News Article

Competitiveness of Mexico’s Automotive States

Thu, 09/24/2015 - 13:45

Our first panel of the day was moderated by Javier Lomelín, CEO of Colliers International LATAM, on the topic of theCompetitiveness of Mexico’s Automotive States. He started the discussion by asking the panelists which were the most relevant factors that made the Mexican automotive industry reach the current productivity levels.

Panelist Juan Carlos Pérez Rocha, Country Head of Large Corporate at HSBC Mexico, said the NAFTA agreement was the first factor that drove Mexico’s industrial success. Secondly, he stated that the country’s location is another decisive factor and, finally, the quality of the local talent. Renaldo Bozic, commercial manager of FINSA, added to Pérez Rochas’s answer that the different states have been proactive to bring new companies to Mexico. “Mexican workforce is not only competitive, but it is also classified as one of the best worldwide,” concluded Jesus Cantú Rueda, Undersecretary of Investment and Industrial Promotion from the Secretary of Economic Development in Nuevo Leon.

Lomelín explained that the local labor force is considered the main reason for Mexican competitiveness; nonetheless he argued that Mexico cannot rely solely on this situation. According to Bozic, the country should start providing added value to products manufactured in Mexico. For instance, every car produced has only 30% of local raw material, and usually 90% of the supplies are imported. “If we could reach 100% of Mexican materials, that would be a competitive advantage,” Bozic indicated. Pérez Rocha added that there are two other issues to be addressed, the first is to help OEMs and suppliers to locate in new areas, and secondly to push for market diversification outside the NAFTA region.

Regarding market diversification, the TPP agreement’s impact on the automotive industry created controversy, and both Pérez Rocha and Cantú Rueda perceive it as an opportunity for the Mexican producers. “These treaties position Mexico worldwide,” said Pérez. “Mexico was not included for the TPP agreement, however we raised our hands and were accepted mainly because we are the easiest door to the US market,” Bozic declared.

Cantú Rueda made the final point of the discussion, regarding the efforts of the Nuevo Leon government to introduce the cluster strategy eight years ago by helping large companies develop their supply chains, as well as aiding each fleet’s operational cost with more than 25,000 minimum wages.