Manufacturing, particularly automotive manufacturing in Mexico is centered around two areas, Monterrey in the North and Queretaro further to the south which means of course that these are the two hotbeds of manufacturing and consequently heat treating in the country. Over the past number of years a substantial number of auto makers and suppliers have sprung up around Monterrey along with other well known companies not involved in the auto industry.

A few names that come to mind are General Motors, Chrysler, and Toyota, amongst the auto parts suppliers we have Sisamex (Arvin Meritor, heavy rear truck assemblies), Linamar Machine and Associated Spring (Wallace Barnes Group, springs). Outside of the auto industry we have John Deere and Caterpillar; amongst commercial heat treaters we have Procesos Termicos Y Especiales De Mexico and Technotrat (formerly Rutycsa). Please note that while ALD and Bodycote (both very large commercial heat treaters) are setting up plants in Mexico they are just getting to the point of building plants and at this time there is not a great deal we can tell you other than periodic updates about the progress of their plans.

For reasons unknown to us commercial heat treaters in Mexico have been a fairly scarce commodity (maybe 10 at most just a few years ago) with most heat treating done in house. However as more and more manufacturers have set up operations in Mexico the demand for commercial heat treaters has grown and the capitalist system being what it is we are seeing a number of new commercial heat treaters set up shop with more to come. Our personal opinion is that with margins in North America for commercial heat treating being so slim Mexico would be a very good area for North American heat treaters to invest in, keeping in mind of course that Mexico is a different country with its own challenges.  Below we have a brief summary of the state of the heat treating industry in Mexico  and we briefly mention a few notable captive and commercial heat treaters. Should you have any questions or comments about the Mexican Heat Treating Industry we would appreciate hearing them.

- up to date the vast bulk of heat treating in Mexico has been captive as opposed to commercial for the simple reason that until recently there were not more than 10 commercial heat treaters in Mexico and most of these had a limited ability to meet the newest automotive and aerospace specifications.

- virtually all of the captive heat treaters are branches of multinational corporations with a very sizeable % being involved in the auto industry. GM, Chrysler, Magna, Linamar, Associated Spring, John Deere, Caterpillar, Arvin Meritor, Dana are just a few.

- suppliers of new furnaces tend to be from outside of Mexico with all the names you would expect to see, AFC-Holcroft, Surface Combustion, Ipsen, Williams and Lindberg. Please note though that in some cases the furnaces are designed by these companies but built locally by a licensee in Mexico.

- the 3 largest commercial heat treaters are ETSA Grupo http://www.especialidadestermicas.com/,  CRIO S.A. de C.V, and Tecnotrat www.tecnotrat.com.mx Margins for commercial heat treating in Mexico tend be higher than in other areas of North America. For instance while an average margin in Canada or the US might be 15% this would be on the low end of the scale in Mexico with margins typically in the 20-25% range which is no surprise given the relatively small % of heat treating done by commercial shops. The figure most bandied about in the industry is that roughly 10% of heat treating in Canada and the US is done by commercials as opposed to in house operations with Europe being substantially higher than this. We have run across no comparable figures for the Mexican market but our estimate would be LESS than 5%.

- while commercial heat treating in Mexico is growing with several new operations being set up (ALD and Bodycote are good examples) there is still a problem with meeting some heat treating specifications such as NADCAP. While the aerospace industry is still in its infancy in Mexico several manufacturers told me that there are virtually no commercial heat treaters that have this certification and not many more that can meet CQI-9. Right along the same lines there remains a shortage of "state of the art" vacuum furnaces with only a very few units being capable of 10 bar quenching or above.

- both captive and commercial heat treating in Mexico will undoubtedly grow in the future as more manufacturing is moved from higher labor cost areas to the relatively low labor cost area of Mexico.

Our conclusion based upon speaking with a substantial number of captive and commercial heat treaters is that there are good opportunities in Mexico for manufacturers of new furnaces, suppliers of associated equipment and room to grow in the commercial heat treating industry.

Now let's Look at a Number of Captive and Commercial Heat Treaters in Mexico.

ta USA. ta USA in Sta. Catarina, Mexico is a medium sized commercial heat treating shop. Traitment Atmospheric is actually the sister plant of another commercial heat treater by the name of Tri State Metal Inc. in East Chicago, USA. This is basically a fastener shop with a mix of continuous and batch IQ systems. It is one of only three commercial shops in the Monterrey, Mexico area. Not an elaborate operation by any means, older equipment but impeccably clean with all the equipment in excellent condition. Kind of like a mint condition 1967 Mustang, not state of the art, not the latest and the greatest but boy does it look good and run well. February 23/07

Caterpillar, Corp./Santa Catarina, Mexico. Let's continue our road trip of captive and commercial heat treaters in the Monterrey, Mexico area with a stop at a very large Caterpillar plant in the area. We're going to assume that CAT needs no introduction and instead go right to the portion of the business that interests us, their heat treating department. This is a good sized, very modern plant with a medium sized captive heat treating department which consists of some very large stress relieving furnaces, press quenching, continuous tempers, pit furnaces and some batch IQ furnaces of which the centerpiece has to be a brand new AFC batch IQ line. Walking through this plant and the heat treating department was no different that walking through a CAT plant anywhere around the world, similar equipment, similar manufacturing systems and a mix of state of the art equipment mixed in with "basic stuff". This by the way is one of two CAT plants in the area, the second being less than 1 hour down the road and doing some stress relieving. February 22/07

Linamar de Mexico.  Linamar is a very large Canada based auto parts maker with numerous plants around the world including Mexico, China and Bulgaria. We've talked about them numerous times in the past because of their recent investment in vacuum carburizing and also for the fact that one of their plants in Canada has probably the largest batch IQ capacity in North America and possibly the world. The photos below show their Mexican plant which makes transmission components for the local General Motors and Chrysler facilities. All in all a nice setup and typical of the new manufacturing facilities which have sprung up in just the past few years in the Monterrey area. February 20/07

GSC/Saltillo, Mexico. The latest installment of our series on captive and commercial heat treating in Mexico covers a captive heat treating operation making investment castings for Mexico's small but growing Aerospace Industry, a company by the name of GSC. GSC's parent company is located in Ogden, Utah and as you can see in the press release below from Dec. of last year also does in house vacuum heat treating. Again in the press release below you can see that we announced their acquisition by PCC, an acquisition which is going ahead and should be completely finalized within the next couple of weeks. While this would be considered a small operation by most standards, it is a very nice plant (only 4 years old), and with an eye to future growth they have an option on a large vacant lot next door. Not big but obviously this is the beginning of what will be a large, state of the art facility in the future. February 19/07

"PCC/GSC Foundries. Portland, Oregon, USA based Precision Castparts Corp (titanium castings for the Aerospace Industry http://www.precast.com/)  has been mentioned several times on our site as they have several large captive heat treating operations. Most recently in July of this year we told you about an order they had placed for two large bottom loading vacuum furnaces. Their name comes up today in regards to an acquisition they are making that while not 100% certainly appears as though it will end up there. GSC Foundries http://www.gscutah.com/  headquartered in Ogden Utah has several locations making investment castings for a number of different industries including aerospace and military which certainly at first look seems like a good fit. As you would expect GSC also does in house heat treating and has two Ipsen vacuum furnaces at their Ogden, Utah facility."

Sisamex/Arvin Meritor Monterrey, Mexico. Continuing our series about heat treating in Monterrey, Mexico, we present to you a very good sized captive operation, the Sisamex division of Arvin Meritor. A manufacturer of heavy rear axle truck assemblies, Sisamex has a large (over 1500 employees) and long established facility in the Monterrey area. As you would expect their heat treating department reflects the size of this plant and is an immaculate operation consisting of a large number of Batch IQ furnaces with matching tempers and other auxiliary equipment. 

Procesos Termicos Y Especiales De Mexico. This commercial heat treater is fairly new to the commercial heat treating market in Mexico but they have certainly started off with a very impressive plant. They started up just 2 years ago but already have a roughly 60,000 square foot plant with a planned addition of 40,000 square feet soon to come. Processes include Vacuum heat treating (with a brand new 12 bar VFS vacuum furnace which was just purchased a few months back), batch IQ furnaces with the centerpiece being a GM batch IQ line (which by the way was purchased through “The Monty” a couple of years back), plating, NDT, hydroforming, a rotary retort line and a mesh belt line. The President of this company is none other than Paul Chacon who is also President of a commercial heat treat in Salt Lake City, Utah, USA. Currently they have roughly 27 employees but this will soon grow to an estimated 45 individuals which makes them probably one of the three largest commercial heat treats in Mexico. In addition to this facility they have another in Mexicali, Mexico which does Aluminum processing.

Associated Spring/Wallace Barnes Group. Let's look at one of the captive heat treating operations in Monterrey, Associated Spring who as you might guess makes springs for the auto industry. Associated Spring also has plants in Bristol, Connecticut, USA and Burlington, Ontario, Canada both of which no longer do captive heat treating. This is a beautiful operation with a very nice if not large austempering heat treating facility. The world of heat treating is small and I immediately thought the furnace looked very familiar. Guess what? The furnace was familiar in that I had seen it many times at the Associated Spring plant in Canada before it was moved to Mexico. It's a small industry!

ALD Mexico. If you recall we’ve announced in the past how ALD (new heat treating furnaces, commercial vacuum carburizing) is setting up a commercial heat treat in Mexico to process transmission components for GM. ALD has provided us with an update about progress of this “Greenfield” site. As we speak ALD is closing the deal for land and a building in Saltillo, Mexico. The building will be a brand new 80,000 square foot facility and will be operational in January of 2008. The basis for this very large investment is an order from General Motors in Ramos Arizpe to vacuum carburize 1800 transmissions per/day. While GM has provided the excuse to build the plant this is a very fast growing area and undoubtedly there is the potential for other new business. By the way while we do not have an exact number knowing vacuum carburizing furnaces as we do, we have no doubt but that this represents a multi million dollar investment on the part of ALD. Vacuum Carburizing has come a long way in the auto industry since it was first applied on a large scale by Peter Jones of Stackpole (powdered metal transmission components, Mississauga, Ontario, Canada) a good 20 years ago.

November 2007