gradually, Mexico has moved from being
the country as an attractive destination to
solely a manufacturing country to become
relocate their supply chains, said Mónica
an attractive spot for R&D projects for
Doger, Director of the Clúster Automotriz
national and international companies,
from Puebla and Tlaxcala. Attracted by both
said Ruben Lostal, Location Manager of
geographic and labour benefits, businesses
MUBEA. For this to fuel further growth, he
from all industries have set their sights on
added, encouraging more people to study
Mexico, “not only for manufacturing but also
engineering is key. “Right now Mexico is
for applied technology projects,” said Doger.
producing more engineers than the US per
Yet the challenges Mexico faces in attracting
100,000 inhabitants,” he shared. “We need
further investment are numerous, she added.
to seize on that but we need to improve secondary education.”
According to Martin Toscano, President of Evonik, foreign direct investment in Mexico
The ongoing changes the country has
has not been impacted as much as in other
experienced in its industries, coupled with
23
C on f e r ence H ighlights events including the pandemic and its
predictive one where technology is key,”
disruption of supply chains, have prompted
explained Victor Galvan, Senior Manager
Asian companies to migrate to the region to
of KPMG Mexico. Data mining, vir tual
centralize their value chains, said Cristobal
reality, data analytics, AI and Industry
Magallanes, Automotive Sales Director of
4.0 principles are just a few of the tools
SKF. “Suppliers to customers have been
the company is leveraging to accelerate
coming to Mexico,” he said. “This will allow
enterprise growth.
for more competition and therefore level the playing field for everyone.”
M ex i c o a l s o s t a n d s o u t g l o b a l l y f o r being “open for business,” Toscano said,
Multinational professional services group
because the regulatory environment is
KPMG, which in recent years has assisted
much less protectionist than at other large
the countr y ’s manufacturing industr y,
economies such as Brazil. To capitalize on
has developed transformation strategies
Mexico’s unique strengths vis-à-vis other
to help businesses seeking to establish
regions of the world, all players in the
operations in Mexico. “We help them take
ecosystem have to pull their weight. “We
their projects from an operational and
no longer play alone,” Toscano stressed.
reactive stage to a more intelligent and
“Today we are all connected in some way.”
MATERIAL TECHNOLOGY MUST KEEP UP WITH INDUSTRY NEEDS Across the world, mobility is adopting
and both governments and OEMs have
cl e a n e r e n e rgy so u rce s . B ut , hyb rid ,
set up different short-term goals for their
electric and smarter vehicles could not
companies globally. Making this possible
exist without the technological materials
requires that the entire value chain works
that make them possible. The entire supply
a s a te a m b e c a use a uto m a ke r s n e e d
chain must understand the specific needs
the correct materials to develop smart
a n d m e g a t re n d s o f t h e a u to m o ti ve
vehicles. “Communicate, collaborate and
industry, agreed industry experts.
create,” said Zaragoza. “We all have to work with a collaborative mindset. I need
“We all have to work with a collaborative mindset. I need to understand what my client needs are and adapt to them.”
Juan José Zaragoza
President LATAM of DuPont
to understand what my client needs are and adapt to them.” Energy sources, sustainable materials and electrification receive the most attention when talking about a more sustainable a u t o m o t i v e s e c t o r. H o w e v e r, o t h e r practices such as lightweighting play key
“Players have to adapt to the mobility
roles in driving the market toward cleaner,
of the future. The mega trends are clear
greater energy efficiency. Lightweighting
in the industry: lightweighting, vehicle
swaps traditional materials for lighter
downsizing, comfor t, security and
ones, reducing the amount of material
sustainability. Sensors will play a key
used. An average light vehicle weights
role. A washing machine usually has 11
1.5 tons to 1.7 tons and half a ton of that
sensors but autonomous cars will need
belongs to a polymer that reduces the car
over 3,000. The entire sector is working
weight substantially, while generating a
to meet those changing needs,” said Juan
greater resistance and security, according
José Zaragoza, Latin America & Mexico
to Zaragoza.
President of DuPont. Technology, digitalization, sustainability D eve l o p e d e c o n o m i e s h ave a l r e a d y
goals and the pandemic have all come
adapted to the electrification tendencies,
together to create majorly change the
24
C on f e r ence H ighlights
automotive industry, according to Luis
“We work to improve cars’ visibility. For
Gonzáles, General Director at Automotive
instance, in the case of Lidar sensors, a
Cluster of San Luis Potosí. Every single
black vehicle reflects only 6 percent of the
material in the vehicle, both on its interior
close infrared signal that a white car would
and exterior, will play a key role in making
reflect, making a black car significantly
the industry sustainable.
less visible and less safe than a white car. We produce anti-reflect coatings and
Traditionally, paintings and coatings only
intelligent coatings that enable darker
provided cars with basic protection and
colors to have the same reflectance than
decoration. Today, the industry demands
clearer ones,” said Macouzet.
much more innovation in their paints. “As the auto industry transforms, we have
Innovation and smarter vehicles would
been innovating. Autonomous cars will
not be possible without better, smarter
need more coating. Design will change
tires. “Tires are the only part of the vehicle
and interiors will need more intelligent and
that touch the ground,” said Pierre-Louis
durable surfaces. Our paint has to adapt
Dubourdeau, President & CEO of Michelin
to the entire technology ecosystem,” said
Central America. The industry is also building
Adriana Macouzet, Vice President Latin
state-of-the-art tech solutions for the tire
America and General Manager of PPG.
industry, including connected, rechargeable and airless tires. Smarter tires will also help
The automotive paint sector has also
collect data, which is useful for telematics.
adapted technology common to the aviation industry, which enabled cars to connect
“Airless tires will bring peace and security
effectively and communicate with each
for drivers and the possibility to improve
other and the environment (roads or stop
fleet productivities. The new tires we are
signs) in the best possible way, according to
developing will not need maintenance and
Macouzet. Technology such as Lidar sensors
our ecological footprint will be reduced
has been implemented massively in Mexico.
dramatically. Twenty percent of the tires
These sensors use eye-safe laser beams to
thrown away are destroyed while having
create a 3D representation of the surveyed
useful life. That percentage represents 2
environment. A lidar sensor emits pulsed
million tons a year that we could avoid with
light waves to the surrounding environment,
our new tires,” said Dubourdeau.
which bounce back to the sensor. The device uses the time it took for each pulse to return
Textiles are also part of the automotive supply
to calculate the distance it traveled.
chain. “Fabrics have to be visually attractive
25
C on f e r ence H ighlights but easy to clean, with a long useful life.
have been reduced considerably in the last
Technology brought software that allows us
years, raising players’ uncertainty.
to keep a precise stock and serve our clients better. We have designed safer uniforms for
The main challenge will be to make EVs’
the automotive industry employees,” said
p ro d u c tio n truly sc ala ble to m assive
Elvia Bedolla, Plant Manager at LAVARTEX.
produc tion , said Macouzet. To do so, good communication between all
Keeping up with industry needs is difficult
players involved is necessary, especially
for ever y player involved in the value
considering the large initiatives and goals
chain, according to Zaragoza. The industry
that OEMs have set for the future. Working
is changing rapidly and adaptation is key
o n t h e E Vs ’ e n e r g y i n d e p e n d e n c e ,
to address the difficulties. “Innovation has
lowering costs and boosting infrastructure
its risks and challenges. Producing new
a re th e m a i n keys fo r th e m a r ket to
materials is specially complicated and
continue moving forward. “Our role is
demands high investments with correct
to become true allies of automakers for
risk analyses to make them financially
this to become a real, massive innovative
viable,” said Zaragoza. Innovation times
production,” said Macouzet.
VEHICLE CONNECTIVITY INCREASINGLY CLOSER THANKS TO 5G O ve r t h e p a s t f e w ye a r s , c a r s h ave
transformation as it allows automakers
undergone a transformation towards the
to deliver new services including up to
digital as manufacturers have fitted screens
8k resolution. “5G is going to transform
and sensors into vehicles. However, the
the way we distribute video like 4G did
industry has been waiting years to offer
with audio,” explained Anaya. “It is already
a truly interconnected service ecosystem.
natural for everyone to listen to music on
The tool it needs to do so is almost here:
streaming platforms and that is made
5G technology.
possible by a network that supports the bandwidth necessary to do so.” 5G will do
“The automotive industry has been waiting
the same thing except that it will focus on
for a network like 5G to be able to offer
video, he added.
new services like autonomy and cloud access ,” said Ricardo Anaya , Product
With the speed capabilities that 5G will
Manager at Qualcomm. The emergence
bring (over 100 Megabits per second, Mbps),
of 5G networks is essential for digital
“working in the cloud will be as working in
26
C on f e r ence H ighlights the internal memory of a computer.” Network
operators investing to deploy 5G technology
latency, which refers to the time it takes for
globally. “These numbers indicate that half
data to travel from one place to another,
the world has officially set its sights on 5G.”
is essential for the automotive industry as it will enable “remote decision making”
According to Qualcomm, 5G will enable
in autonomous processes. 5G offers an
US$13.1 trillion in global sales activity by
extremely low latency rate, said Anaya. “This
2035. “All industries are going to capitalize
migration will enable millions of devices to
on this technology,” Anaya explained,
be connected.”
“The automotive industry, in particular, has been waiting for it for years.” The
As the network grows, powerful processing
transformation that this net work will
close to where the connections are will
bring to the sector includes manufacturing
enable new forms of collaborative work.
p ro ce s se s with co ll a b o rative ro b ot s ,
“You can make simpler devices with more
sales and maintenance processes ,
battery life,” said Anaya. “This happens when
service automation, in-car experiences
you have good processing between the end
and interconnec ted transpor tation
device and the edge AI.”
services such as traffic signals, bridges and infrastructure. “The priority is for a
5G must be based on global standards and
person to get in their car and arrive at
be interoperable and easy to replicate. “The
their destination as safely and efficiently
5G that is being applied in Germany is similar
as possible.”
to what we expect to be implemented here in Mexico,” said Anaya. According to GSA data,
Today more than 120 million cars are
as of the end of July 2021, there were over 175
powered by Qualcomm technology around
operators with 5G commercially deployed in
the world . “ The car is one of our top
over 70 countries and over 285 additional
priorities right now,” said Anaya.
AI, MACHINE LEARNING OFFER MANUFACTURING REAL SOLUTIONS Artificial intelligence (AI) and Machine
is advancing toward AI and ML but we
Learning (ML) are opening new possibilities
need to change the mindset of companies.
to the world’s industries, including the
Sometimes people think that this technology
automotive sector. Once these technologies
is highly expensive or complex but there are
reach their full capacity and create an
numerous tools available for Tier 2s,” said
integrated ecosystem, all the automotive
Sergio Bautista, Robotics Local Business Unit
supply chain could reap substantial benefits..
Manager of ABB.
“The automotive sector is advancing toward
The pandemic, technology and changes
AI and ML but we need to change the
in consumer behavior are disrupting the
mindset of companies. Sometimes people
operation and processes of companies.
think that this technology is highly expensive
Automakers, suppliers, dealers and everyone
or complex but there are numerous tools
involved in the supply chain need to adapt
available for Tier 2s”
to changes, taking advantage of the new
Sergio Bautista
Robotics Local Business Unit Manager of ABB
technologies powered by data. Despite not necessarily being electric, newgeneration vehicles are getting smarter thanks to software and telematics systems
“The technology is already here. Mexico’s
that generate data and connect with other
problem is that while it some sectors are
vehicles. “Analytics and big data are starting
boosting Industry 4.0, Industry 1.0 is still
to focus on specific industries in Mexico. We
rampant in others. The automotive sector
have hyperconnectivity, with huge amounts
27
C on f e r ence H ighlights of data being generated. The right connection
US$1 billion during the coming years in its
and use of this information helps lifecycle
three plants in North America to successfully
management, processes design, supply chain
implement technology such as cloud
management and manufacturing processes,”
software, intelligent robots and AI, which
said Javier Vallejo, Senior Manager of
require exhaustive training and capacitation.
Architect Solutions of AWS.
With the unified software launch, Volkswagen will be able to optimize collaboration between
AI is not only used for autonomous vehicles,
its plants, upgrade the work environment for
it is also useful for forecasting, according
its employees and suppliers and improve the
to José Rivero, Country Manager of Infor.
manufacturing process in general.
“The pandemic taught us the importance of assertive forecasts,” which based on ML
Adaptability is key. It is not only about
motors and analytics models could predict
OEMs or Tier 1s, companies need to know
future demand with precision. Manufacturing
how data influences the entire supply chain.
plants continue adding sensors and “collecting
“Volkswagen is connecting its 120 plants with
tremendous amounts of data,” said Rivero.
over 500 suppliers in on single data protection
These sensors enable companies to know
strategy to speed up the complete process
how machines are working in real-time and
from the beginning to the final consumer,”
forecast the ideal moments to do preventive
said Vallejo.
maintenance, saving time and money. The main challenges that AI and ML face both Telematics offer similar benefits when
in Mexico and the world are the standardization
used in vehicles in movement. Sensors in
and homologation of information, agreed
vehicles provide information about the car’s
industry experts. “People talk about a fully
health, ideal maintenance times and drivers’
integrated ecosystem, but this is idealized;
behavior. AI came to change every part of
it still does not exist,” said Bautista. Mexico
the automotive industry, from manufacturing
does not lack people talented in data science.
to sales, fleet management, insurance
Electrification and new tendencies in the
companies and autonomous vehicles.
automotive sector will change the industry. AI and ML will have to keep up with the new
AI solutions are being offered “to clients
needs and different processes that OEMs are
looking to give their customers a plus, aiming
implementing, said Bautista.
to reach the highest standards of quality,” said Abraham Sosa, Director of Global Accounts in
Technologies such as AI and ML are yet to see
Latin America at Universal Robots. Collecting
their best, full potential, according to Sosa,
data is key to take well-informed decisions.
but to reach it companies need to trust the
However, collecting information is not enough.
technology solutions offered. “We have to traduce the solution created with data into
“Data is vital in the manufacturing process.
something applicable to real life and have a
You cannot improve something that you did
technology-flexible client to test the solutions
not measure to know its exact condition.
offered,” said Sosa.
Integration to an ecosystem is needed for a future intelligent plant that is able to
The biggest challenge is not developing
automatically control processes, stockage,
new technology but to smartly use the one
budgets and forecasts,” said Ricardo Anaya,
already available, according to Vallejo. Tech
Product Manager at Qualcomm.
managers and company decision makers need to clearly identify which pieces of
Volkswagen, one of the most important
information are the ones needed to make
employers in Mexico with over 15,000
the decisions and “avoid the temptation of
employees in its two plants, has already
activating hundreds of alerts that will not
started a digital revolution in its plants across
really help. It is important to focus on key
the world. The German automaker will invest
pieces of data,” said Vallejo.
28
C on f e r ence H ighlights Data translation into real solutions is
creation of a connected ecosystem will
only possible with hard, prolonged work,
play key roles in the following years for the
a g re e d exp e r t s . I nte g rati o n a n d th e
automotive industry.
MEXICO IS READY FOR MORE R&D Mexico is home to 14 light vehicle OEMs, 10
software development. Mexico is having a
heavy vehicle OEMs and hundreds of Tier 1
more prominent role by capitalizing on its
and Tier 2 suppliers. While it is a promising
competitive advantages to accelerate its
land for manufacturing operations,
role in the automotive sector,” said Watty.
companies are now recognizing its potential for R&D and engineering operations, and
Th e co untr y is shif ting f rom ma q uila
investing accordingly..
production–manufacturing
low-
technology par ts at a smaller cost–to
“In the early 2000s Faurecia’s three facilities in Puebla were fully focused in manufacturing. But, the company was aware of where the industry was going so it started to invest in engineering operations. In 2007, we launched our first R&D center in Santa Fe”
Karla Góngora
R&D Director México of Faurecia
“mindfac turing ,” a play on the words “mind ” and “manufacturing” meant to reflect the education , knowledge and technical capabilities of the local labor force. Now, the priority is for universities and training centers to provide the talent the sector needs. “We need to generate that knowledge. It is necessary that new students and graduates have a mindset for innovation,” says Alejandro Rojo, Director of Au to m oti ve C e n te r fo r Ad va n ce d Mobility at Tecnológico de Monterrey, one
“ In th e ea rly 20 0 0 s Fa ure cia’s th re e
of Mexico’s leading private universities.
facilities in Puebla were fully focused in manufacturing. But, the company was
M exico’s min df a c turing tre n d is o nly
aware of where the industry was going so it
a refl ec tion of th e countr y ’s “natural
started to invest in engineering operations.
evolution,” said René Montaño, Director
In 2007, we launched our first R&D center in
of CIDETEQ, a chemical research center
Santa Fe,” says Karla Góngora, R&D Director
in Queretaro. “There has been an
México of Faurecia. Years later, the company
evolution from manufacturing to design
realized it was ready for new R&D centers
and engineering. It is an opportunity to
and launched one for seating and interiors.
innovate and acquire experience. It is also a natural evolution as Mexico improves its
Other companies have also seen Mexico’s
capabilities to train human resources.”
potential for engineering and research. Bosch inaugurated and R&D center in
The accelerate rate at which the automotive
Guadalajara, also known as “Latin America’s
sector demands product innovation is
Silicon Valle” for its technology parks and
driving both companies and research
companies, in 2014. Bosch now has about
centers to innovate. “It is all about where
450 employees in that center but aims
are we going and what we are expecting
to double its capacity within the next
from mobility in the future,” said Watty.
five years, said Eduardo Watty, Mobility
There are four major mobility trends, he
Director Mexico at Bosch. The company
adds. The first is personalized mobility,
also has an engineering center in San Luis
which implies the incorporation of new
Potosi that focuses on powertrain solutions
services and solutions that allow for digital
and electrification. “Mexico is becoming
interaction. Second is autonomous mobility,
a countr y not only for manufacturing
which requires different architectures for AI
o p e ratio ns b ut also fo r p ro d u c t a n d
applications that foster its advancement.
29
C on f e r ence H ighlights At Bosch autonomous mobility “is part of
a s th ey a re o u r t wo s trate g ic p ill a r s
our vision to have zero accidents. We are
fo r 2 03 0. Fo r ove r 1 5 ye a r s we h ave
incorporating sensors and lidars to ensure
suppor ted companies design elec tric
a safer environment.” The third is connected
power trains and we have created a solid
mobility, which Watty forecasts will gain
national network that supports different
more importance in the coming years as
companies in different regions. We are
vehicles use a wider variety of services.
now assessing autonomous and electric
Fourth is electrified mobility. “We need new
vehicle capabilities,” said Rojo. CIDETEQ
powertrains and standards that reduce our
is also supporting electrification projects.
carbon footprint. At Bosch we remain active
“CIDETEQ is an electrochemistry center
in powertrain electrification and we continue
in which we study electro deposits and
improving our ICE engines in our R&D
how chemistry produces electricity. We
center in San Luis Potosi. In Guadalajara,
develop batteries, fuel cells and other
we have our software development center.
elements,” says Montaño.
We are pushing forward that mobility is fun, wonderful and financially efficient,”
M exi co h a s th e re s o u rce s , p ote ntia l ,
said Watty.
infrastruc ture and people become an R&D destination. It only needs support
Research centers and universities are
and collaboration among all players in the
s u p p o r ti n g co m p a n i e s a c h i eve th e i r
country. “We have a clear vision of all that
autonomous and electromobility goals.
Mexico can achieve and we are committed
“ We have focused in the development
to provide all the tools it needs to do so,”
of e l e c tric a n d a uto n o m o u s ve h icl e s
says Gógnora.
TRACEABILITY, CLEAN ENERGIES: KEYS TO CARBON NEUTRALITY OEMs have set ambitious carbon neutrality
it s m a n u f a c tu ri n g c h a i n , “ p u rc h a s e d
goals but the supply chain not far behind
goods and services” accounted for 16.4
in reducing carbon emissions. Current
percent of its CO2 emissions. For that
strategies highlight two key elements:
reason , OEMS must push suppliers to
resource and energy management, and
also implement sustainability strategies.
supply chain traceability.
To d a te , m o s t s t r a te g i e s a r e b a s e d o n re d u ci n g e m is sio n s i n o p e ratio n s
“C arbon neutralit y requires a neutral
across the supply chain. “OEMs should
output of CO2 emissions. If a company is
understand that sustainability implies
generating CO2, it must mitigate that
a long-term strategy for a foundational
impact some other way,” said Pablo Rivero,
supply chain in which it is actively working
Country Manager of ForeFront Power.
to reach zero emissions. That also implies ethical material supplies,” said Ana Núñez,
“Carbon neutrality requires a neutral output of CO2 emissions. If a company is generating CO2, it must mitigate that impact some other way”
Pablo Rivero
Country Manager of ForeFront Power
Digital Supply Chain Center of Excellente Mexico at SAP. Nuñez explains that a functional strategy should be based in a mutual interest from OEMs and suppliers to build the foundations to implement a carbon neutrality strategy, which can be achieved through delivery p r o c e s s o p t i m i z a t i o n a n d e ffi c i e n t
Companies must first identify what lays
equipment, among many other tools .
behind most of their carbon emissions.
“Digitalization is not only about production
Toyot a ’s 2 02 0 e nv i ro n m e n t a l re p o r t
process but also to take data into account
shows that out of 15 categories in
to optimize decisions,” said Núñez
30
C on f e r ence H ighlights Resource management, par ticularly
“We used to design and built large solar
wate r a n d e l e c tri cit y, is e s s e nti a l to
parks, but due to ongoing changes on the
manufac turing operations , especially
regulatory realm we now have more than
once companies consider the role their
100 projects operating in a medium and
surrounding communities c an play in
small scale, most of them on site.” Forefront
their optimal operations. “Communities
builds the renewable energy facilities and
in a better position to interrupt industrial
then sells the electricity to the companies.
process in the automotive industry than in the mining sector, particularly with all
Collaboration between OEMs and
elements involved with water resources.
suppliers has be en essential to drive
Companies must perform acquire social
change. Companies are pushing to
licensing to perform these processes and
provide visibility and traceability of all
avoid being considered the enemy,” says
the components that go into the vehicle,
Luis Vera, Managing Partner at Vera y
from the engineering and design to the
Asociados. From a legal perspective, there
point when the vehicle reaches the end-
can be significant variations in the way the
customer, explained Nuñez.
water expelled by a plant is labeled but this is a matter for local or federal authorities.
“Most OEMs and suppliers monitor and measure their carbon footprint emissions
The first step in gaining public trust could
at cer tain point s of the chain due to
be a solid framework for water use, as Audi
existing regulations. But to ensure that the
México observed at its plant in San Jose
operation meets all regulations rules, the
Chapa, Puebla. “We are the first entity to be
entire process and components must be
waste-water-free in Puebla. We earned this
traceable. Companies should also evaluate
recognition thanks to our lagoon, where we
how those emissions will be replicated in
use rainwater for our processes instead
the production line and analyze how to
of freshwater,” Andreas Lehe, Former
optimize these routes until the vehicle
President of Audi Mexico, told MBN in 2019.
reaches the dealership floor,” said Núñez.
Electricity management is also key, as
Digital threads and resource management
the proper use of this resource can have
play a key role in both ensuring traceability
benefits beyond sustainability, it can impact
and providing visibility to the various
future contracts. “Auto part suppliers are
players within the supply chain. “The very
motivated by OEMs requirements to share
first strategy is to measure its carbon
their carbon neutrality goals,” said Rivero.
footprint,” says Rivero.
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