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November 22, 2013 01:00 AM

Magna expanding footprint in Mexico

Stephen Downer
Correspondent
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    Stephen Downer
    Pedro Martínez, general manager of Celaya Composites, and Andrew Swikoski, Magna Exteriors && Interiors' director of advanced business development.

    GUADALAJARA, MEXICO — Magna International Inc. is pumping millions into developing its composite business in Mexico, concentrating much of its investment on its automotive operations in Celaya to keep pace with the country's burgeoning auto sector.

    It's installing new Engel injection molding presses in the city, 163 miles northwest of Mexico City, having almost completed the installation of a robotized paint line there.

    In Saltillo, northern Mexico, from where it supplies components primarily for commercial trucks, it has refurbished all its compression molders, allowing for improvements in quality.

    The exteriors and interiors unit, part of Magna of Aurora, Ontario, has a third plant in Hermosillo which supplies the whole front end for the Ford Fusion and Lincoln MKZ sedans, consisting of hundreds of parts.

    "We've been doing a lot since we acquired certain assets of Meridian Automotive Systems in June, 2009," Andrew Swikoski, Magna Exteriors & Interiors' director of advanced business development, said in a Nov. 13 interview at the Expo Transporte Anpact trade show in Guadalajara.

    "The purchase expanded our footprint in composites and we've not stopped. Over the past four or five years we've made significant investments in technology and capability at the facilities we acquired."

    The Meridian purchase brought with it both the composites plant in Saltillo and a sheet molding compound production line in Grabill, Ind., making it possible for Magna to develop its own SMC blends.

    In Celaya "we went from a manual paint line to, in the first quarter, a completely robotized paint line," said Swikoski, who is based in Troy, Mich.

    Magna has also bought several Engel presses with clamping forces ranging from 700 to 2,500 tons for Celaya. One is already installed while several others will follow in due course, Swikoski said.

    According to Pedro Martínez, general manager of Celaya Composites, Mexico Operations, Magna employs 360 workers in the city. The facility comprises 140,000 square feet of covered space. "Probably at the end of next year we will have extended that area to 200,000 square feet," Martínez said.

    Both men referred to a "multimillion dollar investment" in Celaya but declined to be more specific.

    The Celaya facility numbers such automotive companies as Nissan Motor Co. Ltd., Honda Motor Co. Ltd., Chrysler Group LLC and Ford Motor Co. among its customers, and the auto base there is expanding. Honda expects to start production from its new $800 million assembly plant in Celaya early next year.

    Outside the automotive arena, Magna has added Canadian powersports vehicle manufacturer BRP Inc, of Valcourt, Quebec, to its client list. It supplies all the exterior trim parts for BRP's all-terrain vehicles. Celaya Composites also offers what Martínez describes as a "unique hydrographic process."

    In Saltillo, in addition to commercial truck components, Magna produces sheet molding compounds. "We are the only ones compounding our own material in Mexico," said Swikoski. "It helps us competitively and also helps us with quality." The SMC operation is housed in a 50,000 square ft building.

    According to Swikoski, Magna can run 50 different formulations. "The most recent formula we have, that has not been launched in Mexico yet, is a chopped carbon fiber formula called EpicBlendSMC EB CFS-Z."

    Magna and carbon fiber supplier Zoltek Cos. Inc. of St Louis, have had an exclusive global collaborative agreement since 2012 and produce the composite blend in Indiana.

    "It's a material that opens up new opportunities," said Swikoski. "It has properties that are so much stronger than others that it can replace metal products, making trucks lighter and allowing for an improvement in gasoline consumption."

    Zoltek has a plant in Guadalajara which, according to Swikoski, is under consideration as a supply base for the new compound.

    "It's fair to say we've experienced growth in Mexico every year since the acquisition," Swikoski added. "We would not be spending the money we have been spending if we didn't see that growth continuing."

    He described Mexico as "a competitive market. We have a range of capabilities and are happy about where we sit from a technology and product offering aspect and from where our locations are. We try to build our plants close to our customers. Hermosillo is there to support Ford, Celaya, the [rest of the] automotive industry and Saltillo, the truck industry."

    Most of Magna's output in Mexico is for the Mexican automotive and commercial truck sectors, although three different roofs and two hoods are exported directly to the Paccar Inc. assembly plant in Denton, Texas, from Saltillo.

    In a separate interview at the same show, Scott Paradise, Magna International's marketing and business development vice president for the Americas, commented that one of Magna's biggest concerns about Mexico is the tax reform approved this autumn by the Mexican Congress's upper and lower houses but yet to be signed into law by President Enrique Peña Nieto.

    "Tax reform has an impact on all industry down here. July-October is when we set our budget for the following year. So, if tax reform comes in after that, it will impact us," Paradise said.

    Nevertheless, he believes Peña Nieto has done "some very good and positive things and is helping to propel [Mexico] to where I see nothing but positive growth going forward. Our customers are continuing to make investments and when that happens we will support them…

    "The outlook is quite good. With logistics costs rising, everybody wants you to build in their back yard" — a hint that Magna is likely to add to its 29 manufacturing plants and one engineering facility in Mexico at some stage.

    Magna Exteriors and Interiors has a total of 10 plants in Mexico, three of which make composite parts: Celaya, Saltillo and Hermosillo. It supplies components and systems for both the interior and exterior of the Kenworth T680 and Peterbilt 579 trucks.

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