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Aguascalientes Grabs Important Investments in the Auto Sector

By Alejandro Enríquez | Thu, 05/13/2021 - 11:52

Aguascalientes, one of Mexico's safest states, is receiving strong automotive investments. Xinquan started last week the construction of its US$40 million plant, while Bosch will invest US$90 million in its production lines in the state. Local newspapers also point to investments that Aguascalientes is expecting from Continental, Marelli, Fanuc and other companies.

Surfing the Chinese Wave

Xinquan grabbed the spotlight with the construction of a new subsidiary in Mexico, which is heralded as a sign of nearshoring trends coming to the country in the USMCA era. Xinquan México Automotive Trim will be focused on plastic injection components, plastic auto parts and leather wrapping. According to Eduardo Galvéz, its Director, the plant will produce for the US market and will create 150 jobs in its first stage to gradually increase to 400. The plant, which began construction last week, is expected to start operations by the end of 2021.

During the event, Aguascalientes’ Governor pointed out that the state has over 50 high-quality universities with that will continue to attract foreign investment. The state’s Minister of Economic Development highlighted that Aguascalientes has received US$67.5 million investments from China, 93 percent of those have during the past five years. This sets Aguascalientes as the fourth largest destination for Chinese capital in Mexico between 2017-2020.

Other Investments

Last week, the President of Robert Bosch Mexico Rene Schlegel announced a US$90 million investments to renovate 12 production lines, which focus on breaking systems. Moreover, leading automation company FANUC also announced in late April the start of a new plant in the state, which has been its home since 1992.

Continental AG also inaugurated its Electronic Plant in Aguascalientes after a US$1.6 billion investment. The new facility will be focused on electronic components mostly for smart screens, driver monitoring systems and smart windshield systems, among others, all of them to increase the vehicle's connectivity.

Aguascalientes’ Auto Legacy

Aguascalientes, a long-standing automotive player, is home to Nissan's largest manufacturing facilities in the country. Being the cornerstone of the automotive sector in the state, Nissan has a tradition of welcoming world-class suppliers, either local or global, to participate in its supply chain. In 1982, Nissan Mexicana inaugurated its A1 plant in Aguascalientes, its second in the country. Thirty years later, after a US$2 billion investment, Nissan Mexicana inaugurated its A2 plant in the state. A2 produces 30 units per hour while A1 produces 65.

It is no surprise that Japan is the state’s largest source of FDI , receiving US$5.46 billion from that country during the 1999-3Q19 period. The state represented 8.44 percent of total FDI in the automotive sector in the country in the same period. Nissan played an important role to obtain this figure. A2 came with an additional business park, called Douki Seisan Park, developed by Nissan and Vesta to place suppliers in the same facility as the plant. The park cost US$57 million and is the base of operations for POSCO MAPC, Tachi-S and Sanoh.

"Through the Japan International Cooperation Agency (JICA), we are working with local governments in the Bajio region — especially with Aguascalientes, Guanajuato and Queretaro — to develop training courses in the automotive industry," said the Japan Ambassador to Mexico Yasushi Takase for MAR 2019.

According to the state’s figures, the automotive sector contributes almost 20 percent to Aguascalientes’ GDP. The sector has also increased its jobs in the automotive sector from roughly 22,000 in 2013 to 46,000 in 2020, according to government figures.

Photo by:   Innovacion Economica
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst