Héctor Soto
Managing Director of the Automotive cluster of San Luis Potosí
Automotive cluster of San Luis Potosí
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Insight

Local Development Through International Cooperation

Sat, 09/01/2018 - 12:39

Expectations of local suppliers are high as time approaches for BMW to start manufacturing in San Luis Potosi. According to Héctor Soto, Managing Director of the Automotive Cluster of San Luis Potosi, the state’s suppliers are getting ready to jump in and start supporting the German OEM but there are still challenges to maximize the region’s potential.
“Automotive companies in San Luis Potosi must understand the importance they play in the state’s economic ecosystem,” Soto says. The Mexican automotive industry has gained momentum and will continue on that path. The country has done a great job attracting OEMs and these companies have brought their Tier 1 suppliers along. The next step, according to Soto, is to develop a strong local supply chain to support these companies. As premium brands such as BMW and Mercedes-Benz prepare to start operations and as GM ramps up its production, Mexico needs to evolve from offering inexpensive labor to being able to cater to increasingly complex vehicle platforms, says Soto. “This is not just about supplying a growing demand for components but also meeting the specific needs of luxury brands.” Soto points to certifications and the readiness to supply for green and increasingly complex combustion-engine vehicles as key areas of opportunity that Mexican suppliers can harness to integrate into global supply chains. “Automotive companies must change their mindset and invest in certifications that ensure a future for their operations,” he says. “They also need to develop their technical and technological capacities to support OEMs that work with state-of-the-art vehicle platforms.”
But to grow and exploit these opportunities, local suppliers need financing and Soto underlines that access to funding can be a tough challenge for Mexican businesses. “Automotive companies need to buy machinery and equipment to grow and certify,” he says. To support them, the Automotive Cluster of San Luis Potosi collaborates with government agencies, OEMs and Tier 1 suppliers to create attractive financing schemes so Tier 2s can invest and become more competitive.
To prepare for future increments in demand, Soto and the Automotive Cluster of San Luis Potosi, have  also established international cooperation projects with Japanese government agencies such as JICA to continue strengthening the Bajio’s automotive-oriented capabilities. One of these projects dubbed “Strengthening Mexico’s Automotive Clusters” focuses on transmitting Japanese expertise to local SMEs that want to participate in the automotive supply chain.