Auto Carpets rises from the ashes

BY IRMA ISIP
Malaya Business Insights
June 21, 2010


When Philippine Carpet Manufacturing Corp, (PCMC) then the largest auto carpet maker, decided in 2007 to give up and close its automotive division after more than 40 years in existence, then division head Rafael Villarreal pounced on the opportunity to start a business.


Villarreal sought the partnership of businessman Eddie Jose, now chairman of the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), and formed a new company Auto Carpets Inc.


Auto Carpets was folded into Jose’s VSO Group, which is also in the automotive business. Jose is chairman of Auto Carpets, owning 70 percent, and Villarreal is president with 30 percent.


Today, Auto Carpets serves 90 percent of the requirements of the local automotive assembly industry. It succeeds where its predecessor gave up due to lower volume than that of more cost-efficient markets like Thailand and China.



Auto Carpets provides floor carpets for Toyota (Innova and Vios); Honda (City); Isuzu (Crosswind); Ford (Mazda and Focus); Universal Motors Corp. (Nissan Urvan), and; Nissan Motor Philippines Inc. (Sentra).



"All the customers went with me. We had a smooth transition (from PCMC) by transferring the technology, skilled employees and equipment. We needed their cooperation." Villarreal said.


Villarreal considers being able to take over the business from PCMC as the latter’s gift for his 35 years of service in the company.


In its start-up year, Auto Carpets got help from Toyota’s production system to make work easier and to cut down costs. Becoming more efficient and increasing productivity were key factors cited by Villarreal in making the venture a success.


The company absorbed a select group of the 90 employees affected by the closure of the division. By August 2007, Auto Carpets was rolling and has not stopped since.


To some extent, it has also been exporting its products.


"We have been expanding since we started operations last August 2007. We do not export directly, but some of our carpets are included in the exports of locally manufactured vehicles," Villarreal said.


For Auto Carpets business to flourish, it needs a vibrant automotive assembly industry.


"The growth of our business wholly depends on the growth of our customers, the local vehicle assemblers," he said.



The domestic auto manufacturing industry is operating at just a quarter of installed capacity – 60,000 out of 250,000 units.


As of 2009, sales of locally manufactured vehicles declined to 63,813 units or 49 percent of total car sales from 145,888 units or 90 percent in 1996.


At this rate, down the line businesses like Villarreal’s auto carpet manufacturing may survive but opportunity to grow becomes very limited.


Auto floor carpets form part of the inner soft trims and are fitted into a car’s flooring in one piece. They go to the assembly line as they are molded according to the shape of the vehicle’s flooring.


Auto Carpets offers a wide variety of car carpets, from mat assembly floors, mat luggage trunks to side trim trunks.



The company also produces needle-punch carpet rolls for trim makers Toyota Boshoku, B4 Auto Seat Covers, and Emerald Multi Products.
The auto carpets it produces are made to the specific types and colors of its clients.


"Floor carpets are a necessity for aesthetic. They may not look that way but they are key element in a vehicle," Villarreal said.


According to Villarreal, alternatives to flooring like vinyl normally seen in commuter vehicles are not appropriate for cars, vans and sport utility vehicles.


"Our molded carpets fitted on the vehicle floor differ from the secondary carpet mats sold in retail stores. We do not supply this," he said.
Auto Carpets‘ products are made from polyester fibers imported from Taiwan. The polyethylene pellets melted at the back of the carpets also come from Taiwan and at times from Korea.


Its carpets stand the test of time.


"We do not have after sales market since the floor carpets are never replaced even in the aftermath of (typhoon) Ondoy," Villarreal said.
Auto Carpets produces about 4,500 carpets a month at its 2,500 square meter facility in Paranaque. It has 70 workers trained in car carpet molding and needle-punch technology.


http://www.malaya.com.ph/06212010/busi1.html
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