Strong Demand from Buyer Industries Modernization in the Mexican Foundry Industry
Thanks to demand from the automotive industry, Mexican light metal casting has grown strongly in recent years. Nowadays, national foundrymen produce around 1.6 million tons of various products. Now the production has to be modernized in order to meet customer demands.
Mexican suppliers of light metal parts are benefiting from the strong demand of the automotive industry. According to the market analysis company Mordor Intelligence, sales of aluminum castings to the automotive sector will increase by an average of 8 % per year until 2020. Magnesium parts will grow by 10 % and zinc parts by 2 %. According to Mordor Intelligence, the total sales volume in 2020 will amount to almost $ 1.8 billion.
The industry association SMFAC (Sociedad Mexicana de Fundidores) predicts that the production value of the entire foundry industry will increase by around 8 % in 2018. In view of the new US tariffs on steel and aluminium, Mexican manufacturers of intermediate products are increasingly looking for customers in Europe and East Asia. Producers of steel and aluminium parts in the country, on the other hand, can benefit from US tariffs in the medium term because they buy intermediate products at lower prices than their US competitors and can thus manufacture at lower prices.
Customer Industries are Doing Good
The Mexican automotive industry will continue to demand more lightweight castings in the coming years. New plants built by Mercedes-Benz (in cooperation with Nissan), BMW and Toyota will strengthen the production location and higher minimum value-added requirements in the Nafta region will attract additional suppliers. Car manufacturers will also have to reduce CO2 emissions and thus the weight of their vehicles. While 52 % of a vehicle currently consists of steel parts, this proportion will fall to 13 % by 2030. The gap will be filled by lighter components, especially ones made of aluminum.
However, there are further potential customer industries in Mexico. The Mexican aviation industry will grow by around 10 % in 2018, continuing its positive development of recent years. Experts expect this growth rate to continue into 2023. Thanks to the energy reform initiated in 2013, new power plants are being built in the electricity sector, especially in the wind and solar sectors. The government is also expanding the power grid.
Industry Carries Weight
According the SMFAC association, the entire Mexican foundry industry consists of around 1,600 companies, 70 % of which are national and 30 % international companies. Together, they produce around 1.6 million tons of various products, 80 % of which are sold to the automotive industry. Geographically important centers are the northern state of Nuevo León and San Luis Potosí in the centrally located Bajío region.
Bocar, Cuprum, Die Casting Solutions, Dynacast, Gibbs Die Casting Group, Nemak, Power-Cast Monterrey, Rockmann Industries and Sandhar Technologies are among the most important companies in the light metal casting of aluminium parts. Almexa is the largest Mexican supplier of rolled aluminium. Leading manufacturers of magnesium parts include Pace Industries, Magic Precision, Meridian Lightweight Technologies, Morimura Bros, Ryobi Die Casting, Gibbs Die Casting Group and Georg Fischer Limited.
Foundries Need to Become More Flexible
Regardless of the good order intake, Mexican foundries and casting manufacturers will have to face challenges in the coming years. Above all, the automotive industry is demanding ever more flexible production. Parts must be available within the shortest possible time and also in small series. In addition, specifications change more frequently due to rapid model changes.
In recent years, foundries in Mexico have focused on extending their capacities. Between 2012 and 2017 alone, 26 plants have been added, including investments made by Aurrenak, Kodaco, Nemak and Sakthi. Now producers have to invest in quality. This includes computer-based simulation of casting processes and quality inspection using X-rays or gamma rays. The general digitalization of production is becoming more and more widespread in Mexico. Detailed information is available in this GTAI article.
Most Machines in Mexico are Imported
In addition, Mexican foundries need to expand their supply base. According to the American Foundry Society (AFS), Mexico offers opportunities for suppliers of foundry equipment, tools and specialty chemicals. Especially the prospects for machinery sales are promising, which Mexico, despite its important industrial base, has to import to a large extent. The Inegi statistical office estimates that around 80 % of machinery across all sectors is imported.
Mexican imports of foundry equipment have risen steadily in recent years. The most important supplier is the USA, which accounted for around 40 % of imports in 2017. They were leading in all product categories listed below with the exception of molds and die casting machines, where Italy was the largest supplier. In addition, the People's Republic of China, Germany and Japan are important supplier countries.
A detailed study of the Mexican machinery market is available on the GTAI website.
NürnbergMesse Launches Euroguss in Mexico
From 24 to 26 October 2018, Euroguss Mexico will celebrate its premiere at the Fundiexpo in Guadalajara, Mexico's largest foundry trade fair. This means that the subject of light metal casting will be of particular relevance this year. More than 30 German and international companies will be presenting themselves at the first edition of the joint stand. "We see great potential in Mexican light metal casting and are delighted to be able to bring the Euroguss brand to Mexico," says Christopher Boss, Event Manager Euroguss at NürnbergMesse.