Sunday, 18 May 2014

BMW to make Mini in Mexico?

Rumours are circulating that BMW is set to manufacture at least one of its Mini range alongside BMW 3-Series and 1-Series in Mexico.

With Mini production now getting ready to roll at VDL NedCar in Holland, reports are surfacing that parent BMW is looking at further possibilities to expand production of the brand in potentially lower-cost regions close to new and expanding markets.

According to the German newspaper Handelsblatt, BMW may build the Mini alongside the BMW 3-Series and 1-Series at a new plant in Mexico.

The newspaper argues that BMW executives favour Mexico for the factory to build the smallest of the BMW brand vehicles. It further argues that building the Mini in Mexico alongside other lower-margin products locally would boost profits.

However, according to a report in Automotive News Europe, a BMW spokesperson has said the report was "mere speculation". But of course BMW would say that, wouldn’t they before any full-blown announcement by BMW top management?

According to Handelsblatt, BMW’s supervisory board will make a decision in the second half of the year. Further suggestions put the cost of the BMW plant at US$1 billion.

Expanding Mini production so close to the North American market would fit in with BMW policy. And with so much experience of building the product in the UK and the Netherlands, the company has a detailed knowledge of the product.

Lessons learnt at Plant Oxford over the years, coupled with new experience from VDL NedCar, albeing building the car under sub-contract, puts BMW’s manufacturing engineers in an ideal position to produce another first class facility, not only in terms of body and assembly, but in paint shop technology too.

Added to which, equipment supply companies such as KUKA in Augsburg, Germany, have comprehensive operations in Mexico and North America which could cope with any substantial order from BMW.

Indeed, so close is KUKA (above) to BMW that late in 2012 the car company placed a blanket order for no less than 2,400 KR QUANTEC industrial robots and KR C4 controllers with the Augsburg robot maker. Delivery of the first machine of this massive order was due to start early 2013.

KUKA Augsburg has no less than four operations in Mexico and North America and Mexico: KUKA Systems de Mexico based in Toluca, Mexico; KUKA systems North America LLC based in Sterling heights, Michigan; KUKA Toledo Production Systems based in Toledo, Ohio, and finally, KUKA Assembly and Test operations in Saginaw, Michigan.

Together these divisions of the robot and systems integrator can deal with almost anything which BMW can direct in its direction. And, anything that KUKA Systems de Mexico cannot handle will be more than covered by the other three operations.

KUKA also works closely with a range of equipment suppliers associated with body-in-white (BIW) line building, which is perhaps KUKA’s key speciality, including spot welding and other methods of joining.

And, as with the introduction of Mini production at VDL NedCar on a sub-contract basis, the new facility will provide an opportunity for Mini design and manufacturing staff based in Munich, Germany, and Oxford, UK, to transfer and replicate their much-valued knowledge and expertise to a brand new facility.

The prospect of Mini production in Mexico raises the whole question of engine supply for BMW products made in that country. Should any further development take place on this front then another German equipment supplier, machine tool supplier Grob-Werke GmbH of Mindelheim, could be in the front line.

Even at this moment, Grob-Werke is busy with engine line expansion at BMW’s Hams Hall facilities in the West midlands, UK. Grob-Werke has facilities too in Bluffton, USA and Sao Paulo, Brazil.

Meanwhile, in a separate report from El Economista, Francisco González of investment promotion agency ProMexico has said that both Hyundai and BMW are planning to develop plants in the country, investing US$2 billion.

Although these reports have been circulating for some time, no doubt in part fostered by sources in Mexico keen to encourage further investment into the region, there is more than an element of probability to them.

Although BMW has yet to confirm its plans, it is well known from various top-level pronouncements in Munich, Germany, that BMW is committed to growing its North American production base, having announced expansion plans for its Spartanburg plant in March.

In 2010, reports surfaced that BMW was considering investing USD1 billion in its Mexican supply base, followed by a series of reports out-of-business publications and from Mexican government sources.

The reports now surfacing are the first to suggest that Mini production would be added as well. According to one forecast, BMW could begin production in 2018, growing to 160,000 units by 2021.                                              ∎

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