Mexico’s Central Region Offers Key Opportunities, Ideal Location

Q: How would you describe the performance of the central region of Mexico in the automotive industry over the past year?

A: Mexico’s central region plays a crucial role in attracting investment, especially in the context of nearshoring. The area, which includes Mexico City, the State of Mexico, and Hidalgo, is receiving significant investment in railway infrastructure, while its production chains are transforming to manufacture EVs.

The region is key to the country's economic activity due to its logistical relevance. Major logistics hubs have been established in the northern part of the State of Mexico, with significant investments from companies like Amazon and DHL. This has driven growth and generated a significant economic spillover for the region. 

Q: What does the region offer to the automotive sector, and what growth opportunities exist considering changes in logistics and infrastructure?

A: The central region of Mexico has several strengths. First, it manages natural resources effectively, which is crucial given the water stress faced by other regions. Although water is a limited resource across the country, the central area is managing its use well, making it attractive for investments in technology and EV production. The region also has a large talent pool. With a population of over 32 million people, it is the largest consumer region in the country, providing a workforce capable of meeting the demands of a growing and transforming industry. Another strength lies in its excellent financial services. These factors, combined with investments in railway and logistics infrastructure, position the region as an area with enormous potential for the automotive industry.

Q: How is the Metropolitan Cluster responding to shifting industry trends and what initiatives are being developed in the region?

A: In response to the industry's shift toward EVs, the cluster is deploying a unified strategy throughout Hidalgo, Mexico City, and the State of Mexico. One of the main initiatives revolves around digitalization, aligned with Industry 4.0. We are implementing a masterclass of 10 disciplines featuring some of the world’s most advanced technologies, enhancing the capabilities of existing staff in plants.

We are also addressing decarbonization, which is crucial for sustainability. The cluster is also developing various platforms that enable positive disruption in the industry, positioning ourselves at the forefront of technology and processes. These actions allow us to meet the current and future demands of the automotive sector.

Q: What are the main challenges companies face when adopting Industry 4.0 principles?

A: One of the main challenges in adopting Industry 4.0 is transferring knowledge throughout the entire value chain, from top management to all operational areas. It is crucial to integrate technologies and digitalization at all levels, which can significantly improve processes and reduce costs. Digitalization also has a positive impact on talent management and the measurement of KPIs, such as carbon footprints. The incorporation of digital technologies in these areas highlights their importance in operational efficiency and industry sustainability.

Q: What projects is the cluster leading to modernize and update the skills of automotive executives and entrepreneurs?

A: One of our key projects revolves around the Six Sigma, a quality management and control methodology. If we do not align and unify quality criteria from top management, these standards will not be reflected in production lines. Fortunately, thanks to our relationship with general managers of the companies in our organization, we are successfully implementing this methodology.

Another project is the Mobility Council, a working group that shares best practices to understand and build the roadmap for our cluster. We are also working with the Inter-American Development Bank (IDB) on urban transportation and smart cities projects. The cluster is also reviewing the challenges and risks associated with integrating the USMCA’s demands on parts and components. We are also evaluating the role of new investments from Asian countries in the industry.

Q: How could Mexico balance its relationship with the United States and China to boost its automotive industry?

A: Mexico must balance its relationship with both markets, ensuring that any new commercial participation meets quality and safety standards while leveraging opportunities arising from globalization and geopolitics. The trade relationship with the United States and Canada is a priority, as investments from these countries have historically consolidated Mexico's role in the production and export of light and heavy vehicles and auto parts. However, there is also a growing commercial presence of Chinese vehicles in Mexico, and it is crucial to understand and adapt to this new economic dynamic. Mexico has been rigorous in complying with regulations for vehicle production, and major manufacturing countries such as Germany, Japan, South Korea, Spain, and the United States adhere to these standards.

To produce in Mexico, Chinese companies must comply with the same regulations. Some Chinese brands are already working on this, focusing on providing high-quality vehicles that meet the physical-mechanical and safety requirements of the Mexican market. These vehicles often offer better costs and advanced technology.

Q: What initiatives does the cluster have in terms of green production and sustainability?

A: We have a comprehensive program called Path to Industrial Decarbonization, which we have been promoting since 2021. This program addresses the necessary infrastructure for companies to understand and plan their transition toward decarbonization. The cluster’s role has been to establish the necessary links with the government to ensure that the industry's needs are met, allowing SMEs to also reduce greenhouse gas emissions.

An operational challenge companies face is deciding where to invest, whether in new technologies for their production processes or in technologies to mitigate their carbon footprint. The available financial instruments are crucial in supporting both initiatives, enabling companies to advance in both productivity and sustainability.

Q: How are the energy needs of automotive companies in the region being met?

A: The new administration for the State of Mexico is working on public policy related to electricity, recognizing the need to improve its quality and to develop the necessary infrastructure for growth. Conditions are improving for the productive sector, allowing it to enhance production processes and incorporate technologies that reduce the carbon footprint. There is also a cultural shift toward promoting sustainability across all sectors — government, industry, society, and education. This comprehensive approach is key to advancing toward a more sustainable future.

Mexico has achieved 32% of its commitment to reduce its carbon footprint by 2030. Authorities keep engaging in important agreements to achieve this goal, such as that between Iberdrola and CFE. Companies like Siemens, a member of the cluster, are also working toward this goal. Conditions are improving and the right infrastructure, such as railways, is being built.

Q: What training programs for new technologies is the cluster developing?

A: We have a comprehensive training program in electromobility, developed in collaboration with Texas State University and Grupo NICDET, which is a member of the cluster. This program is aimed at both students and personnel involved in the production of EVs.

We are focusing on education at all levels. We have projects that strengthen skills from technical to higher education levels, and even for individuals already involved in production. The cluster is also working to increase the participation of women in science and technology. We developed a program, endorsed by the IBD, to take female students from technical universities to electromobility events in Cancun, Quintana Roo, and Puerto Vallarta, Jalisco. We are working to expand these programs and are seeking additional support to ensure their success.

Q: What are the cluster’s short and medium-term priorities?

A: The priority is to strengthen the automotive industry in Hidalgo, Mexico City, and the State of Mexico. We also aim to integrate the value chain to meet the demand from global companies to bolster regional economic development. We are introducing an innovative project that will bring together leading technologies capable of meeting academic and industrial demands. We are also working on a project with BEAT, and we hope to announce new investments in the region. So far, we have trained over 3,000 engineers in digitalization and are training about 2,000 people per month.

The automotive cluster began as the Automotive Cluster of the State of Mexico and is now in its 11th year. We have achieved significant growth, and our goal is to position the region as the largest cluster in the country, with full capabilities to attract investments from nearshoring and to sustain existing investments.