Can Local Companies Participate in Japanese Manufacturing Chains?Sat, 09/01/2018 - 12:47
With the arrival of Mazda and INFINITI in recent years and reinvestments from companies such as Honda and Toyota, many opportunities have arisen for local companies to participate in Japanese manufacturing chains to supply OEMs directly or the Tier 1 suppliers accompanying them. However, Japanese players have identified several obstacles to grow their local supply chain at a faster pace, which forces them to still depend greatly on raw-material and component imports from their home country. Free-trade agreements and cost-competitive strategies show local supply as an advantage for international players, so strategies have to be implemented for Mexican players to raise their standards.
Having a local sourcing strategy will always prove advantageous due to the logistic advantages this offers and there are still opportunities for more local companies to integrate into our supply chain. Quality, short response times and support are areas of opportunity for new companies to compete against players with more experience in the market. The industry is becoming increasingly demanding and suppliers must have enough experience to not compromise OEM production or force companies into a recall. Both foreign and local suppliers have developed well in the Bajio; the opportunity is there and Mazda is open to growing its local supplier base. That being said, in terms of product costs, having a local or a foreign provider makes little difference considering that most components are priced in dollars.
There are still many opportunities for suppliers to collaborate in Nissan’s production processes. Even in raw material supply including plastics, steel and aluminum, there is an opportunity as long as the government offers the proper incentives for local companies to grow their operations and boost their quality. We understand that localized sourcing leads to much more competitive costs and an easier distribution process and we are in a constant search to localize our supplier network. There have been cases in which companies have not been able to meet our quality requirements. Nevertheless, we believe that with the right incentives and support, supplier companies can grow their participation in the global industry.
We are working with local service companies and suppliers of spare parts for our equipment but we still do not have many partners in component supply. Unlike what happens in other countries such as Thailand, finding component suppliers in Mexico is challenging. The government should make supply chain development a priority. Availability of local suppliers will ensure that more OEMs and Tier 1 suppliers like us continue to invest in the country. At the same time, the new administration should create favorable conditions for companies to invest in technology and develop their human talent. Cost competitivity is also an area of opportunity for the country. Mexico is still at a disadvantage compared to other countries regarding energy costs. Meanwhile, lack of security has increased our logistics costs, mainly in shipments to the US.