Case Study: Elastomer Solutions: Successfully Expanding Alongside its Customer Base
A leading supplier of rubber-based components to some of the largest players in the automotive industry, Elastomer Solutions is a European enterprise with broad ambitions. “Since our customers are global, we are expanding our own footprint in order to ensure that we remain close to them and can service their growing needs,” says Paula Dias, CEO of Elastomer Solutions.
“We call it the Triple A Strategy: Americas, Asia and Africa. In 2012 we set up in Africa, and 2014 we turned our focus to the Americas on a standalone basis.”
Automotive manufacturers such as Audi, Daimler, Volkswagen and others have been steadily supplying or are planning to supply the North American market through production facilities in Mexico. In this way, the OEMs harness competitive production costs and the benefits of proximity for transport and logistics, along with low-tariff – and in many cases tariff-free – access to the U.S. and Canada through Mexico’s membership in the North American Free Trade Agreement (NAFTA). They can also easily access customers in South America, where Mexico also has free-trading relationships.
As a supplier to well-known automotive manufacturers, Elastomer Solutions, a portfolio company of mutares AG, wanted to establish a production footprint in Mexico in order to better support its customers’ North American operations. The Europe-based producer of custom polymeric components wasn’t sure how to go about it quickly and effectively. However, when Elastomer Solutions discovered Entrada Group and its value proposition, it knew it had found its ticket to Mexico.
“Prior to engaging with Entrada, our biggest concern was having to set up in Mexico alone, something that would have required a lot of additional resources and know-how to manage a completely different legal and corporate system. Entrada was instrumental in introducing us to the country’s customs, regulations and workforce, and most importantly, it enabled us to establish ourselves rapidly in Mexico,” says Ms. Dias. “It would have taken us much, much longer to set up on our own.”
She adds that there are three key assets that convinced Elastomer Solutions to work with Entrada: its manufacturing support platform, its location in central Mexico and its people.
The Entrada Manufacturing Support Platform
“Once we understood the benefits of the Entrada support platform, which includes a shelter services concept that minimizes our exposure to risk, manufacturing campuses and centralized shared services, we were hooked,” Ms. Dias adds. “In short, we are able to focus on our core business, while Entrada takes care of the rest.”
As a midsize company, Elastomer Solutions didn’t have the spare resources or experience to deal with the hurdles of setting up operations in Mexico on its own – challenges such as local logistics, procurement, human resources and administration, plus understanding and navigating the Mexico legal framework.
“These are essential issues when establishing and running manufacturing operations in another country, so not having to manage it ourselves is immensely valuable,” she adds.
“At the same time,” Ms. Dias stresses, “Entrada does not interfere with our business or our customers. We maintain complete control of both.”
For more than 15 years, Entrada’s first manufacturing campus has been located just outside of Fresnillo, a city situated within a population corridor of some 500,000 in northern central Mexico. Only 35 miles northwest of the capital Zacatecas, it can be reached easily by air from Mexico City.
“What we liked about the location in Fresnillo was the feeling that we were really in authentic Mexico – we felt a strong chemistry with the land. We didn’t feel that way when we visited border areas like Monterey,” says Ms. Dias. “The facilities in Fresnillo – the park, installations and production hall – are also perfect for our operations, and we feel safe because the site is well secured 24/7,” she adds.
“Moreover, there is a good supply of labor in the area. The people are very rooted in their community, so there’s a strong sense of commitment and engagement.”
“The quality of the people at Entrada was foremost important in our decision to work with them,” says Ms. Dias. “After we met Paul Karon and Doug Donahue [Entrada’s principals], we felt immediately comfortable and felt that we could really trust them. This was confirmed in discussions with other Entrada clients, and has been borne out since working with them.”
For a company like Elastomer Solutions, a new operation in Mexico, alongside its operations in Portugal, Germany, Slovakia and Morocco, enhances its status as a global business. Elastomer’s AAA ambition is already starting to translate into important revenue gains. “This year we’ve grown 21% in terms of sales. This is not solely due to Mexico, but some of the projects that we’ve newly won in Europe will be executed there. We have also been awarded some interesting North American projects for Mexico too,” Ms. Dias asserts. “One year after ‘go live’ in the country, we are really starting to reap the benefits!”