Despite Production Stoppages, Guanajuato Expects to Create Jobs

Despite the production halt that 14 automotive plants in Guanajuato, Mexico, faced earlier this month due to the semiconductor chip shortage, the industry is expected to generate thousands of jobs this year. The shortage of semiconductors has affected automotive supply chains in Mexico and abroad.

“Now the issue of chips has intensified because the pandemic has worsened in the country where they are produced and they implemented severe measures to avoid working, so there will soon be news of production stoppages at several companies that will last days,” said Alejandro Ragel Segovia, Minister of Metal Mechanic Industry Workers Union (SITIMM).

The companies informed the unions of the need to stop production but both parties worked to reach an agreement to minimize the damage that the pause will cause. “The proposal is that industries should manage to contain the situation as much as possible and not reduce wages,” said Ragel. Despite the pauses, Guanajuato expects to close 2022 with 3,000 more automotive jobs, said Ramón Alfaro Gómez, Minister of Sustainable Development of Guanajuato.

These technical stoppages are becoming a common occurrence in Mexico. On June 15, seven automotive assembly plants in Puebla paused operations for the same reason. This trend is expected to continue throughout the coming months, potentially affecting over 4,500 Mexican workers, said Constantino Sánchez, Minister of the Republican Trade Union Conference. “The semiconductor crisis that exists in the country is causing several companies to stop their activities and obviously also affects the economy of Puebla in general,” said Sánchez, as reported by MBN. 

Semiconductor shortages have been a constant problem for the automotive industry especially since the start of the COVID-19 pandemic as IT companies grew during this period. During the pandemic, some semiconductor manufacturers also had to reduce their production capacity. Another one of the main reasons for the constant semiconductors shortages is the global dependency on South Korea, China, Malesia, Philippines, Singapore and Thailand.   

Another consequence of this problem is inflation within the automotive sector. “In other industries, inflation within the automotive sector has now been above general inflation for more than 30 months. Car prices have helped drive general inflation considerably higher over the last two years. Economists have expected prices to stabilize and even decline in 2022, allowing the rising consumer price index to moderate markedly; however, this has not happened yet and it does not appear that it will for at least the first three quarters of the year,” wrote Guillermo Prieto Treviño, Independent Contributor, at MBN.