July 26, 2016 Framework for Success

Volume 11 | Issue 5

Mexico-based METALSA S.A. de C.V. was founded over half a century ago to manufacture industrial components in fields ranging from construction to shipping. Today, serving multinational companies the likes of Chrysler and Ford, METALSA is a major player in North America’s automobile industry and a leader in the production of side rails for trucks and chassis frames. Mauricio Chan reports.

In 1956 Guillermo Zambrano founded METALSA’s predecessor, Manufacturas Métalicas Monterrey (MMM), without a clear vision for his company but with an open mind and a penchant for taking challenges. So when the industrial landscape produced a niche for automakers, Zambrano jumped on it and never looked back. In the early 1960s he sought an alliance with A.O. Smith, a diversified manufacturer serving residential, commercial, and industrial customers worldwide from its headquarters in Milwaukee, Wis., leading to the revamping of MMM’s product line. METALSA’s commercial director/spokesperson notes the fortuitousness and importance of the partnership: “Zambrano pinpointed the need to seek out a partner that had the technology and the know how to manufacture products for the auto-making industry. This is how he ended up in Milwaukee with A.O. Smith, which at the time was the number one producer of chassis frames, and managed to convince the U.S.-based company to make a sizeable investment in Mexico.” Not long after the partnership was consummated, MMM was renamed METALSA, which for the past 50 years has focused on producing truck chassis and engine cradle components.

Currently, METALSA boasts of double-digit growth as a company, with 80 percent of its output serving the U.S. auto industry. Although METALSA’s major clients remain U.S. producers such as Chrysler, Ford, and General Motors, recently the enterprise has expanded its roster to feature major Asian automakers such as Nissan and Toyota. Furthermore, METALSA has aggressively sought to diversify its service offerings to promote organic growth. “We have been working on adding value to our services,” notes METALSA’s spokesperson. “Today we not only manufacture products and ship them, we also provide logistical, just-in-time, and sequencing services. We also have the capability to set up operations in close proximity to our clients’ plants to provide custommade components.” METALSA’s two main business units are namely those of lightweight vehicles such as automobiles and sports utility vehicles, and of full-size trucks such as freight liners. With a payroll of over 4,200 employees, the enterprise is the number one producer of side rails for trucks and the fourth largest manufacturer of chassis frames in North America. Output has catapulted from 20,000 frame components a year during the company’s incipient stages to about 320,000 in the late 1990s.

INFRASTRUCTURE
METALSA’s main manufacturing plant is located in Monterrey in Mexico’s northern region and boasts of a bevy of capabilities, including stamping, hydroforming, rollforming, robotic welding, CNC roll bending and piercing, heat treatment, and laser, plasma, mechanical cutting and painting. Services include custom-made side rails and sequencing, fatigue and field tests, logistics, design, and prototypes. METALSA also features two additional manufacturing plants in Mexico in the regions of Saltillo and San Luis Potosi, as well as a plant in Roanoke, Va. All of these plants boast of global certifications for quality and environmental standards, including ISO: 14000 – minimizing the effect of operations on the environment – and ISO/TS16949, aiming to reduce variation and waste in the supply chain.

METALSA’s spokesperson explains that the company’s strict standards have been in part dictated by the current business landscape. “We saw in the 1980s that to really compete in the auto making industry, we needed to switch our focus from simply producing high volumes to creating a culture that valued statistical control of processes as well as strong values within our personnel.” It was in this spirit that METALSA adopted Japanese standards of quality and implemented a higher degree of automation for its procedures. Furthermore, as client needs became more specific and production volumes rose, the enterprise was forced to invest in research and development to meet the new demands, thus paving the way for customized solutions. “We have evolved from being a company that manufactures products based on designs provided by the client,” explains METALSA’s spokesperson, “to one that designs products of its own to tackle everyday problems. We have allocated significant resources to developing talent internally, and this in turn has spearheaded not only cultural advancements, but also new technology and innovation.”

OBSTACLE COURSE
Despite the giant leaps METALSA has taken in recent years to become a leader in the North American auto-making industry, there is no shortage of challenges in the 21st century. Specifically, there are pinpoints two major hurdles the enterprise will need to overcome to continue its record-breaking growth. Not surprisingly, one of the main difficulties circles back to the deplorable state of the U.S. economy, which consumes 80 percent of METALSA’s output. “The turmoil in the U.S. economy has affected some of our largest clients and thus caused a significant reduction in demand,” notes the spokesperson. “Obviously consumers in North America are being forced to make difficult choices regarding the purchase of ehicles, and often they decide to save money for tougher times rather than make such investments.”

In addition, the high price of gas has shifted the perception by consumers of the ideal vehicle. Trucks and sports utility vehicles are more noticeably affected. “The consumer now has to factor in the price of gas when purchasing a car,” he notes. “Demand for certain trucks and heavier vehicles has plummeted, while demand for compact, medium-sized, and fuel-efficient cars has increased. These shifts engendered by the recession have built a somewhat ‘perfect storm,’ as the resulting weakness of the dollar against the euro has forced steelmakers to consolidate and driven up the price of steel, which of course constitutes nearly 100 percent of our raw material.”

SOLUTIONS BUSINESS
To combat the aforementioned market trends, METALSA has placed great emphasis on the implementation of best practices, providing its personnel the tools needed to confront the challenges adequately. In adopting this strategy, METALSA has borrowed a page out of one of its clients’ playbooks: “Our operational model, based on Toyota’s operating system, utilizes a gamut of tools that help us eliminate waste within the company,” the spokesperson says. Along these lines, METALSA strives to add value to all of its services through innovation, reduced costs, and thus become more competitive in the industry. One of the main goals is to decrease the weight of the automotive chassis frame and other such structures to regulate the use of gas. “We are continuously looking for alternative raw materials for the development of our products with the goals of reducing weight and fuel expenditure. Of course, in doing so we also factor long-term consequences such as durability in our decision-making process.”

Furthermore, METALSA has been a strong proponent of ideal working conditions that foment the personal and professional growth of all of its employees. “We strongly believe that our focus on the integral development of our personnel will lead to results,” says the spokesperson. “This is why we invest between 80 and 100 hours a year per person in training for the body, soul, and spirit with the aims to achieve personal growth and to create better leaders not only within our company but within the community. Ultimately, quality products are made by quality people.”

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