Coahuila Spotlight

Mon, 09/01/2014 - 12:26

As other states in the northern part of the country, Coahuila’s economy has long had a strong focus on mining export oriented manufacturing. The latter sector alone represents 36% of the GDP of the state and employs more than 220,000 people. However, automotive has quietly snuck up to claim 19% of the state’s GDP, as it now produces light vehicles, heavy vehicles and auto parts. Saltillo has hosted the GM and Chrysler assembly plants since 1981, as well as a Freightliner plant. The GM plant provides more than 6,000 direct jobs and is considered the OEM’s plant with the highest productivity index in Mexico. It focuses both on the assembly of vehicles, and the manufacturing of motors and transmissions. On the other hand, Chrysler’s plant began operations as a motor assembly plant but it now works only on the assembly of the Dodge Ram and of the V8 and V615 engines. This plant contributes 500 direct jobs to the state. In October 2013, Chrysler announced a further investment of US$164 million in Mexico, which will be directed to the growth of its Coahuila plant and to start the production of Tigershark motors. Within the heavy vehicle sector, Freightliner established itself in 2009 and has an annual production capacity of 30,000 vehicles. It generates over 1,600 direct jobs and is specialized in the assembly of buses and trucks. These three big players together provide 8,100 direct jobs and more than 10,000 indirect jobs.

The establishment of OEMs has generated a snowball effect in which suppliers of raw materials as well as auto parts have begun operations in the state. The productivity in Coahuila’s automotive sector is the highest in all of Mexico with one out of four vehicles made in the country being assembled in the state. Starting during the administration of President Felipe Calderón, the government of Coahuila has established fiscal benefits for the automotive sector to push the establishment of new companies. It also seems that the fact that recent OEM investment announcements have targeted other northern states and the Bajio region has not unduly threatened the position of Coahuila as an appealing automotive hub. Even when OEMs invest in other states, Coahuila can fall back on a strong automotive network that can supply in those companies. This possible interaction between states has been made an objective by the current administration, in a project labelled as targeting the growth of productive supply chains inside Coahuila and beyond. The tag of “the Mexican Detroit” is one that Coahuila is fiercely trying to protect. Aware that it must benefit the rest of the country while maintaining its own competitive edge, the government of Coahuila is using state and national arguments to attract more companies within the sector. In the expos and fairs the government has attended, it has pushed the fact that Mexico is an extremely attractive option in terms of manufacturing and assembly, for its low labor costs and the 45 trade agreements it has with international markets. Coahuila is keen to show itself as a profitable exportation platform in Mexico and highlights its contribution to overcoming financial and innovation chellenges for the automotive sector across Mexico since 2008 through its Innovation System for Automotive Clusters (SIECCA). Taking the state’s southeast production region as an example, SIECCA seeks to provide an ideal model for a cluster, by coming up with a replicable system tackling R&D and financing. As part of SIECCA, Coahuila

decided to launch a strategic project to strengthen capacities and knowledge in the research centers and education institutions in the state. The idea is to take into consideration the needs of the companies established in the state, whether they are assembly lines, Tier 1s, Tier 2s, or SMEs to come up with joint solutions. Right now, the program is undergoing its third project, which has the support of CONACYT and regroups COMIMSA, CIQA, the Saltillo Technological Institute, and the Autonomous University of Coahuila. The main objective of this particular project is to develop an environmentally friendly vehicle with innovative materials.

Recently, Sixxon Precision Machinery, a machining components manufacturer, announced its plan to establish in Coahuila, through an investment of US$20 million and the creation of 600 direct jobs. The Secretariat of Economic Development and Competitiveness of Coahuila also announced that between 12 and 15 Asian companies, some of them automotive, are interested in establishing plants in the state, showing the confidence that foreign companies have in the state and in Mexico.