Volume 8 | Issue 4 | Year 2005

INMAGUSA is an acronym for Ingenieria y Maquinaria de Guadalupe, S.A. de C.V., which essentially means Engineering and Machining of Guadalupe, Inc. It is a privately owned company in which the 88-year-old founder, Gustavo Galaz, is still active in running affairs, while daughter Eva Galaz serves as general manager. It is the classic success story of a small company finding a market niche that has grown from $3 million a year in sales to $105 million.Although this is a Mexican success story, it does have its roots in the U.S., both in terms of the company’s dramatic growth and its current major customers. In the late 1940s, ARMCO was looking to build an integrated steel mill in Mexico. Gustavo Galaz, over a 30-year period, grew with this new company, holding several key positions. In 1970, Galaz left to start his own business, INMAGUSA, which originally made electrical cabinets for utility substations. In 1978, Dina, a National Mexican truck manufacturer, asked INMAGUSA to make the rail frames that form the foundation of the truck chassis. That product grew to become the focus of the company’s business and in 1995 INMAGUSA broke into the NAFTA arena and begin to supply frame rails to truck manufacturing plants in the U.S. and Canada.

“From about 1994 to 1999 was a peak period in the trucking industry,” notes Director of Sales and Strategic Planning Jay Cowan. “We were operating at top capacity; three shifts per day, seven days per week and we still couldn’t satisfy the demand.” That hectic experience laid the framework. Today INMAGUSA is one of the two largest producers of frame rails in North America, serving two major customers: Freightliner, a subsidiary of DaimlerChrysler, and International Truck and Engine, the operating company of Navistar International Corp. plus a group of specialty type truck and bus producers. Today 85 percent of sales are to the U.S. and Canada.

INMAGUSA is located on a 110-acre site about 12 kilometers south of Monclova in the town of Casta–os, in northeast Mexico, 150 miles south of the Texas border. It currently employs a total of 1,750, and has three full manufacturing shifts working six days a week on two production lines. A recent $27 million expansion located next to the original manufacturing facility provides a total of 452,084 square feet under roof. INMAGUSA achieved IS0: 9002 certification in 2000, and since then has been certified QS-9000; ISO: 14000 and ISO/TS-16949 certifications are in process. In February 2005, INMAGUSA received “Clean Industry” certification by the Mexican government.

“The new installation is more automated and more high tech,” Cowan explains. A new layout with automated handling equipment has reduced in-process inventory and reduced manufacturing process time per rail. Company Technical Director Eduardo Loya Galaz has also developed new flange punch equipment, with an improved punch design and employed new technology for the heat-treating process. The results are faster processing, greater accuracy, better control and, of course, higher productivity. “In 1995 we only had the ability to produce 80 frame rails per day and currently we are producing in excess of 1,800 rails per day with capital expansion in process to achieve production levels of 2,000 per day, when the final phase of plant number two is complete in the third quarter of 2005.”
State-of-the-art equipment includes a slitting line, two roll formers, two full heat treat lines, robotic cutting cells, eight punching presses, a 4,000-ton forming press, and both e-coat and powder painting lines, which is somewhat unique. “We’re the only frame rail manufacturer in North America that offers both kinds of primer,” Cowan notes.

Diversity and Service Prevail
As a tier one supplier to the high-end truck, bus and recreational vehicle market INMAGUSA`S success can be summed up in one word – attitude – to make and meet ever changing requirements and to achieve end customer desires by reducing operating and maintenance costs, improving customer appeal and “just plain out doing the competition.”
The competitive dynamics of this market demand that suppliers have not only the ability but the desire. Participation in the early design development of a vehicle chassis project is key for a frame rail manufacturer, helping to incorporate design parameters that facilitate cost effect results in tooling development and manufacturing processes.

State and national government regulations combined with increased engine horsepower are driving designs for larger engine cooling packages that, in turn, are driving dramatic change in frame rail design. Higher horsepower applications require offset frame rails to allow the radiator to drop lower and fit between these frame rail configurations. These lower radiator applications, also allow for aerodynamic styling and larger windshield designs for better driver visibility.

There is also lot of activity in low cab forward, class 6 in town delivery vehicles. This has several advantages over conventional cabs – greater visibility, maneuverability, operating ease, and overall efficiency since it’s easier for the driver to get in and out because the cab is set lower to the ground. In describing its popular Condor truck model, Freightliner touts these design advantages: “The low-to-ground cab height and two-step entry/exit minimize driver fatigue during the daily in-and-out routine. The 47-square-foot windshield delivers unparalleled visibility while the oversized flat floor and dash-mounted steering column offer excellent belly and boot room.”

In addition to being lower, the cab also, as the name implies, tilts forward, permitting easy access to the engine and other truck parts. According to Ford Motors, “More and more customers, especially in highly populated urban areas, are turning to tilt cabs for their general delivery, utility recovery, leasing and rental, construction, landscaping and other vocational applications. It’s one of the fastest growing segments in the retail truck industry.”

Chassies for motor home are also seeing dramatic changes to more sophisticated contour frame rail designs to allow for additional “basement” storage space, another reason for INMAGUSA`s investment in the 4,000-ton form press, which further rounds out its manufacturing capabilities to meet ever changing market demands for new innovations.

Steel Economics
Frame rails are fabricated from steel, and the rising price of this raw material has been, as Cowan characterizes it, “two years of hell. Two years ago we were paying a little under $400 per ton for steel and not long ago we were paying around $765 per ton. Recently steel prices have been declining, bring welcome relief. Questions remain however. How low will it go and how long this trend will continue? Steel raw material costs are an issue that demand versus supply cannot contain.”

Cowan says that manufacturers have really had no choice but to pass the rising materials costs on. These costs are just being moved up and down the supply chain and eventually the end-user has absorbed it. Also everyone is seeing the results in higher transportation costs. Since our competitors are dealing with the same issues, nobody is gaining any pricing edge.”

Indeed, industry reports reflect strong sales for last year and equally good or better prospects this year. Still, there is some risk in having your eggs all in one basket, and INMAGUSA is taking a look at some diversification strategies. “One market we’re looking into is electric power transmission poles,” Cowan says. These are conical, 12-sided poles that are wide at the bottom and narrow at the top making obsolete the old erector set type power transmission towers.

INMAGUSA further seeks to distinguish itself as a value added supplier. “We do piece parts manufacturing for our customers and of course customize the frame rail to detailed specifications,” Cowan stresses. Almost all products produced are for customized trucks and buses, line set to customer’s schedules with a specific VIN number stamped in the frame rails.

People-Focused
One key component to INMAGUSA’s success is its workforce.”

Indeed, INMAGUSA remains somewhat extraordinary in its dedication to the welfare of its labor force. “The Galaz family instituted a school specifically for the children of our workers that goes from four levels of Montessori kindergarten and one through sixth grade,” Cowan says. “Right now we have 380 kids enrolled. This is a sort of isolated area where we are the major employer, and to have a high quality school is just one example of the Galaz family’s commitment to its people and our community.”

As the owner and company founder, Gustavo Galaz, frames it, “This is a family business where family values result in business success.”