José Antonio Gutiérrez Jardon
Secretary of Economic Development
Coahuila
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View from the Top

Coahuila Strives to Achieve Industry Consolidation

Mon, 09/01/2014 - 12:23

Q: What role has the automotive industry played in the economic transformation and social development of Coahuila?

A: Coahuila has had one of the most important automotive clusters in the country for almost 40 years. The southeast region of the state has developed over the years, with the presence of four OEMs to date. Socially, we can ensure that a third generation of workers will become an active ingredient in this thriving industry. We can say that the automotive industry runs in the family in Coahuila. It all started with GM and a Chrysler engine plant in the late 1970s and 1980s, before a Chrysler truck plant came in the 1990s, Daimler in the 2000s, and Fiat most recently.

Q: What progression has there been since the Automotive Industry Reactivation Program was implemented in 2009?

A: To this date, companies are running three shift programs and the entry of new suppliers is imminent. The program rescued the industry from the depths of the 2008 crisis, and we are now facing an automotive boom in the region, producing nearly 600,000 units annually.

Q: What is your approach to offering tax and land incentives to the automotive sector, and what investments are being made into infrastructure to accommodate growth?

A: Our government has always been proactive and supportive of the automotive industry. It fully understands that this sector lies at the heart of this region. Aggressive incentives are offered to newcomers, and our full support is extended to established companies in order to guarantee that they stay and expand here. There is no secret in our strategy; it is all about support and commitment. The state laws have been modified to provide aggressive incentive programs in terms of land and taxes. The infrastructure investments being made in the industrial areas make Coahuila a world class location to invest in.

One clear example is the Laguna-Norte corridor that starts in Acuña and ends in Torreon, Coahuila. This will create great logistic benefits for all companies investing here. To fuel automotive industry growth, four regional networking councils exist in Coahuila to develop stronger ties among all industry participants. Additionally, the state government participates in an association called CIDIAC that involves the OEMs and major suppliers, as well as research centers and universities. This association creates strategies and promotes best practices among its members to consolidate the region’s automotive cluster.

Q: How can Mexico move from low cost manufacturing toward a more high-tech industry, and what role could Coahuila play in this?

A: Coahuila is currently playing a role in this matter. We have evolved with new high-tech companies in the region serving the automotive industry and the aerospace industry. Companies like Magna and Alcoa have established new robotic plants in the region while Magna has also invested in a power train technology plant in the southeast of the state.

Q: How important is the attraction of another OEM to Coahuila?

A: We believe bringing in another OEM could consolidate us as the most important cluster of the North American region. More than 280 automotive companies are located within a radius of 500km of our Laguna and southeast regions. In order to make that goal a reality, we are heavily focused on strengthening our local supplier sector to help automotive companies meet their local content requirements.

Q: What is your outlook on the contribution that the automotive industry will make to Coahuila’s economic development?

A: According to INEGI, the GDP of automotive and transportation equipment manufacturing in Mexico grew 12.6% in the first quarter of 2014 year-on-year. According to specialists, the automotive industry in Coahuila is expected to grow 7.5% during 2014. The growth rates shown by the automotive industry in Coahuila have long been outstanding. From 1998 to 2010, the automotive industry in Coahuila maintained an annual growth rate of 2.7%. Today, the automotive industry represents 22.3% of Coahuila’s GDP and creates one of every ten jobs. The state of Coahuila represents 3.4% of Mexico’s GDP, ranking in eighth place nationwide. Additionally, we are one of the five states that jointly produce 75.2% of light vehicles in the country. Although the economy has shown conservative growth in the last two years, the arrival of new auto part plants across the state shows that it will keep being a significant driver economic growth and job creation.