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2021 Brings Growth Opportunities: CLAUZ

By Alejandro Enríquez | Tue, 04/13/2021 - 07:00

Q: What lessons did CLAUZ learn from 2020?

A: It was a year of challenges. The state demanded operations to be shut down in Puebla for more weeks than the rest of the country. At the beginning of the pandemic, the country did not consider the automotive industry is essential. Later on, the federal government changed that but in Puebla, it took a little bit longer. This had an impact not only on vehicle production but also on auto parts. Over 2H20, companies enjoyed more stable production and now they are performing well thanks to their commercial focus.

The automotive industry’s strong link to foreign markets softened the impact from the pandemic and it has led to positive forecasts for 2021. We expect a remarkable recovery. The auto parts sector continues to grow in the Puebla and Tlaxcala area. We also have opportunities thanks to USMCA, which will serve as a means to increase RVC from Mexico. In addition, there has also been a change in the US government with the new Joe Biden administration. His decisions should provide greater certainty and continuity than those of the former administration. His approach toward China will also be relevant for the sector.

Q: What allowed companies to succeed in 2020?

A: The industry took a hit, with production and sales plummeting. That being said, the combination of innovation and commercial efforts was a successful formula for companies in the region. Moreover, companies that are taking care of their workforce also provide certainty to the industry in general. Through a number of surveys, we have confirmed that the automotive sector has been one of the safest places to work. All these elements have helped the industry to recover while enabling more opportunities for 2021.

Q: What advice would you give to Tier 2 companies in the area?

A: All companies have opportunity areas. CLAUZ has been working with UPAEP on a project that has to do with analyzing strategic areas for Tier 2 companies to identify which of them are a priority to level up. I am confident that we have found some opportunity areas to develop local suppliers in the short term. Some of these opportunities have to do with stock and supply management, financial information and logistics operations. Building a clear strategy is essential for supplier development.

Q: How are CLAUZ members experiencing the new labor standards?

A: We are cautious in this regard. The sector has its particular characteristics on how to handle different labor schemes. We have provided guidance to our members by bringing experts to the table to help our members be aware of all the clauses involved. We have also enabled direct communication channels with the government.

Q: What are CLAUZ members’ main concerns?

A: With the pandemic, everyone is paying close attention to government regulations on how to resume operations safely amid COVID-19. Particularly, companies are working to maintain a healthy working environment and a healthy team. The major concern for companies is keeping their employees safe.

Audi México Puebla
Puebla is home to Audi's only vehicle manufacturing facility in the Americas

Q: What role have Puebla and Tlaxcala’s local governments played in supporting the sector throughout the pandemic?

A: Puebla, in particular, has been really active in establishing regulations, although at times those have created some uncertainty. However, both state governments are really open to discuss and address industry concerns. Naturally, we understand the government is concerned about controlling the pandemic. At the same time, they understand the commitments automotive companies have with international customers. As a priority sector, we have an essential role to play. Closed borders generated auto parts shortages that continue to affect even vehicle maintenance.

Q: What are your views on the industry’s recovery to pre-pandemic levels?

A: Experts say recovery will come between 2023 and 2024. However, I would like to be more optimistic. Some members affirm they have enjoyed better-than-expected results but others are struggling to recover. Again, it depends on a company’s technological capabilities to support their processes and resource management. This is where the cluster can contribute to a great extent.

Q: What challenges are companies facing when it comes to digitalization?

A: The very first obstacle is financing. Companies need to allocate resources and invest them, of course. However, the second, if not the most important element is having a vision. Companies do not only invest money but also time, material and human resources for the shift to happen. CLAUZ has an innovation committee led by a local technology and innovation center through which we are working to help companies reach greater degrees of digitalization.

Q: What are the cluster’s near-term priorities?

A: We have three committees at CLAUZ. The human resources committee focuses on management and training. We have projects with CAMEXA and GIZ focused on dual education. We also have projects with the British Embassy to boost high-school education and to reduce the gaps between industry and academia. Our supplier development committee works on strategies to help local suppliers, particularly in the area of purchasing, to be more efficient in their processes and financial structures. Our innovation committee is focused on fostering innovation strategies, which include searching for funding for new projects and fostering digitalization.

CLAUZ’s vision is to continue growing and attracting more members. As a cluster, we are convinced we can support growth within the automotive supply chain. There is a difference between going it alone and having a team to help you move forward. Our team is the government, academia and companies

 

The Automotive Cluster of the Center Region Puebla-Tlaxcala (CLAUZ) is an association that brings together companies, government entities and academic institutions to work on a common plan to increase competitiveness in both states.

Photo by:   CLAUZ
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst