Latest news with #Danfoss
Time of India
6 days ago
- Business
- Time of India
Caught between tariffs and China, Mexico adapts to an unpredictable US
MONTERREY: The factory in northern Mexico was built to supply Americans. Just a few hours from Texas, about 80% of its air conditioners and refrigeration units are sent to the United States. President Donald Trump's tariffs threatened to upend its whole business -- at least until the company devised a plan. Before the tariffs took effect in March, only about 40% of its exports traded under the rules of a pact Trump signed in his first term. But when Trump agreed to suspend tariffs on any Mexican goods that fell under the agreement, the company's leaders saw ways to adapt. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Dukung Orang Terkasih Menghadapi Limfoma: Mulai Di Sini Limfoma Baca Undo They sought out Mexican suppliers for products bound for the United States. They analysed which products already complied with the pact's rules but had not yet been certified as such. And they reconsidered projects that involved bringing in imports from outside North America. "When you're on a plane and there's turbulence, you get really scared and you hold onto your seat," said Xavier Casas, who oversees the factory for the company Danfoss, in the Mexican city of Apodaca. "But, you know, 99% of the time, the plane is going to land." Live Events Today, virtually all Danfoss products shipped from Mexico to the United States comply with the trade deal, called the U.S.-Mexico-Canada Agreement, or USMCA. Efforts are underway, Casas said, to make some components in Apodaca, where the Danfoss factory is, instead of in China -- another way to mitigate the impact of punishing U.S. tariffs. "Until now, Mexico's trade strategy was still closely tied to Asia. Bringing in supplies from there was financially viable because of the low costs: Instead of thinking how to manufacture things here, I'd import them," Casas said. "But the current situation is pushing us to think, 'Hey, why not?'" While the United States and China have recently announced steps to defuse an all-out trade war, experts say it is unclear whether the truce, which is not yet final, will crumble or hold. Although exact details are unknown, the deal could mean some tariffs on Chinese products are lower and others significantly higher. Analysts also think it is unlikely that U.S. tariffs will return to their 2024 levels as long as Trump is in office -- and possibly even well beyond his term. Countries and companies around Latin America have faced a similar problem, caught between Asia's cheap supply lines and the lucrative market of the United States. Brazil and Colombia, countries with two of the region's biggest economies, are among those that have moved closer to China since Trump's second term began. But many Mexican companies have rushed to align with the United States, despite the pain of moving away from China, which sells 11 times as much to Mexico as it buys. Some executives even see the tariffs as an incentive to reduce their dependence on China and other Asian suppliers, which could strengthen manufacturing in North America overall. "The game has changed," said Ryan Last, a lawyer with Troutman Pepper Locke, an international law firm helping manufacturers understand and react to U.S. tariffs. "There's this long-term adaptation where companies are thinking of investing in the U.S. or shifting their supply chain to more domestic North American content." Two top officials at the Mexican Economy Ministry, who spoke on the condition of anonymity so as not to endanger trade negotiations with the United States, said more exporters wanted to show that their products were mostly manufactured in North America, with materials mostly sourced from the region. Data shared by the ministry show that about 87% of Mexican exports are now free of U.S. tariffs -- only a slight decrease compared with last year. (Even products that may comply with the trade deal, such as cars or steel, have been hit by some of Trump's tariffs.) "I was expecting all these numbers to plummet because of the uncertainty," said Aristeo López, an international trade expert and former Mexican diplomat who acted as lead negotiator for parts of the USMCA deal. "But," he added, "there's not been such a negative impact on Mexican exports." Víctor Gamas, a customs broker for an agency that works on both sides of the U.S.-Mexico border, said many of his customers were retooling their supply chains. This year, Gamas said, he visited an American manufacturer of acrylic products at that company's plant in Nogales, northern Mexico. The company was racing to substitute imports from Vietnam and China for supplies made in Mexico, he noted. Trump's on-again, off-again tariffs have persuaded some exporters to take preemptive measures. A director of manufacturing at an American factory in Monterrey said that his team had stopped buying a key electronic component from a Mexico-based Chinese company, just in case the United States started targeting Chinese suppliers in the region. Trump, said the director, who spoke on the condition of anonymity because he was not authorised to comment publicly about his company's practices, had forced businesses to think differently -- and to act against even hypothetical risks. Mexico's president, Claudia Sheinbaum , has encouraged such changes. She has pushed what she calls Plan Mexico : an ambitious, long-term strategy meant to revitalise manufacturing; substitute imports; and balance the trade deficit with countries that do not have trade deals with Mexico, including China. Because many Chinese goods sold to Mexico are reworked for sale onward to the United States, the mismatch in the trade balance between China and Mexico had created little political tension in Mexico until recently. But with Trump's ascent, China has loomed over more trade issues. "With China, we have relations on many issues -- and obviously, with the United States, we have the trade agreement, which is very important," Sheinbaum said Wednesday. In January, days before Trump returned to the White House, Sheinbaum said that strengthening the USMCA was "the only way" the region could "compete with Asian countries, particularly China." If North America could manufacture 10% of the imports it otherwise receives from China, Sheinbaum's finance minister said at the time, the gross domestic product of Mexico would grow by 1.2%, that of the United States by 0.8% and Canada's by 0.2%. The border state of Nuevo León, where about 4,500 foreign companies have factories and offices, has tried to seize the moment. Monterrey, its capital, has for years advertised to investors as an alternative to China. "I don't want a company to come and bring everything with it," said Emmanuel Loo, Nuevo León's acting economy secretary, whose team has been helping manufacturers find local suppliers. "No, I want a company to come and buy everything locally." Manuel Montoya, the director of the Nuevo León automotive cluster, a group that includes about 120 vehicle manufacturers, said that Mexico would still need to source many materials, particularly electronic goods, from China. But he said even that could change in the following years if local providers found ways to make them. "What's the strategy that our companies have been following? Try to be North American," Montoya said. "If you still have something that you bring from Asia, forget about it already."
New York Times
06-07-2025
- Business
- New York Times
Caught Between Tariffs and China, Mexico Adapts to an Unpredictable U.S.
The factory in northern Mexico was built to supply Americans. Just a few hours from Texas, about 80 percent of its air-conditioners and refrigeration units are sent to the United States. President Trump's tariffs threatened to upend its whole business — at least until the company devised a plan. Before the tariffs took effect in March, only about 40 percent of its exports traded under the rules of a pact Mr. Trump signed in his first term. But when Mr. Trump agreed to suspend tariffs on any Mexican goods that fell under the agreement, the company's leaders saw ways to adapt. They sought out Mexican suppliers for products bound for the United States. They analyzed which products already complied with the pact's rules but had not yet been certified as such. And they reconsidered projects that involved bringing in imports from outside North America. 'When you're on a plane and there's turbulence, you get really scared and you hold onto your seat,' said Xavier Casas, who oversees the factory for the company Danfoss, in the Mexican city of Apodaca. 'But, you know, 99 percent of the time, the plane is going to land.' Want all of The Times? Subscribe.
Asharq Al-Awsat
10-05-2025
- Business
- Asharq Al-Awsat
Saudi Arabia Strengthens Relations with Danish Private Sector to Boost Bilateral Trade
Saudi Minister of Industry and Mineral Resources, Bandar Alkhorayef, held a series of bilateral meetings on Friday with leaders of several leading Danish companies in the industry and mining sectors. Discussions covered joint investment opportunities, as well as the enablers and incentives offered by the Kingdom to investors, the Saudi Press Agency reported. The meetings focused on strengthening cooperation in the industrial and mining sectors between the two sides, with an emphasis on leveraging the strategic opportunities presented by the National Strategy for Industry across its 12 priority sectors that the Kingdom aims to localize and develop. This was discussed alongside the opportunities provided by the comprehensive mining strategy, in line with the objectives of Saudi Vision 2030. Alkhorayef also met with executives from the pharmaceutical, food, and mining sectors, including FLSmidth, Danfoss, Novo Holdings, Novonesis, and Arla Foods. The visit reflects Saudi Arabia's continued efforts to deepen economic partnerships with leading industrial nations and attract global expertise to accelerate the growth and competitiveness of the Kingdom's industrial and mining sectors.
Asharq Al-Awsat
10-05-2025
- Business
- Asharq Al-Awsat
Saudi Industry Minister Strengthens Relations with Danish Private Sector to Boost Bilateral Trade
Saudi Minister of Industry and Mineral Resources, Bandar Alkhorayef, held a series of bilateral meetings on Friday with leaders of several leading Danish companies in the industry and mining sectors. Discussions covered joint investment opportunities, as well as the enablers and incentives offered by the Kingdom to investors, the Saudi Press Agency reported. The meetings focused on strengthening cooperation in the industrial and mining sectors between the two sides, with an emphasis on leveraging the strategic opportunities presented by the National Strategy for Industry across its 12 priority sectors that the Kingdom aims to localize and develop. This was discussed alongside the opportunities provided by the comprehensive mining strategy, in line with the objectives of Saudi Vision 2030. Alkhorayef also met with executives from the pharmaceutical, food, and mining sectors, including FLSmidth, Danfoss, Novo Holdings, Novonesis, and Arla Foods. The visit reflects Saudi Arabia's continued efforts to deepen economic partnerships with leading industrial nations and attract global expertise to accelerate the growth and competitiveness of the Kingdom's industrial and mining sectors.
Zawya
28-02-2025
- Business
- Zawya
Danfoss delivered solid performance in a volatile market, with significant growth in the MENA region
MENA sales recorded 20% year-on-year growth in 2024 Operational EBITA was EUR 1,097 million corresponding to a margin of 11.3%. Investments in innovative solutions (R&D) at EUR 488 million, corresponding to 5.0% of sales. Continued to decouple our own emissions from our sales growth, achieving a 19% reduction in scope 1 and 2 carbon emissions. Outlook 2025 sales in the range of EUR 9.5-11.0 billion and operational EBITA margin in the range of 10.8-12.3%. In 2024, we delivered solid operational results and most of our core businesses remained resilient. However, factors such as higher interest rates and lower farm income sent the build of new off-highway machines within agriculture and construction into a cyclical downturn. The electric vehicle market was also impacted by governments scaling back incentives. We have as always proactively managed our business performance through the cycle and maintained our long-term focus. To set Danfoss up for the future, we have taken decisive actions to evolve our operating model to better serve our customers, improve competitiveness, enable faster decision-making, and become a more responsive organization. We continued with significant investments in delivering competitive and innovative solutions as well as regionalizing our factory footprint, thereby continuing to execute on our green growth strategy. NORDBORG, DENMARK – In 2024, sales were EUR 9,674 million. Despite challenging market conditions, we delivered a solid operational EBITA of EUR 1,097 million, equal to a margin of 11.3%. 'I am especially excited to see the continuous strong performance in our Climate Solutions and our Drives businesses. We strengthened our position in selected high-growth markets like data centers, commercial heat pumps, and selected electrification applications such as marine. Moreover, we maintained a high level of investments in innovation to expand our offerings of competitive, innovative, and best-in-class technology and solutions,' says Kim Fausing, President & CEO of Danfoss. Over the past five years, we doubled the size of Danfoss, achieving balanced sales and a strong local presence across the Americas, Europe, and Asia. We firmly believe in the long-term growth opportunities for Danfoss and in offering great service to our customers all over the world. This is why we continue to invest in factory automation and in regionalizing our supply chain to become more resilient. Additionally, we successfully completed the integration of the Eaton Hydraulics acquisition into the Danfoss Power Solutions segment. With our new operating model, we have decentralized further to move closer to our customers and become easier to do business with. We focus on strengthening innovation and our entrepreneurial mindset as well as improving our cost competitiveness and responsiveness through increasing speed in decision-making. Today, we operate Danfoss through three segments and 16 divisions. Our businesses now operate within a significantly simplified structure, supported by leaner Shared and Corporate functions. 'We're especially proud of our performance in the MENA region, where we registered growth of 20% in comparison to 2023. Acquisition of BOCK®, compressors, was one of the contributors to this success, alongside our existing portfolio of energy-efficient solutions, and our Dubai-based heat exchangers assembly plant. We pride in becoming our customers preferred decarbonization partner in the region', added Ziad Al Bawaliz, General Manager, Danfoss MENA. For Danfoss, sustainability is a key driver of competitiveness and an integrated part of our strategy. We continued to decouple our organic growth from emissions, reducing our scope 1 and 2 emissions by 19% as we work toward our ambitious 90% reduction target by 2030. We also signed a power purchase agreement covering 100% green electricity for our two campuses in Haiyan, China reducing our carbon emissions by 40,000 tons every year as of 2025, which is equivalent to 33% of Danfoss' emissions in China and 9% globally. In 2024, we launched the 'Green Ask' initiative with strategic suppliers, which covers 40% of our EUR 3.5 billion spend to enhance data on sourced products and identify decarbonization opportunities. 'I am proud of what the Danfoss team has accomplished together this year. Our global team's engagement, resilience, and determination in overcoming challenges and driving impact exemplify the exceptional talent that is fueling our success. I sincerely thank our customers and partners for their trust and close collaboration, which is fundamental for our common success going forward. While global economic uncertainties and geopolitical instability may cause market fluctuations, we stay the course. We firmly believe in the long-term growth opportunities for Danfoss,' says Kim Fausing. Financial outlook 2025 Danfoss has a continued ambition to expand or maintain our market share. Sales are expected to be in the range of EUR 9.5-11.0bn for the full year. The operational EBITA margin is expected to be in the range of 10.8-12.3%, following our continued investments in new products and solutions. Key figures for 2024 Sales in 2024 down 9% to EUR 9,674m (2023: 10,654m). Operational EBITA (EBITA excl. integration costs and other operating income and expenses): EUR 1,097m equal to a margin of 11.3% (2023: EUR 1,455m or 13.7%) Investments in innovation (R&D) maintained at high level of EUR 488m (2023: 487m), corresponding to 5.0% of sales (2023: 4.6%). Investments (CapEx) excluding M&A were EUR 434 million (2023: 596m). Net profit EUR 370 million (2023: 819m). Free operating cash flow (after financial items and tax) amounted to EUR 467 million (2023: 692m). Lost Time Injury Frequency (LTIF) continues to be at the same low level as the previous year at 1.3 (2023: 1.2). The total number of employees decreased to 39,360 (2023: 42,054), reflecting efforts to balance the workforce in alignment with the current market conditions as well as the implementation of our adjusted operating model. About Danfoss A/S: Danfoss engineers solutions that increase machine productivity, lower energy consumption, enable electrification, and reduce emissions. Our solutions are used in areas such as refrigeration, air conditioning, heating, power conversion, motor control, industrial machinery, automotive, marine, and on- and off-highway equipment. We also provide solutions for renewable energy, such as solar and wind power, Power-to-X, heat recovery, as well as contribute to district-energy solutions for cities. Our innovative engineering dates back to 1933. Danfoss is family-owned and employs over 39,000 people. We create long-term value for our customers in more than 100 countries with a global footprint of around 100 factories.
