Carlos Lozano
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View from the Top

The Little Giant of the Mexican Automotive Industry

Tue, 09/01/2015 - 16:55

Q: Aguascalientes has become one of the main states for the Mexican automotive industry. How has the state evolved in this sector and what new projects have you started?

A: The automotive industry arrived in Aguascalientes in 1980 when Nissan established its second plant in the country. It has been a process based on results, and it has helped Aguascalientes consolidate as the fastest growing state in Mexico and as a pioneer in the industry. The results Nissan has obtained with its plant in our state have made it the most productive manufacturing site of the company globally.

In 2014, we had 130 established international companies, and now we have grown to 142, because we market the state as the best option for the automotive industry. We have been successful thanks to our ability to determine what companies need from the state. Nissan’s decision for its new plant was taken four years ago, and we endeavored to make this happen for Aguascalientes. In the end, we won the project because of our previous results and thanks to our negotiations with Carlos Ghosn, CEO of the RenaultNissan Alliance. By 2019, Nissan expects to manufacture close to 1.1 million vehicles in Mexico of which 850,000 units will be produced in Aguascalientes. Right now, this plant is considered a pioneer throughout the world, and Carlos Ghosn has promoted Nissan’s relationship with the state as an exemplary collaboration. Because of that, we have been the fastest growing state in the country for three years now.

Q: What advantages did the state offer, and how did it become the most attractive region in the country?

A: Aguascalientes offers many opportunities, including the natural advantage of its geographical location, which is fairly close to both the Pacific Ocean and the Gulf of Mexico. It is also at a short distance from the border, and it is less than 500km away from the largest markets in the country. In addition, we have all the necessary public and private infrastructure for welcoming investments of this kind, including schools, roads, restaurants, and hotels. In this area, we have seen a lot of collaboration from private investors who have developed their own industrial parks to a total of 19 different complexes. Once the government managed to attract an OEM, we were able to build the entire business for the suppliers. Aguascalientes is one of the safest regions that offers high quality labor, and has an effective service infrastructure unmatched by any other location. Furthermore, we have strengthened our relationship with local labor unions, which has allowed us to attract companies from 27 countries around the world and to be a strike-free state for the last 45 years. Aguascalientes offers a superior quality of life and costs of living that are below the regional average. The local inflation rates are lower when compared to the national indicators, and we have important infrastructure projects planned for the future. In terms of electricity, Aguascalientes is probably the only state with no energy fluctuation whatsoever thanks to the grid encircling the region, completely interconnected and with triple redundancy. It is a state with a really clear vision of staying attractive for foreign investment.

Q: With all these new companies arriving to the country, how much growth are you expecting for Aguascalientes?

A: What we are seeing is just the beginning and more opportunities will appear in the years to come. We have already reaped some benefits, perfectly shown by the 12.4% growth we had in 2014, according to the National Institute of Statistics and Geography (INEGI). However, the forecast that Banamex offers for this year places us as the fastest growing state in the country with a GDP increase of 7.8%. Our goal is not just to attract automotive OEMs, but to bring along all their major suppliers. Many Japanese companies were already established in Aguascalientes, but more of them are now arriving from all levels of the supply chain. Therefore, what I can predict is a continuous growth with large revenue for the state and job generation.

Q: What were your specific strategies in bringing Aguascalientes to its current positioning?

A: Nothing that is happening in Aguascalientes right now is circumstantial. The state needed to prove that it was ready for new challenges, and it was important to show that even when there were no new investment plans, we still wanted to maintain a healthy relationship with Japan. Before being elected, I visited Carlos Ghosn and many other directors to tell them that we wanted to work with them once again. At that time, there were rumors about a new Nissan project in America, and I immediately proposed Aguascalientes as a viable location. We developed a program based on the six strategic areas of economic and social progress, justice, legality, safety, efficient government, education, sustainability, and proper services, as well as quality of life. Currently, we are the state with the most advantageous financial position in the country, the second safest state, and state with the third lowest corruption perception according to the Mexican Institute for Competitiveness (IMCO) and the Center of Research and Economic Teaching (CIDE). We restructured Aguascalientes to become the primary state in environmental strategy and the leading state in urban development and housing. All these factors have a strong effect on companies’ results, and because of that we have mastered our ability to administrate success. There have been companies that want to establish in the region, but we have learnt to say no when we could not handle it. The most attractive place for the automotive industry is Mexico, but that does not mean that we can oversell our capacities. States that have stretched themselves too far will face problems in the future. To avoid this, we have a group of industrial players, including the most important international and local companies, working together to deal with the sector’s concerns. Finally, we have worked on a supplier development program and implemented various strategies to develop local companies and include them in the automotive supply chain. The financing program Fondo Progreso has developed new options for these companies, and we have connected 50 local companies with major automotive players.

Q: How is the government promoting environmental practices among the companies in the state?

A: Our education plans are now including these practices, and we have created an environmental culture in Aguascalientes. Aguascalientes is a leader in water treatment processes, waste disposal, recycling, and energy management, with programs that provide solar water heaters to senior citizens, for example. Alongside Mexico City, Aguascalientes is the only state with electric taxis, and has the largest amount of green areas per inhabitant.

In terms of our electric vehicles project, we are still in the early stages and it is still an expensive technology. The cars are currently recharging from the Federal Electricity Commission (CFE), but we are planning to generate solar energy. Aguascalientes has some of the largest solar exposure in the country, so we are turning this into an opportunity. CFE has already presented its proposal to us, and we want to launch the project in the next six months.