1999 was considered to be the best year in the history of Volkswagen Mexico. What was the key factor behind this success?
The key factor was the Mexican working force. This people are willing to work really hard and that I believe, is the biggest advantage right now in Mexico. We have really good people here in Mexico: hard workers, very well educated and very enthusiastic. Nevertheless the process took us 5 years. 5 years ago we produced less than 200 thousand cars and we increased that amount to over 400 thousand.
Is it the Mexican educational system, or is it your training program?
I would say the trust we have on people in combination with our training system. Everyone here receives in average 55 training hours a year, and we are 15 thousand people working. This is obligatory and is part of our business plan.
Does the country's educational system match your needs?
Yes, in general yes. In addition people are willing to educate themselves after getting out from school. They do a lot by themselves so they have always something more than just what they get from the official education.
In terms of sales, VW captured 26.1% of the domestic market in 1999. Once again, is it due to the human factor?
This is mostly due to the quality and the variety of the products that we are offering, in combination of course with the human factor.
In contrast with Mexico's results, deliveries to customers in South America diminished with respect to 1998. What would you say makes the difference between both markets?
The depression of South American economies, because I do not think that our colleges in Brazil or Argentina are less ambitious than we are. So it is a question of the economy in those countries. Fortunately Mexico has kept that issue stable.
At the end of the day, do you happen to compete with other Volkswagen plants worldwide?
We are always happy to compete; internally we are competing with everybody else, for example with VW Brazil in the Americas. Still, we are concentrating on the North American market; there are just very few exports to South America right now.
So, in which terms are you competing with them?
The cars we produce have to be competitive in quality and price in all markets. And then, you always compare key figures like market share, profits, etc..
Could sales in 1999 have been better?
All the cars we produced were sold. We could probably have sold more cars if we had them available.
So, is the production capacity the only impediment to increase sales?
Our plant has been running for 8 months of this year at a 100% technical production capacity. We cannot produce much more. For example, the Jetta is sold out and we are now trying to increase capacity, which is not an easy thing to do. We are using every means available and it has become an everyday issue.
Just, what is the option?
We have to maximize production as much as possible and imports as much as possible, from Brazil for example.The Puebla plant is at its limits in terms of capacity, but we are trying to add some more.
Considering the figures attained in 1999 and the present limitations in terms of production capacity, what are the next challenges?
We are trying to get more production than we did last year, not a very significant increment but perhaps 5% more. Everything in this business is a challenge. We want to finish the year with 28% of market share; that is another challenge.
Almost all the units sold to the American and Canadian markets are Jettas. How do you explain this?
Jetta is the main volume car that we are selling to the US and Canada. The price of this car is very competitive in those countries and so is its quality. In the US and Canada you do not drive as you do in Europe where there are four persons in the car. there you usually drive alone. You have a trunk that people like a lot, so people like this car.. The Golf is a very accepted car in Mexico and in Europe.. But customer preferences in the US are different from Europe.
For all of our readers, which are the advantages and disadvantages of investing in Mexico?
First of all, there are no major disadvantages. That is what I am always telling everybody. If you invest in Mexico, remember that from here you can access the two biggest markets in the world, which are North America and Europe. If you start a business you have to be a global player, you do not have to concentrate your efforts only in Mexico, in a long term you have to think global. We are selling our products right now in 85 countries around the world, and our suppliers are doing the same. If you produce something here, it has to be manufactured, commercialized and distributed keeping high standards so that you could be selling the same product anywhere in the world. We are aware of this. You have the working force here; people are hard workers. People work here 283 days a year, and if you compare it with the 230 days or so that people work in Europe, you can see that the productivity of your investment is much higher here. Investment now is flowing from north to south; everyone is investing now in Mexico. They are looking at the same advantages we are looking at. It is much easier to find a good workforce here than somewhere else. | What has the old Beetle represented to the Mexican families and how do they perceive the new Beetle? What is the profile of the customer that buys the old beetle and what is that of the one that buys the new Beetle?
First of all, in Mexico the old Beetle is called "vocho", and the new one is called Beetle. The vocho is still a car for basic transportation. A lot of companies need that kind of transportation, they need a car not as sophisticated as the new Beetle, that can go off road to the countryside. In this terms the old one is much more practical. It is cheap, it can be repaired the way it used to be 30 years ago, and few things have changed really. It is made mostly for company fleets and for people that cannot afford a higher price car. The new Beetle does not have a big market here in Mexico. The Beetle is a specialty car, and in Mexico, especially in Mexico City, people do not want to be seen in the street driving a fancy car because of the insecurity rates. People want to be invisible in the streets. Besides this, the price is in a range that not many can reach. This would never be a Mexican family first car. In the US, where everyone wants to be seen, this car is perfect. The Beetle is the car made in Mexico for the world.
How much of a concern is the insecurity issue for you and your company?
This is a very difficult question to answer. If you see the income per capita in Mexico you will see that 50% of the population is considered to be poor. In the countryside, in the big cities, you will always find poor people trying to make a living. It is the same situation you would find in Rio de Janeiro where the unemployment rate goes up to 40%. What can people do without an adequate and regular income? In these terms, every poor country is a dangerous country. In Puebla I need no protection when coming from my home to the factory and I am not anxious about the fact that I have to come here everyday. But in big cities this is not the case. Mexico has to do something about it. Mexico needs more jobs; education without employment is useless. But this is happening all over the world.
In a country where pollution is a national concern, how is VW reacting?
All our policies are in line with the VW Group policies. For us Mexico is not different from Germany or the US or whatever. Our company has to be clean; we have internal environmental policies, which we are fulfilling. We want to have a clear environment. By the way, the Mexican government is rethinking emission laws and we expect stronger laws for emissions in a near future, but this will apply for new vehicles. If the government intended to tell everyone owning an old car to buy a new one because there is a law that says so, there would be a revolution. The government knows that this has to be solved with long-term actions.
Can you tell us about your latest achievements in terms of security and quality?
We are offering the customers what they really need in safety.. In Mexico we need special items such as alarms, but in general cars are developed in Germany and then offered in all world markets. I could bring right now a Jetta from Germany and there would be no difference with the ones we manufacture here. For each country there are different features because each country has different laws, but in general cars are the same. The policies are: quality number one, and costs as good a possible.
Are you selling in Mexico brands other than Volkswagen?
Yes, 2 years and a half ago we launched Audi, which is very successful. Right now we are very close to BMW. Probably we will be bringing Seat in a near future. Seat is offering cars that fit the Mexican taste for cars, so we are thinking about bringing Seat as a third brand.
What has been the role of VW Mexico in the negotiations of NAFTA and the Free Trade Agreement with the EU? What does this represented for VW?
The government asked not for help but for advice. The government started to learn what a global player means, also for a government. You have to change your regulations, your laws, and you have to teach other companies what a global player does. I believe that competition is always good. Many people do not know that Mexico is the 8th global exporter in the world; even in the government there are people that do not know what it represents. Mexico has so many chances to increase its figures, probably becoming number 5 or 6. You have to open your markets and your way of doing business. The Mexican government saw this was the right way and that is why they came looking for advice. This tells us that the government is willing to enter the global arena as a competitive player. Mexico has now a very interesting international approach. Zedillo really captured the essence of the ideas behind globalization; he has much more a long-term way of thinking than other people in the past. The government wants Mexico to become successful in the future, becoming economically independent from the US.
Economically speaking, what is the difference between Fox and Labastida?
There is no major difference; there will be no big changes. If you think about the Mexican economy there are still a lot of things to do. One thing is to open the market still more, to become more global thus creating more jobs. On the other hand there is the tax problem.. Many people are not paying any taxes and so the government has not enough money to solve its problems. There are still so many things to do within the country. I personally think that Labastida or Fox would have done the same thing because there is no other choice. This country is moving towards a socially oriented democracy. |
Volkswagen Mexico