Mauricio Velázquez tries to explain the advantage to the CVT – “Continuous Variable Transmission” by talking about a favorite commuter pastime: drinking coffee while driving. With a normal automatic transmission, he says, you get a little bit a shift shock or jerking when the car switches gears. All of your coffee, he notes, might not stay in the cup. With the CVT, there’s none of that. “When you drive a car and you’ve got a CVT,” he says, “you’ll figure out why.”But that consumer comfort feature is just one characteristic that Velázquez, a metallurgical engineer at JMEX, JATCO’s Mexican affiliate, gives as an advantage to his company’s unique transmission.
Churning out more of these coveted transmissions to export to a growing market in the United States was the impetus behind launching JATCO Mexico S.A. de C.V., or JMEX, four years ago. By mid-2005, the company had finished installing equipment in its new factory, located adjacent to a Nissan Mexicana plant in Aguascalientes in central Mexico. A few months later, JMEX was up and running, and at full capacity by the spring of 2006. It was a quick jumpstart to JATCO for outside Asia and a good barometer for how well the initiative – and its planned expansion – will fare.
Velázquez, who has a history of working in the automotive field, credits the local workers for getting the company off the ground in a hurry. “The labor force, it has been one of the key reasons for JMEX’s success on this issue,” he says, explaining that labor skills in the area are very much related to automotive manufacturing. “It’s a very, very aggressive and quick launch for production.”
The JMEX plant produces 35,000 units per month. Once the second phase of the launch is complete , JMEX will have an additional manufacturing capability of 35,000 CVTs per month to answer the expected higher market demand to Europe and providing more units for the nearby Nissan Mexicana. “This is just one facility,” says Velázquez. “We are right now in construction” for a major JMEX expantion at this location.
Moving into Mexico
The Nissan Motor Co. Ltd. was founded back in 1933 in Japan. In 1970, the company created a transmission manufacturing group named JATCO, headquartered in the city of Fuji. Today, Nissan still owns 75 percent of JATCO stock, with 15 percent owned by Mitsubishi Motors Corp., which entered into this partnership in 2002 and 10 percent by Suzuki.
Since the CVT was created in the late 1990s, the technological advancement has been a growing part of JATCO’s sales. In 2004, the CVT made up 11 percent of company sales, which also included conventional automatic and manual transmissions. In 2006, the CVT made up 30 percent of sales, and JATCO projects that number to rise to 50 percent in 2010
The biggest customer for JATCO products is Nissan, which buys up 60 percent of its output. Mitsubishi purchases 14 percent, and the rest is divided among numerous companies, including Suzuki, Subaru, Mazda, Volkswagen and Renault.
Opening a Mexico plant has enabled JATCO to expand its offerings in the United States. JMEX exports to DaimlerChrysler and to two Nissan North America locations, in Smyrna, Tenn., and Canton, Miss. It supplies the CVT2 – there are four models in all – which is a transmission for 2.0-2.4 liter engine, front wheel and four -wheel drive vehicles, such as the Nissan Altima, the Jeep Patriot and Compass, and the Dodge Caliber.
Velázquez explains the mechanics behind the CVT, which gives a car a smooth ride by not jerking as the speed changes. Instead of gears, he says, the CVT operates with pulleys, an output and an input pulley, and uses a steel belt. One of the pulleys is adjusted automatically according to the acceleration rate. The CVT can accommodate 1,000 different patterns of speed, so it can adjust to the way the driver accelerates. An electronic device, called an Automatic Transmission Controller Unit or ATCU, keeps a record of the car’s speed and helps control the CVT.
As JATCO’s presentation materials explain, “CVT offers the optimum gear change pattern which predicts customers’ needs for acceleration on roads and driving conditions which are constantly changing.”
From a manufacturer’s standpoint, the CVT provides a cost savings, too. With lighter parts than the gears used to build a conventional automatic transmission. “It means we might be able to have a good and very competitive cost versus other competitors,” Velázquez says. “We feel very confident that…we’re in very good position to compete worldwide.”
Add to that the advantage of having a direct relationship with its clients and JATCO is in a good position indeed. There are JATCO representatives at Nissan plants, as well as in DaimlerChrysler’s facility, on hand to help with technological or any other issues that may arise. “We are right next to them to support them from all sides,” Velázquez says, “and to help them meet their targets.”
JMEX is poised to become an integral part of the company. The total JATCO workforce is 7,624, with 1,000 of those in Mexico only. Velázquez expects that number to increase by 700 once the expansion of the facility is complete. The plant will grow from about 323,000 square feet to 700,000 square feet.
And its sales volume will double. Now, with 35,000 units being churned out a month, JMEX racks up about $350 million in sales for the year. JATCO’s Group total sales volume for fiscal year 2005 was 3.59 million units or $3.9 billion.
Again, Velázquez credits the labor force for JMEX’s early accomplishments. He himself started as a sales manager and in a short time was put in charge of customer service and logistics. He adds that the company got the ISO/TS 16949 certification on March ‘07, an international quality stamp of approval of the automotive industry. “Labor and manpower in JMEX is one of the most important things the management is taking care of,” he says.
Workers do some die-cast manufacturing in the plant, as well as machining and assembly line work. JMEX die-casts the aluminum housings and does the final assembly of the whole transmission. Some components come from suppliers in the United States and Japan.
Now, the manufacturing focus is all about the CVT2, but Velázquez says JMEX will have the capability of setting up shop for a new product line.
“You can see the drastic and aggressive trend of the customer [demand] for the CVT,” Velázquez says. A desire for a conventional automatic transmission is declining, he says. The future is the CVT.