Introducing the new corporate culture at the Cruzeiro unit after the acquisition of FNV
Armando spoke of the leap in administrative quality and unit organization that came with the acquisition of FNV by the Iochpe Group:
“Back then  we were producing side rails, medium-sized pressed-metal parts and tubed wheels, and we were just getting started on tubeless wheels for trucks and busses (which was new at the time). We were also making Fruehalf trailers and a digger. Then there was the foundry business, which involved the railcar and industrial components areas, and, incipiently, the railway sector foundry business. In 1990, when Iochpe-Maxion bought the [Cruzeiro] plant from Engesa, it divided the activities into three: trailers, foundry and railway equipment, and automotive components (autoparts). It was then that they made a significant organizational change: the directors were given total responsibility. Unlike FNV under Engesa, we now had separate business units and I was in charge of the autoparts unit. There was another director for foundry and railway equipment and another for the trailer unit. Not long afterwards, Iochpe discontinued the trailer business, which it saw little future in, and didn’t believe really fit the Iochpe product portfolio. (…)
On the organizational level, in particular, we evolved a lot. Iochpe-Maxion had vital administrative know-how. The division into business units was extremely important in terms of fostering development. I think that was a change that proved decisive for our success.”
Investment in wheel-production at Cruzeiro
Armando recalls Icohpe-Maxion’s first major investments in wheel production at the Cruzeiro Unit. Such technological innovations as e-coating and tubeless wheels, which became market standards, turned the company into a leading wheel-manufacturer:
“In the autoparts segment, Maxion stepped up its investment in wheels. We presented a plan for the wheels line that envisaged the company becoming an international player on the strength of really intense growth. In 1990 we were producing roughly 400 thousand wheels a year. Our plan was to more than double that to a million a year, and fast. As we saw it, that was the minimum output we’d need to be able to compete internationally. So, with the goal set, we put together an investment plan; a commercial plan. Our strategy was to obtain growth and higher sales, step up investments, and prospect customers abroad. All this investment was to be channeled into tubeless wheels, because tube wheels were becoming obsolete.
We worked out the specifications for the equipment, and one of the hallmarks of this was a new painting technology, water-based e-coating, which was the new standard abroad, so that enabled us to meet international specifications. We also needed a new rim production line and new disk-pressing machinery.
Of course, before we could get started on production, we had to change the whole factory layout. With the discontinuation of the trailer business, we temporarily moved the wheel line into the old trailer facility. That meant we could keep the company ticking over while making the transition. The final move was made during collective vacation. The factory floor was really old, so we had to completely relay it, which meant backing in a cement truck. It was nuts.”
Buying Fumagalli’s tubeless wheel business
Armando also recalls that, as part of the growth strategy for the wheel segment, the company acquired the tubeless wheel production line from Fumagalli:
“At around the same time the opportunity arose to buy the wheel line from Fumagalli (1992), which had invested heavily in the production of tubeless wheels for trucks and busses, but now wanted out. They offered us the line, complete with laminators, welder, disk press…It was semi-new, with not much mileage, so it was just the right thing at the right time. The sale went through and it gave us another 30 thousand wheels a month in output. So with our new painting rig and this extra line, we plowed ahead with our commercial plan for wheel exports, as the Brazilian market was only beginning and tube wheels were still widespread. After all that investment in wheels, we adopted a much more aggressive approach in going after exports.”
Outsourcing and the production of structural components
The contract to supply frames for GM’s S-10 was a major impetus, a pioneering project that led to the development of considerable knowhow in the production of chassis and side-rails:
“Pressed side rails are a crucial part of the chassis used in trucks and busses. It’s an area that has seen expressive growth in Brazil. We practically cornered the market, as we were the only ones making them.
We started investing in frames and side rails again, and drew up a plan for related structural components. This was in 95, 96, when GM invited us to produce a frame for its S-10. The automakers were starting to outsource frame production, so we got ourselves ready to meet that demand, and invested heavily in e-coating technology to paint the frames. It was an important installation for us and really leveraged our growth in this segment. We started producing S-10 chassis and some others for Ford and Volvo. We also bought some presses to produce the trays that join the side rails.”
Iochpe-Maxion was a Brazilian pioneer in the creation of a modular consortium industrial park. Under the modular consortium concept, the suppliers operate onsite, at the automaker’s installations. Iochpe-Maxion’s first modular consortium experience was at the Volkswagen trucks factory in Resende, in 1995.
“One huge contract we won was with Volkswagen Trucks. When Ford and Volkswagen separated, we bid for and won this contract, after visiting the plant, negotiating with the company and discussing the program from the word go. The present site [in Resende] hadn’t even been bought yet, so we were involved in designing the layout of the plant. We only landed this contract because we had brought forward our investments in e-coating and presses…”