Could you give our readers a brief historical background of Aventec Mexico?
We made a business registration company incorporation on March 30th, 1998. Before that, we received requirements from our previous General Motors Mexico President (Director General), Mr. Gary Cowger, now in charge of the Human Resources at the head office of General Motors. At that time he was the president and he contacted Hirotec, one of our shareholders to come to this country to make doors and other closures for them. Hirotec has a good reputation with General Motors worldwide. Because of that reputation, Mr. Gary Cowger showed others interest and when we had a conversation with Mr. Cowger and the Hirotec president at that time in Japan, Hirotec showed interest. We have three company shareholders: Budd Company in Detroit, Michigan; Hirotec Hiroshima, Japan; and Sumitomo Corporation, Tokyo. Sumitomo also has an office in Mexico City. They also have a great relationship with GM, Ford, Chrysler and Volkswagen. They also had a conversation with an executive of General Motors Mexico, received the same invitation. So Sumitomo contacted Hirotec because they have a relation in Japan. Almost 15 years ago, in Sonora, Hermosillo, Sumitomo and Hirotec applied the assembly lines for the Ford plant. Since then, Hirotec and Sumitomo have had a good relationship. So we came to a mutual understanding to go together all over the world. So, Hirotec received Jerry Krueger's invitation. At the same time, Sumitomo also received GM's invitation. So we said, "Were you invited", "Yes we were also invited, so let's go!" That was in the summer season of 1997. Then, Hirotec had another relation with Budd Company, which is a client for Hirotec in the US market. So the three companies thought there would be a good opportunity to have joint 1/3 projects. Then we incorporated in 1998. At that time, Mr. Fox was the governor. He came here and he dug the ground that was a great honor for us. We finished the construction in May 1999. We started partial production in July 1999 and total production in October 1999. At that time, our customer was GM Mexico-Silao. The product we are currently selling is the Suburban. Then we discussed, several customers made a presentation. Fortunately, we were able to get an order from Ford Motor Company for the new Fiesta and also recently received another order from Nissan, the Tsuru panel. And now we are discussing with GM Ramos Arispe, we may receive orders for the new 250 Aztec motorcar, so we are expanding at the moment.
What is the specific contribution that each company puts in this synergy?
Hirotec is the manufacturing company, they are the 100% doors suppliers for the Mazda motor in Hiroshima, so they have the technology and are the leaders in this manufacturing field. Budd company also has a manufacturing background but it takes care of the sales and marketing. Sumitomo receives all other general affairs, including finance, accounting and administration.
What are the main advantages of the State of Guanajuato or the developments of industry as compared to other regions in Mexico?
If we go south, being Mexico City, near Cuautitlán or Puebla, that's fine but we have a severe pollution problem and wages are very high. If we go north to Hermosillo, the customers are only for Hermosillo or maybe Ramos Arispe, maybe we could do business with Ramos Arispe, GM or Saltillo Chrysler. Guanajuato is in the middle of Mexico, so maybe we can supply the business North, Center and South. So it's a good opportunity for us to do a nationwide business. Of course, we do have some penalty because there's approximately 1000 kilometers from here to Hermosillo. Maybe it's not feasible but Guadalajara has Honda, Aguascalientes has Nissan, Cuatitlán has Ford and Silao has GM. We believe many other new projects will arise. Rumor says that Ford will install a plant in the Bajío Area and Renault came to Aguascalientes. So we believe this is the best location. And also when Mr. Fox was Governor of Guanajuato, he was so aggressive in his policy to invite us; he came to Japan and made a promotion with a lot of incentive proposals, so we took that note in our investigation. Of course also Aguascalientes and Queretaro gave us several incentives but the Guanajuato incentives were attractive and also, as I said, the main inviting company was GM in Silao, they said "You must come here, right now. Don't go to any other state." So we said, "Fine, but let us review", so we reviewed this Bajío area and finally we decided to come here.
Do you think Mexico already lays the ground or in order to attract automotive and electronic industries?
That is a very difficult question because, generally speaking, Mexico is improving and that goes back less than 15 years ago when I was in Sonora, Hermosillo. Right now, Telmex, CFE, they are very supportive but the problem is that here, in the industrial park the owner is personal, not the government and he has some financial problems that's why we had a very tough time to have utilities but the government gave a lot of support. So, whenever we have a problem, we contact the government, ask them to support us and they immediately do so. So yes, we struggle very much but we appreciate the government's support.
Are you running at full capacity right now and what are your new plans for the future?
Right now, we are pretty full and have a 50 hour jph. Our main customer is GM Silao. We try to produce 300 thousand units per year and this is a good volume of approximately 85% of our production capacity. The remaining 15% is a small percentage. But we receive Ford orders and Nissan orders and maybe we'll receive some business from GM Ramos Arispe. We are expecting GM, Nissan and some Ford, we also wish to have a big business with Ford Motor Company. In other words, our goal is not for the small volume business. The big Suburban vans is one of our target with our technology. So we wish to do business with the Ford Pick up truck or Chrysler truck, too. As you know, the automotive business changes the model every 5 years or so. Once they finish the model they say, "Hey, Aventec, thank you very much, bye-bye." Then, we lose the business, but if we have Ford, Chrysler and GM respectively, periodically, if we lose one, we survive. Without GM, we'd have to close this plant, that's why we decided to have Ford, Chrysler, and Volkswagen even in the USA or South America. We wish to expand business.
Fox prides himself of Aventec having been established in Guanajuato, for it is the most interesting joint venture. Do you think this example could be exported to other countries and will it depend on how successful this experience turns out to be?
If possible, we wish to export our products overseas but the problem is that our products are closure panels like hoods, doors, trunk lids or roofs and they are very sensitive to transportation. During the transportation, if we have any damage, the product is no good. So this product is not suitable for long-distance transportation. If the people who need from us, we can support but its very risky and a non-feasible arrangement for such type of long-distance supply. GM Silao is 10 minutes from us. For example, if we have inquiries for Hermosillo to assemble the product there.
But I mean the concept itself may be exported.
We don't know yet but if we have any requirement,
for example in Brazil, we may go there or to Europe.
France, Germany and England are very developed but
potential areas would be Poland, Spain or Eastern
European countries. We may do something interesting
even exchanging some partner. Thailand and Asia
show another possibility to grow and it would depend
on the shareholders. As far as we are concerned,
Sumitomo, Hirotec and Budd are very happy so maybe
this is a very good combination to take advantage
of going to other countries. |
Is it difficult to combine three cultures such as the Japanese, American and Mexican to work together?
Actually, this is very difficult with three totally different cultures. We reviewed this problem as a risk but human is human so we thought we would be able to make it because of communications. We still have a lot of problems they complain it's not the Japanese way of doing things, etc. But the first approach was to reach a mutual understanding and majority has some consensus. If the result is better than the previous, why not? We have to listen to the Mexican way, the USA way and finally make a decision. Once we came to Mexico, we had to respect Mexico first so our target is to become a Mexican company with Japanese and USA blood so we try to speak Spanish as much as possible, learn the way of thinking. We don't like "Mañana, mañana, mañana," but this is Mexico. We have to respect the Mexican ways with a Japanese and American concept. The Mexican people are very aggressive and diligent. Before they understand the policies they say "I don't understand, ¿por qué, por qué?," but we train them and educate them and show them why it is necessary. Once they receive that concept, they are very good people, we are so surprised. We do have a problem but we have to overcome it.
Are you happy with the skills of the people you are engaged with and what are the training skills you are working on?
The simple worker doesn't need any skills, they are local farmers or shoe-makers. Once they receive only one month of general training: what Aventec is, what Hirotec is, what GM is, they are dispatched to each line and they do well. The problem is the skilled worker such as quality control, maintenance, etc. Here, in this Bajío area it's difficult to find them so we have to get them from Monterrey, Mexico City, we are recruiting nationwide. But we use a good head-hunting company, we have interviews, etc. They are still lacking some requirements but if we are lucky, we can get a good worker.
Since Aventec is a long-term project and you have committed your presence in this country and, so far, you have already achieved some of your goals, are you perhaps foreseeing the idea of finalizing an agreement with educational institutions here in Mexico in order to train your future personnel?
That is still under development and we don't know yet. If we selected a location like Celaya (Celaya is a good facility, it's the joint arrangement between the Mexican and Japanese governments and they do skill training), we would utilize those opportunities. The problem is that here in Guanajuato there are no such places but for the long-term a contribution we have to review any possibility with the Guanajuato or Silao government to establish this type of training facilities. Maybe if the government itself has such a program we will have a joint project with other tenants of the industrial park. If we can do it, that arrangement will help us eventually but unfortunately, we just came here and that is still under way.
As you mentioned, Mr. Fox had a trade mission in Asian countries, including Japan and he was determined to attract investment but now that he's become the new president of this nation, what are your expectations for the next six years and what are the major demands for your sector?
For the investing foreign countries like ourselves, they felt it risky because every six years, when the president changed, something happened such as the tequila shock last time. When we decided to come to Mexico in 1997, we discussed "When is the next presidency changing?", "Well, in 2000". So after we foresaw disaster a year after settling down or maybe it was not a good timing. We thought that Mexico formed part of the NAFTA so it has big obligations with the USA and Canada, so if sudden changes continue, then we shouldn't come. Mexico is a Latin American country. Mr. Zedillo's efforts have been good and stable. The peso is 9.3 right now, people can't believe it, but look at the inflation, within 10% is good in Mexico. Active countries need dynamic changes so within 10% is reasonable. The problem is that the Mexican financial system makes it difficult for other countries and if we cannot control the inflation or exchange rate, then we have a problem beyond our control. We said, "Why do we have to go to that problem if we don't like it, it's very unstable". Our sincere requirement is no sudden changes, "por favor".
How supportive would you be of the Mexico-Asian free trade agreemen?
Before moving to the free trade agreement between Japan and Mexico I'd like to ask the current or new government to consider that in Mexico we have the maquiladora or "PITEX" system but this system will be finished by October, but what will happen then? We invested multi-million US dollars worth of imports from Japan. We are considering to import another big million US dollars worth in May 2001, then, do we have to pay the duty? We are discussing about the PPS promotion program but it only applies to components and not for the heavy duty presses we are using. We have a lot of penalty. If we can use presses made in Mexico, we'll use them but that is not possible, we have to import. The good supplier is still Japan and Europe and this is a disadvantage for us. That's one issue we have to discuss and if the new government can consider to say something, we'll appreciate it. This applies to any other country considering to invest here.
Right now, the USA, Canada and Mexico have an agreement and they have just signed an agreement with Europe, but time is necessary. We are now considering to procure material such as steel coil and this is majority of our total cost. Our current coil comes from the USA, we prefer to use quality European or Japanese coil, too but because of this problem, we may keep using the US coil. Until the European duty becomes 0, we'll have to keep paying the duties and we have to add this cost to the final customer. If we compete with a company using USA coil, our costs are higher and we reduce our competitiveness. If they don't care about the quality, I don't care. So far, we have several difficulties to use USA coil and would like to try to use European and/or Japanese Coils, too, but we have to pay the cost penalty and add them to our selling cost.
Could you tell us about your professional background and how you would like to see Aventec in 5 years' time?
My background isn't technical, I'm an economist. I graduated from a Japanese university and my mayor was international trade, especially the EC. After that I joined the Sumitomo corporation in Japan and I spent almost 25 years with them. The first 3 years I was assigned to the personnel department so I learned a lot about the subject. Then I was requested to go to the automotive department. Since then, I have been and will be in the automotive industry and sales. I have traveled a lot: to Europe, the USA, Asia and South America and sold Japanese products, components, material or equipment, I'm a salesman. Then, I spent several years in Detroit and in Hermosillo, Sonora in automotive related businesses. Then they told me I should go to Silao and was assigned as Vice-President of General Affairs although I wished to be Vice-President of Sales and Marketing. It was a challenge to learn about accounting, which is a different world. So far I hired a good manager for support. I'm quite happy but again, I'm a salesman and further along the road I wish to go to Sumitomo Tokyo to a sales activity area. But Aventec is a very dynamic experience to learn about the Mexican culture and the Mexican administration system and human resources system. I also learnt about the Mexican accounting system which I hate but I like! My original assignment was two years and today is my two-year anniversary. Supposedly, today is my last day but my boss in Japan asked me to take care of this business for one more year because there is no other person to replace me. I have a family in Japan waiting for me but business is business, if it's only one year, I'll stay. I love Aventec and I love Mexico but only for one more year at this moment. |
Aventec Mexico