The Mexican branch of this international giant, ArvinMeritor de Mexico found its own solutions to clients’ needs by sharing knowledge and updating technology. Following its own landmarks within company guidelines, the subsidiary is successfully moving the transportation market south of the border. Susana Baumann reports.
To deliver innovative solutions that move the world” is the core purpose of ArvinMeritor, a global supplier of integrated systems, modules and components to the motor vehicle industry. ArvinMeritor CVS de Mexico S.A. de C.V. follows company goals and has developed a market of excellence with innovation and continuous improvement programs that respond to specific clients’ needs.
The leading supplier to the global heavy duty and motor vehicle industry had worldwide sales of $8 billion in 2005, producing integratedÿsystems, modules and components for lightÿvehicle, truck, trailer and specialtyÿequipment OEMs, and for the commercial aftermarket segments. The company’s headquarters are located in Troy, Mich., but it hires over 31,000 employees in 25 countries around the world, with more than 120 manufacturing facilities and 24 joint ventures in 12 of those countries. The company trades on the New York Stock Exchange under the ticker symbol ARM.
ArvinMeritor was born from the merger of Meritor Automotive Inc. and Arvin Industries Inc. in 2000. While the latter had an established reputation as a global manufacturer of automotive exhaust systems; ride and motion control products; air, oil, and fuel filters and gas-charged lift supports, Meritor Automotive Inc. was the recognized supplier of complete drive-train systems and components for medium- and heavy-duty trucks, trailers and off-highway equipment and specialty vehicles, including military, bus and coach, and fire and rescue in commercial vehicle systems. It is a foremost supplier of roof, door, automotive body, access control and suspension systems, and wheel products for passenger cars, light trucks and sport utility vehicles for light vehicle systems.
Two main divisions, Commercial Systems and Light Vehicle Systems posted sales of $8, $6.7, and $5.7 billion, in the last three years and have experienced sustained growth and deep market penetration. The Light Vehicles Systems division represents 60 percent of the global revenues, posting $4.8 billion in sales in 2004, employing 17,000 workers while Commercial Systems represent 40 percent of the company’s revenues.
The company believes that its success is due to its diversity in products, clients and geographic locations. ArvinMeritor’s competitive advantage has placed it as the preferred resource of the 10 leading global OEMs, with a product mix 60 percent dedicated to supply the light vehicle and 40 percent to commercial vehicle markets. In addition, international sales outside North America represent 50 percent of the company’s revenues. This diversity minimizes the risk of a cyclical industry and increases flexibility and growth.
THE MEXICAN KNOW-HOW
ArvinMeritor CVS de Mexico was legally established in 2003 but its roots extend to 1975 as the result of the fusion among three partners representing Dirona, a major manufacturer of front axles, rear axles and brakes for heavy-duty trucks and buses located in Monterrey, state of Nuevo Le¢n; DINA, Diesel Nacional S.A. de C.V., a Mexican producer of buses, European-style intercity coaches, and medium and heavy duty trucks and Rockwell Automotive International. The project was funded by NAFINSA, a Mexican development bank.
“There was a need to manufacture axles for the domestic markets, and the company was originally born as a government subsidized manufacturing facility. In 1988, 50 percent of the stock was acquired by Grupo Quimmco and the remainder by ArvinMeritor. Finally in 2003, the company established ArvinMeritor CVS de Mexico,” said Christopher Guajardo, marketing manager.
The company has four manufacturing plants in Mexico, three dedicated to light vehicle systems in San Luis Potos¡, Quer‚taro and Puebla, and the plant in Monterrey for commercial vehicle systems. According to Guajardo, the relationship with headquarters is very close although the company has manufacturing, commercial and administrative independence to target and respond to its local markets. Mainly, the production is marketed in Mexico and exported through heavy and medium duty customers to the United States, Canada, Venezuela, Chile, Colombia, Costa Rica, Ecuardor, Nicaragua, Peru, Panama, Republica Dominicana and Guatemala.
The plants have a high degree of integration with machining, carburetion, milling and stamping machines, metal lathes and mill drills, bench grinders, bench vices, drill presses, shears, and metal folders, many of them with numeric control that allow working with exceptional precision to control quality specs.
The company’s pursuit for excellence and commitment to innovation and improvement is equally advocated among vendors, clients and employees. Raw materials are supplied by local vendors or are imported from locations in North America within the NAFTA guidelines and worldwide facilities. “We want to build strong supplierÿrelationshipsÿso that our key vendors think of us as their `customer of choice.’ We try to communicate our expectations clearly and we always measure their performance against worldwide standards,” Guajardo explained.
Likewise, the Mexican department of product engineering works in sync with its United States counterpart to offer the best responses to local markets under common platforms. “Company guidelines encourage us to create the best solutions for our clients facing Mexico’s market circumstances, such as road conditions, transportation systems, climate and diversity of load and industry. It is not the same to offer a suspension solution for a cement truck fleet than a company that transports logs,” Guajardo said.
PRODUCTS THAT MOVE
The Mexican Light Vehicle division manufactures suspension modules, exhaust systems, emissions controls, suspension components and ride control, roof systems and modules, door systems and modules and steel wheels. The Commercial Vehicle division produces front and rear axles, braking systems drivelines, manual and automated transmissions and clutch, anti-stick braking systems, air systems and stability control systems, trailer suspension systems and emissions systems. Many of these products are marketed under the family of brand names of Meritor, MeritorWabco, Euclid and Dirona.
The company recently established a joint venture with WABCO to produce new generation, lightweight single piston air disc brakes. “This brake technology offers the final consumer an increased payload potential, easier maintenance, and reduced operating costs for a broad range of heavy-duty vehicles, which is important when dealing with extreme road conditions such as the ones we have in certain regions in Mexico. It also becomes important when vehicles have to face extreme weather conditions such as intense rain that occurs in some parts of the country during the rain season,” he explained. In addition, Meritor WABCO will offer the Meritor Brand EX225 air disc brake family, designed for severe service conditions. Both are covered by world-class customer support.
Another area where ArvinMeritor is making headway is emissions technology. The foremost supplier of exhaust systems and emissions controls for heavy vehicles, ArvinMeritor has created the Clean Air Solutions line, thermal management, system design, and time-tested solutions in the production of applications that include hydroformed and fabricated diesel engine manifolds, and gasoline engine maniverters and manifolds. “These products are designed to optimize the engine performance and the level of emissions. Regulations have become increasingly strict worldwide. Our company’s aim is to meet or exceed OEM needs as well as international standards and regulations, by creating leading products to achieve zero emissions. The company is currently working on creating new and revolutionary technologies that will be ready for the 2007 model vehicles with more reliable particulate filter regeneration without increasing its cost,” Guajardo shared.
With the merger of Arvin Industries and Meritor Automotive five years ago, the automotive industry was revolutionized with the creation of chassis systems capabilities and an impressive array of advanced products from the new company’s undercarriage systems division. The company applied leading capabilities to optimize suspension systems, such as benchmarking, vehicle chassis optimization toolkit, bi-directional flow bench and chassis hardware in the loop systems.
ArvinMeritor products have become a part of every vehicle on the road. Main clients in Mexico include international assembly facilities such as DaimlerChrysler, Camiones International, Volvo Trucks, Kenwood, Volkswagen, and American MCI.
EXCELLING IN A COMPETITIVE MARKET
The Mexican market is a very aggressive one because of European, Asian and American competition although Guajardo stresses that as a manufacturer of original equipment, ArvinMeritor HSV de Mexico has a leading position. “We are working at our full installed capacity, working for `captive’ clients, for the market in general or to supply product when our competitors cannot do it. In addition, our department of products engineering offers on site customer service and extended guarantees in most of our products,” Guajardo assures. The company experienced a 30 percent growth in FY 2003.
Recently, the board approved a major investment plan to respond to this increasing demand, especially in leading products such as brakes, and front and rear axles. Although the demand fluctuates, according to Guajardo, the general tendency has been of growth, especially during unpredictable demand peaks or when the competition lacks product.
The company has embraced the 3R strategy to remain a lean manufacturing, productive enterprise: rationalize, refocus and regenerate. “We rationalize by combining operations in a single warehouse facility and closing facilities that do not meet financial targets in Mexico,” Guajardo said.
ArvinMeritor Inc. also divests businesses that are not in sync with long-term goals and refocuses on core strengths, the company’s potential market leadership, the ability to provide solid revenues, and the ability to respond with competitive advantages to a very demanding market.
To achieve a larger market share and provide technologically advanced solutions, the company also works with OEM partners to interpret their needs and expand product lines that better meet those needs, by investing in strategic alliances with other industry leaders. “We strive to exceed Mexican customer expectations for quality, technology, time to market, responsiveness and value,” Guajardo said.
He concluded: “The company offers the same service to the Mexican markets than any other international location, with an integral sales and engineering team that travels from site to site to train and troubleshoot at clients’ facilities. We back our products with ISO: 9000, ISO: 9002, ISO: 14001, and TS19942 certifications. The market demanded it, and we responded. That is the type of integrity with people, processes and practices we have at ArvinMeritor,” Guajardo concluded.