Baja California Spotlight

Mon, 09/01/2014 - 12:47

With a reputation as a maquila hub and bordering the US, Baja California has one of Mexico’s most enviable levels of economic activity. After the signing of NAFTA, Baja California’s fate became intricately linked to the US economy. Although Baja California has sometimes been perceived as dangerous in the media, Mexicali, the state capital, is considered one of the most prosperous cities in Mexico. Despite the high recognition for its manufacturing industry, other sectors such as automotive, tourism, and agriculture have taken pride of place in the state’s GDP. The arrival of Toyota with a platform to manufacture the Tacoma pickup truck in 2004 and the presence of Kenworth, assembling its tractors in Baja California, dominate the state’s automotive landscape. The manufacturing of automotive parts and vehicle assembly are also showing great development potential for Baja California. Major European, Asian, and American companies have all set up shop there, but 78% of the automotive industry in Baja California belongs to large and medium-sized companies. The other 22% is divided among smaller enterprises, most of them local suppliers that have developed thanks to the opening of plants of foreign origin.

Five industrial clusters have been built in Baja California, catering to the sectors where the state foresees the most significant growth. These clusters are automotive, electronics, aerospace, medical, and renewable energy. However, the automotive sector has pulled ahead due to its different segments present the state, ranging from assembly plants to manufacturing and remanufacturing facilities for automotive parts, and even off-road vehicles. For now, the industry is heavily focused on the production of trucks and pickup trucks, in addition to the remanufacturing of alternators, starters, engines, and transmissions. This breadth of operation has seen more than 80 suppliers to the automotive industry operating in Baja California. Major names like like Hyundai Translead, ThyssenKrupp Budd, Honeywell Automotive, LN Safety Glass, Autoliv, SKD Automotive, and Furukawa Electric serve the Mexican and US automotive markets from Baja California, manufacturing windshields, seat belts, sensors, radiators, engine parts, air bags, and harnesses. These companies operate thanks to the labor of almost 30,000 dedicated workers, ranging from basic labor to specialized high-level professionals. 63% of the jobs in the auto industry are located in the border city of Tijuana, while Mexicali claims 27% of the human capital, followed by Ensenada with 8%, and the remaining 2% distributed between Tecate and Rosarito. The manufacturing of niche vehicles, such as the Shelby Cobra 427, stands as evidence that the Baja California automotive sector is capable of working on specialized products and processes.

Just like many of the states with automotive industry activity in the country, Baja California has a dependency on major OEMs Toyota and Hyundai. In 2013, Toyota announced a planned increase in the production of the Tacoma pickup truck, while Hyundai Translead expanded its operations, incorporating its new die casting process for the manufacture of engines and transmissions into its plant. The current Baja California administration is focusing its efforts on consolidating the automotive sector, with activities throughout 2014 seeking to promote Baja California as an attractive investment destination.