HEDGING EXPORTS THROUGH IMPROVED COMPETITIVENESSat, 09/01/2018 - 11:14
As Industry 4.0, information technologies and innovation processes take the automotive sector by storm, it is time for Mexico to take the next step as a manufacturing center and increase its competitiveness, according to Luis Rojas, Director General of the Guanajuato Foreign Trade Promotion Coordination (COFOCE). “Guanajuato’s economy was based on the textile and maquila industries but the state has become an automotive hub that will mature with Toyota’s latest investment,” says Rojas. He adds that the state’s economy will also improve thanks to a focus on information technologies, high added-value and the differentiation of products and services. “Manufacturing is a labor-cost game but Mexico’s competitiveness can no longer be supported solely by cheap labor,” says Rojas. “It is necessary to bring together all the advantages that the state can offer to create a friendly ecosystem that fosters this innovation and further investment.”
As a public trade-promotion agency, COFOCE has gone the distance to encourage exports of Mexican products across several industries. The agency has participated in several trade missions oriented to auto parts production to showcase Guanajuato as a benchmark in this sector. Similarly, COFOCE has made efforts to boost the participation of Guanajuato’s auto parts and aftermarket segments at both national and international trade fairs.
The key for COFOCE’s success in boosting the state’s position in the international market has been competitiveness. But Rojas signals the NAFTA negotiation as an event that could put Guanajuato’s industry at risk since according to the coordination, almost 38 percent of the local industry’s operations could be impacted should the treaty be terminated. However, COFOCE has focused on helping local players strengthen their operations to minimize any negative impact. “With or without FTAs, competitive companies will prevail,” Rojas says. “Even if the US decides not to pull out of NAFTA, more competitive exports mean more business opportunities for local companies.” COFOCE has already calculated what would be the impact on local operations due to tariffs resulting from reverting to a WTO-regulated market. Based on that, Rojas and his team have determined how much local companies would need to increase their competitiveness to neutralize these effects. “We have analyzed all tariff codes for Guanajuato’s main exports and looked for ways to boost companies’ competitiveness accordingly,” says Rojas.
This might be easier said than done but Rojas has identified several areas of opportunity for companies to pursue. COFOCE is now supporting training and certification programs, while promoting innovation and digitalization to streamline the value chain and make manufacturing processes more efficient. “Industry 4.0 and information technologies must become a reality in Guanajuato to make the leap from manufacturing to ‘mindfacturing’ and truly add value to the state’s production,” says Rojas. COFOCE is organizing trade fairs such as Foro Automotriz de León and high-level conferences such as Foro GO where it brings key international figures from various industries to promote innovation. “These events help us understand how local companies must adapt their strategy in the face of a changing market,” says Rojas.
The state has also made significant advances in the area of e-commerce. The Guanajuato Supply initiative, for example, will enable 500 companies from all industries — among them the automotive aftermarket — to reach over 120 countries through the partnerships that COFOCE has established with key e-commerce companies such as Amazon, Ali Express and Kichink. “The goal we have with Guanajuato Supply is to cut the middleman between the state’s auto parts companies and final consumers around the world,” says Rojas. “COFOCE has started pilot programs and some companies are already exporting to international destinations.”
Rojas adds that “Guanajuato bets on digitalization and COFOCE champions this trend.” This objective has already been set out in the Guanajuato 2040 State Development Plan, which projects Guanajuato will be the fifth-largest state economy in Mexico by that year. COFOCE is participating in outlining the priorities of the program and Rojas lists the construction of test tracks and the promotion of the Guanajuato Auto Show as key projects to develop the state’s automotive industry, coupled with the implementation of the latest digitalization trends.