Digitalization strategy implementation before and after Covid-19: the case of GKN Mexico

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The Great Lockdown Crisis triggered by the COVID 19 pandemic is provoking a great economic impact such as falling production and job losses. In the case of Mexico, in 2020, the Gross Domestic Product (GDP) decreased 8.5%, and 647,000 job were lost. During that year, the automotive industry contributed 3% of the GDP and 18.9% of the manufacturing GDP. The effects of the health contingency and its impact on the economy caused that the participation of the automotive industry in the manufacturing fell two percent compared to 2019. Despite these results, the automotive industry is very important for Mexico.

On the other hand, there is the assumption that the COVID-19 pandemic has accelerated digitization and therefore the creation of new positions, such as, data scientists, data analysts, cybersecurity and programming experts, and so on.

Given this, the purpose of this contribution is to analyze the so-called strategy “Industry 4.0” carried out by the global company GKN Driveline and to identify the main challenges that this firm has been faced and the way that these have been solved before and after COVID-19 pandemic; we analyzed the case of Mexico’s manufacturing plants. We analyzed three moments: a) Since 2016 to September 2018, when the company started with the implementation of this strategy and its goal was to reconvert, to 2024, the company into a “smart firm”; b) To October 2018 to April 2019, in April of 2018 the company was acquired by Melrose PLC, and in the last quarter, for approximately 6 – 8 months the Industry 4.0 strategy was suspended to focus efforts on improving production. During this period, the central question was: How can industry 4.0 improve the indicators and make the company more profitable for investors? In 2019 the goal was to design a local industry 4.0 strategy taking into account the strengths of the Mexican plants. The ongoing strategy is based on five concepts: smart vision, smart automation, smart flow, smart quality and safety and smart connectivity; and c) from March 2020 to the present, in order to assess the impact on the strategy during and after the pandemic.

To do this analysis we carried out a field research in their plants located in the municipalities of Celaya and Villagran (Guanajuato, Mexico). A qualitative research was carried out, the information presented was gathered via in-depth interviews with key actors (middle and upper managers) during the period from 2020 to the beginning of 2021.

The main results are: a) the company is working on strengthening its cybersecurity protocols; this is essential to prevent that the sharing information between machines are being vulnerable. Another challenge is to communicate the analog machines with the digital machines; and the company has had to work on to reconvert the older machinery. 2) Since the acquisition by Melrose, workers are more aware of the profitability to be achieved from the implementation of the Industry 4.0 strategy. This is related to the lean approach: Doing more with less. 3) Talking about industry 4.0 job profiles, we can say that there is no engineer 4.0 in the labor market, then the company has conformed multidisciplinary teams and attracted new talents. And the second important point to keep in mind is that current and older workers need to be retrained to obtain these new required skills, and the company has designed manuals and training program when a new system is introduced. 4) The positions created by the company after pandemic were traditional: blue collar worker and engineers.

This research form part of the project “Industry 4.0, global value chain and new business models: 3 case studies of the automotive industry in Guanajuato” supported by UNAM-PAPIIT Program.