Global expansions set firm foundation for Boge Rubber

DAMME, Germany—Boge Rubber & Plastics Group had a busy 2017, expanding in all regions of the world.

The automotive supplier of rubber and plastic parts opened its first production facility in Mexico, its second site in China and a second production hall in Slovakia.

All of the moves are in response to increased business from major automotive original equipment manufacturers, which the company has had more freedom to chase since being sold to China's Zhuzhou Times New Material Technology (TMT) by ZF Friedrichshafen A.G. in 2014.

"As a global supplier, we have to follow our customers," Boge CEO Torsten Bremer said. "Our customers invest into new sites in emerging markets for two reasons: to make the cost balance better and to exploit these growth markets. These two reasons are the same for us. It's not just following what we did before, we're expanding our footprint as well as we expand our portfolio with a new degree of freedom from when we were spun off from ZF. Our new shareholder gives us a lot of freedom to look for new applications of our competencies. We're not limited to automotive. Even though we're doing more than 95 percent automotive today, we can look into other businesses and expand our lightweight composite material portfolio."

That material portfolio focuses on two main areas: parts for rubber-to-metal bonding applications and plastics. Its rubber-to-metal business accounts for about 83 percent of its sales primarily focused on powertrain and chassis applications, the latter accounting for two-thirds of Boge's overall sales.

While plastics only accounts for 17 percent, Bremer said that number has grown from 5 percent in the last five years.

"We are ready to change ourselves with the changes around us," Bremer said. "As a mid-size supplier, we are not the ones to move the market. But we have to be fast followers of changes and we give our contributions to our main customers. We're in very intensive talks on how we can help them to respond to the actual challenges."

Follow the leader

In Mexico, Bremer said many of Boge's Germany-based OEM customers had requested the supplier set up shop in the country. Once the firm secured a commitment from Mercedes, giving Boge an order if it set up shop, the firm pulled the trigger on a new manufacturing plant.

Now that Boge is there, the firm is receiving many more orders. The plant is about evenly split between rubber-to-metal parts and plastic components, but Bremer said in the past couple of months orders for plastic parts have picked up.

Based in San Luis Potosi, the plant spans 54,000 square feet with enough additional land to double in size if needed. Bremer said the operation is currently in the prototyping phase with the machines installed and employs about 15, but Bremer said once production starts in mid-2018 employment is expected to reach between 150 and 200.

He added that the plant also is capable of serving customers beyond Mexico in the NAFTA region.

"Right now all the orders we've received are for OEMs and Tier 1s in Mexico," Bremer said. "We've been in NAFTA with our U.S. plant, but with the new installment of our OEM customers in Mexico, those customers need local content. This was the reason to go there, but it is our expectation to also offer out of that plant for the U.S. and other markets in the mid-term."

Boge also services North America from its site in Hebron, Ky., and South America from its site in Sorocaba, Brazil.

Fast growth

Boge quickly outgrew its four buildings, spanning 301,000 total square feet, in Qingpu, China, which opened in 2008. It recently acquired a second building—based in Zhuzhou—of about 161,500 square feet from its parent company, which had used the site for its truck and bus business. The firm employs about 850 at Qingpu and 200 at Zhuzhou.

Bremer said the firm already is building a third plant, in Wuxi, that will also span about 161,500 square feet. Once completed it will be Boge's 12th global location, also operating a site in Dingley, Australia, for the Asia-Pacific region.

Once the Wuxi plant is complete, Bremer said the firm will diversify the locations with Qingpu focusing on plastic parts and complex rubber/metal products like bushings and switchable engine mounts.

Zhuzhou will focus mainly on the firm's truck and bus business for rubber/metal parts. Wuxi will handle mass-produced rubber/metal parts because it will operate a compounding facility, which also will supply rubber to the other Chinese sites.

Bremer said the firm has grown at a 20 percent rate in recent years, but added that the overall market is slowing down and Boge is in a transition phase as some of its first-generation products are reaching the end of their lifecycles.

Pushing limits

Boge has operated in Trnava, Slovakia, since 2000, one of five European facilities. Three others are located in Germany—Bonn, Simmern and Damme, its headquarters—and the other in Fontenay, France. The initial site, spanning 215,000 square feet, focused on standardized products, but the firm has since added plastics and hydraulic bushings among others to its portfolio.

The new production hall—a second building on the same site—spans 54,000 square feet with enough land for another expansion, something Bremer said the firm already is considering. The project created about 60 jobs and is projected to reach 120-150 total when at full capacity. Right now, Trnava employs 850 total.

"We have pushed more project launches into Slovakia and reached our capacity limits two years ago," Bremer said. "With the strong expansion of our lightweight portfolio, we decided to build a second plant focused only on plastics. It will also reach its limit two years from now. We have many booked orders that we're already thinking about the next expansion.

"Then we'd be reaching the limits. Not only space-wise, but in the western part of Slovakia it's getting tougher and tougher to find experienced and well-educated employees. Unemployment rates are extremely low and a lot of automotive producers and their suppliers are still installing capacity."

The new building only will produce plastics products, allowing the original building to focus on its rubber/metal products, which generates about $130 million in sales from that building.

"We want to diversify the plants and concentrate individual units on special portfolio parts depending on complexity and costs," Bremer said.