Gestamp boss eyes growth in outsourcing, hot stamping
BARCELONA, Spain -- The expanding trend of automakers’ outsourcing to suppliers will continue to help Spanish metal parts supplier Gestamp outpace the growth of the global auto market, says the company’s chairman, Francisco Riberas.
Gestamp posted revenue of 8.2 billion euros ($9.5 billion) for 2017, up 8.6 percent from the year before. Since 1998 the company has enjoyed a compound annual growth rate of 20 percent, company records show.
Riberas predicted that further growth would be driven by automakers’ reluctance to invest capital in press shops for new plants.
“The most important driver for growth for us in the next years to come will be outsourcing,” Riberas told journalists at the company’s Abrera plant, next to Seat’s Martorell operation near Barcelona.
Riberas quoted figures from Roland Berger putting the total market for body-in-white and chassis parts at 103 billion euros (about $122 billion) in 2015, of which 43 billion ($50 billion) went to suppliers. The trend to reduce in-house stamping will increase the amount going to suppliers to 63 billion (about $73 billion) by 2025 in an increased overall market of 127 billion (about $148 billion), Gestamp predicts.
Gestamp is ranked 27th on the Automotive News Europe list of the top 100 global OEM parts suppliers. It currently has 102 production plants globally and seven under construction, company figures show.
Riberas said Gestamp would struggle to capture business from existing plants with internal press shops but would pick up business when automakers expand production or switch to newer technologies such as hot stamping. Heating steel before stamping allows the use of thinner grades to produce lighter body parts without compromising strength.
“We don’t expect automakers to outsource [from existing plants] due to pressure from unions,” Riberas said. “But whenever they need to invest or move from cold to hot stamping or even need to replace lines, then they are going to save money and go to suppliers.”
He gave the example of Gestamp’s new plant in Nitra, Slovakia, which this year will begin production as the press shop for Jaguar Land Rover’s new plant there. Riberas said the plant will account for between 1.5 percent and 2 percent of Gestamp’s production next year.
Gestamp currently derives 25 percent of its revenue from hot-stamped parts in the body shell, or body-in-white, part of its business. The average use of hot-stamped -- also known as hot-formed -- parts is about 10 percent in a body-in-white, with cars such as the Volvo XC90 large premium crossover using 38 percent hot-stamped, high-strength steel.
Riberas said he expected to see the average use of hot-stamped steel rise to 20 percent to 25 percent annually in 10 to 15 years, benefiting Gestamp.
“Hot stamping is almost 100 percent outsourced to suppliers,” he said.
Gestamp is largely immune to fluctuations in raw material prices because of its “pass through” arrangements with clients, Riberas said. That means the company passes on any increase or decrease in prices.
Tariff increases on cars or steel into the U.S. are “not an issue,” he said, because Gestamp plants are near vehicle production sites. But Riberas warned that metals prices would rise.
“That’s that not a problem for us,” he said. “That’s a problem for industry in general. The automakers are going to be less competitive, and they’re not going to be able to pass these increases to the customers.
“Today there is not enough high-quality steel and aluminum in the U.S., and prices are already higher than they are in Europe, so I don’t see the point of these tariffs.”
Gestamp is currently working to increase the capacity in its hot-stamping lines and other areas of manufacturing by monitoring individual processes digitally. By applying Industry 4.0 practices, the supplier predicts it will increase capacity 10 percent on its 84 hot-stamping lines globally, Rene Gonzalez, Gestamp’s director of advanced manufacturing, told journalists.
Monitoring sensor feeds from the lines and creating data from that will allow the company to predict problems and avoid lengthy shutdowns, Gonzalez said.