In a move to get most out of the North American market, the German Industrial group ThyssenKrupp (TKAMY, Financial) finds it suitable to invest a huge sum of $866 million to expand the company’s operation. It finds the economy’s reindustrialization a favorable factor for it to the year 2020.
The company has started the new steering components plant in Puebla, Mexico. North America is the second-largest auto market in the world and with the predictions by experts of a 12% rise in car production by the year 2020, the company hopes to increase investments in the North America and capture the market early.
Economy reindustrialization in North America
With a stable growth rate of 8% last year and with the economy reindustrialization in North America, the company has also planned for major acquisition but is waiting for positive free cash flow. Around 17 million vehicles were produced in 2014 which is a promising figure for the car components company. Being part of North America’s growth is on the mind of the company and thus seeing an opportunity in the automotive sector, the company plans to invest around 500 million euros in it alone. In all the business together, it aims around 800 million euros by the year 2020.
With full-order bookings in the U.S. and Mexico, the company plans to expand rapidly in the near future to cater to the demand of the auto market. Raising the bar from the last three fiscals during which the company invested 180 million euros to 500 million euros suggests the company is anticipating some exciting growth potential in the U.S. and North American region. On an average, the company is expected to invest 80 million euros by the year 2020 out of which a 50% share will go into building and expanding new plants in Mexico. The new steering plant in Mexico is the fourth amongst the automotive components manufacturing units.
The current product range in North America includes:
- Engine and steering components
- Springs and stabilizers
- Assembly of axle modules.
Launch of In-Car Plus
For the top American and Japanese manufacturers in the United States, the company is eyeing to launch In-Car Plus research and development platform which will help it to boost its broad based marketing plans in the North American Region which mainly focuses on energy efficiency, electro mobility and light weighting. These innovations can be used in body, chassis steering and power train. Earlier in the year in February, the company opened new front axle assembly unit in Puebla, Mexico with further axle assembly unit building in San Jose, Chiapa to supply Audi beginning in 2016. Work is expected to start the construction of production line for cylinder head covers at a new engine components plant near Bajio region.
Area of strength in North America
- Total employee strength of 29,000.
- Production of high-tech world class components for the automotive and machinery sectors.
- The company has total employee strength of 4,500 in the components technology division alone in 11 locations in North America, out of which half of them are in Mexico.
- Nine of the 10 components fitted to premium class cars are of the company.
- The company posted 6.2 billion euros in 2013-14.
Total automotive sector sales around 9.5 billion euros in 2013-14.
