Jalisco Making the Best of Tech and Automotive

Q: How has Jalisco Automotive Cluster provided guidance to its members during the pandemic?

A: There are 24 cluster members, which is nine more than last year. Two more will join the cluster shortly. Alongside the state government, we are looking for strategic partners, including Tier 1 companies, to develop a more local manufacturing footprint. As a cluster, we provide guidance in different areas, including exports and legal advice, particularly on calculating RVC so companies can share with their customers their own RVC rate. We are taking decisive steps in our mission to support the automotive industry in the state with clarity and proactiveness. That is the purpose of a cluster.

Regarding the pandemic, there are many challenges the industry is facing. We have worked hand-in-hand with the Jalisco state government to provide our members with the information they need to keep their operations going. Close communication has been key and companies have thanked us for it, particularly at the lower levels of the supply chain. The information has been key for decision-making processes.

One of the cluster’s main strategies was to focus on economic aid from the state government to SMEs that were most affected by the pandemic. Large companies have a corporate network that helps them thrive amid crises. The final economic impact will depend on the measures that local and national governments take. As the pandemic evolves, the social commitment remains key to diminish its impact and to avoid more severe measures.

Q: What are some of the lessons taken by Jalisco Automotive Cluster and its members from the pandemic?

A: The pandemic has given us life lessons as individuals. We need to think about improving ourselves as human beings and professionals. As companies faced new challenges, innovation became necessary. Before the pandemic, SMEs were reticent about embracing change and the pandemic left them with no option but to embrace new channels and means.

The sector has also learned that circumstances can change and organizations must be ready to adapt. These are opportunities to be more competitive. This is a great lesson from the Japanese culture that says that in the greatest difficulties lie the greatest opportunities. This is the mindset we want to instill in our members. For organizations, it is important to have a clear sense of direction while acknowledging vulnerability to unpredicted circumstances.

Q: What are the opportunities to invest in Jalisco when it comes to the automotive industry? How has this scenario evolved amid the pandemic?

A: Jalisco has worked to attract foreign investment. We are aware that the current economic and political scenario presents some difficulties. We have worked closely with SEDECO Jalisco, taking part in meetings held with foreign companies looking for investment destinations.

In the automotive sector, we have insisted on the benefits the state offers, particularly in auto parts. The state still has room to take advantage of its high-quality production capacity. The cluster has taken an active role with embassies and chambers of commerce to present the advantages Jalisco offers to different sectors. These advantages include its ports, airports, road infrastructure, universities, and, naturally, qualified talent. Discipline is a key differentiator when compared to the Bajio or the northern region.

Q: How is the cluster participating in the development of EV suppliers?

A: This is a priority for the state government and the cluster is supporting this project. Jalisco can take advantage of EVs given the state’s technological and electronics expertise. For the cluster, EVs present a challenge and an opportunity, given that these vehicles have higher technological requirements. Today, we are serving as a liaison between R&D centers, institutions, and companies. North America has not provided enough incentives regarding EVs. As long as battery prices remain high, the market will remain small. In the meantime, potential customers are already developing new technologies and we have to cooperate in this regard. Having said that, we cannot disregard internal combustion engine vehicles. As a cluster, we need to continue supporting the supply chains related to both technologies.

Q: What were the cluster’s strategies to strengthen local suppliers amid the pandemic?

A: We launched a supplier development program, which was a first for the cluster. Our kickoff will be in January 2021, together with the state government. This program is aimed at SMEs and it includes an initial assessment and recommendations focused on automotive industry standards because most of these could be new for SMEs.

On the other hand, we are working closely with the Automotive Cluster Network, which is formed by 10 automotive clusters from different Mexican regions. Alongside the Coahuila Automotive Cluster, we are working on an assessment to identify opportunity areas in the supply chain. As a network, we will focus more on a formal investment promotion program to make the information on each state’s supply offering and Tier 1 and OEM requirements available online. Our goal is to create business opportunities for Tier 2 companies. Without a doubt, USMCA will bring more opportunities for Tier 2s. We will also identify potential suppliers that can increase their production capacity. As a network, we also provide relevant information on USMCA through a series of webinars from specialists on the subject.

Q: How have cluster members advanced when it comes to digitalization and smart manufacturing efforts?

A: Companies in Jalisco have made progress in this regard, particularly large and medium companies. They have a clear vision as to why it is important to digitalize processes and they have already seen the results. A great opportunity area is among small and micro-companies. Many are aware of the potential benefits but the financial situation is their priority, even more so during the pandemic. In the short term, those who choose not to digitalize their process might run the risk of being left out of the sector entirely. As a cluster, we need to tell them the truth.

IoT and data analysis will play a major role in the future, there is no doubt about that. While these technologies are present for OEMs and Tier 1s, they are the future for Tier 2 and Tier 3 companies. Considerable savings can be expected and this is appealing for smaller companies. Next year, we will work on bringing smaller companies and large players together so they can see first-hand the potential of smart manufacturing, including supply planning.

Q: What are Jalisco Automotive Cluster’s strategies for the future?

A: Each state has its own particular strengths and weaknesses. Jalisco is well-positioned as Mexico’s Silicon Valley. Our task is to combine the technical expertise with the potential of the auto parts segment in the state. Raising awareness of our capabilities is an important first step. Often, companies do not know who is next to them or what their potential is. We are aware of the strategic benefit of knowing each other. Everyone wants to grow and we are here for them.

During the pandemic, we also saw companies focus on medical equipment to ensure continuous growth and operation. Some smaller companies decided to maintain business as usual and stayed in their comfort zone. We are trying to create a coherent environment where every player has a mindset of proactivity to thrive. If Jalisco is not the first state that comes to mind when thinking about the automotive industry, this is soon going to change.

Jalisco Automotive Cluster began operations in 2017. The cluster represents the interests of 24 automotive companies based in Jalisco and it is part of the Mexican Automotive Cluster Network