Building a national supplier base is an institutional priority for ProMéxico. We cater to advanced-manufacturing industries such as aerospace, automotive and electronics, which usually share a supplier base. Mexican suppliers are evolving. Rather than catering to a single industry, they are supplying several and diversifying their portfolio. This is a positive step in the development of the country’s advanced-manufacturing industries. ProMéxico focuses on identifying the productive capacities of SMEs so they can join these industries’ supply chains and on raising Mexican content in these industries through business meetings focused on strategic industrial processes. Tooling is perhaps the area that offers the most opportunities. All industries need tooling solutions such as molds and dies but Mexico imports around US$2.6 billion in tooling annually and is the second-largest importer of molds worldwide.

Companies should make continuous improvement a priority, both in quality of products and processes. Certifications are equally important. Becoming a certified company is a complicated process that implies changing paradigms within the business itself and requires a strong economic backbone to support the necessary investment to align the company to international standards. Similarly, players looking to join the production chain must be willing to invest in implementing the latest technology in their processes. Talent development should also be one of the utmost priorities, together with technology integration, particularly as it relates to Industry 4.0 applications. We understand these difficulties, which is why we have opened a dialogue with the state government to boost financing programs for companies wanting to participate in the automotive chain.

Regardless of political issues such as the renegotiation of NAFTA, there are huge opportunities for Mexican suppliers to integrate into American production chains. However, local players must deliver quality, achieve cost competitiveness and implement adequate technology to meet the requirements of suppliers and OEMs. EVCO Plastics is completely integrated into the US automotive supply chain, as well as with household appliances, health and other sectors, and we have grown thanks to these kinds of opportunities. The US and Mexico are complementary economies, much like Germany and Turkey. We can improve this collaboration through innovation centers and several US companies are already bringing innovative projects and R&D branches to Mexico. If this collaboration continues, the region can increase its competitiveness.

Integrating technology and growing the capabilities of local companies is crucial, particularly in filling the holes of the current supply chain. Vehicle production is certainly important considering the country produces approximately 3.5 million light vehicles per year. However, auto part production is equally if not more important since every year this industry accounts for over US$80 billion in production. In plastics, for example, there are not enough mold manufacturers in the country. Many plastic component providers are working at full capacity and they are looking for companies to subcontract part of their production. The challenge now is finding those companies that are willing to make the effort to become true members of the automotive production chain.

The main challenge for Mexican companies is investment. Many companies are focused on developing innovative manufacturing processes since Mexico can no longer be competitive due to low labor costs alone. Mexican companies should face fewer difficulties to integrate into US productive chains once the region is strengthened. We also look forward to having more flexible US-Mexico trade that incentivizes investments in the medium and long term. Sourcing cost-competitive raw materials has now become a challenge due to the increased prices in steel and aluminum. Most raw materials are not produced in North America but imported from Asia and Europe, so the challenge is finding a way to produce locally.

When we first invested in Mexico, we only focused on component manufacturing operations. Now, we also engage in machinery and product development. Brose opened a center for machinery development in Queretaro and now builds equipment to cater to Brose’s needs in the US, Mexico and Canada. Brose brought the necessary technology from Germany to build laser welders in its El Marqués plant and this will be the first time Brose designs and builds equipment outside Germany. Having trained workers has enabled us to engage in these advanced activities. Our new goal is to start a project with the Polytechnic University of Queretaro (UPQ) in March 2018. Brose will have its own area within the university where the company will engage in technological innovation.

There are already over 2,000 German companies operating in Mexico generating more than 150,000 jobs, which clearly shows Germany’s belief in Mexico´s potential as an investment destination. BASF values self-learning and individual training with coworkers as the optimal tools to raise the Mexican workforce to the same level of any country. We have created several mentoring and development programs for our employees and trained Mexicans outside of Mexico to gain international experience, implement it in their everyday activities and share it with their peers. We believe that talent exists in Mexico. We are investing in training for our customers and by the end of 2018 we will re-inaugurate our training center for automotive refinishing in Toluca.

The biggest challenge is building confidence among Tier 1 suppliers. Most of these players are foreign and they have to be convinced about the advantages of trusting a Mexican supplier. We understand that companies look for solid, trustworthy partners with the financial backbone to meet their clients’ demands. For this reason, we have worked with the state government to offer financial support to SMEs looking to work with a foreign company. Additionally, we have worked on a strategy to combine efforts from several SMEs to become a unified front that can meet OEMs’ requirements in terms of volume and delivery times.