News Article

Mexico’s Road Towards Automotive Industry Leadership

Thu, 11/09/2017 - 13:59

The Mexican automotive industry is not put off by an unstable political climate but, rather, the country is focusing only on growth and competitiveness, panelists at the Mexico Automotive Summit 2017 said on Thursday in Mexico City. They suggested the key requirements for becoming a global leader in the sector were to increase competitiveness through talent, technology and supply chain development.

While NAFTA renegotiations hover like a cloud over Mexico’s automotive industry, the impact from the talks has been minimal. “2017 has been a very positive year in terms of investments for the automotive sector,” said Mario Chacón, Head of the Investment Promotion Unit for Global Businesses at ProMéxico. Chacón praised the growth of the automotive sector’s manufacturing capabilities but he also said that future growth depended on the joint efforts of all players. He explained that it is necessary to bring together the main automotive clusters in Nuevo Leon, Guanajuato, Queretaro and Chihuahua and the many companies spread throughout Mexico. The goal, Chacón said, is to increase competitiveness in the face of uncertainty.

Eduardo Solís, Executive President of AMIA, added that the country should not worry too much about threats made by the country’s northern neighbor. “Sixty percent of what Mexico exports to the US for the automotive sector does not depend on NAFTA but on the WTO regulations,” he said. Solís explained that free trade agreements have been essential but the country does not depend only on one. “Mexico’s free trade agreements have been fundamental for its economic growth. We should remain positive as this broad network puts us in an advantageous position.”

Moreover, investment has not stopped. “Local and foreign groups have made great investments in many Mexican industrial sectors, mainly in the automotive sector,” said Juan Carlos Pérez Rocha, Country Head of Large Corporate for HSBC Mexico. He said that companies worldwide have a positive opinion of Mexico’s manufacturing practices and labor. “Foreign companies have successfully found excellent professionals when coming into the country, thus they invest heavily in their training to ensure that they have all the necessary qualifications,” said Perez. However, this also poses its own challenges.

“The growing investment in the automotive sector will translate into a growing need for human capital,” said Veronica Orendain, Director General of Heavy and High Technology Industries at the Ministry of Economy. She said the Ministry of Economy had identified knowledge gaps and among the largest is the lack of qualified technicians with full knowledge of manufacturing practices. “The challenge is to bring together the industry and academia to generate successful study programs.” Solís agreed with the need to train even higher qualified professionals to remain competitive. “Universities should focus on the technologies that are coming in the next 10 years, such as artificial intelligence, Industry 4.0, Big Data and the Internet of Things.”

Another challenge, Orendain continued, is supply chain development. “The Ministry of Economy has developed specific support tools to bring new technologies to companies in the supply chain, mainly Tier 2 and 3 companies. We are also supporting the linkage of research and technology centers.”

Solís said that AMIA aims to ensure fair practices and to promote ethical behavior among companies and states, and added that Special Economic Zones (ZEEs) were gaining in importance. “Special Economic Zones are becoming increasingly important as they are attracting investment to areas that need it through the elimination of several taxes to promote economic growth. Reduced taxes make these regions much more attractive.” However, he also warned that it is important for companies to have a clear view of the target area, which could be short of the necessary suppliers.

All panelists agreed that Mexico can continue growing its automotive sector, which is already in an excellent position. “Mexico is now a manufacturing hub that increasingly incorporates advanced manufacturing technologies,” said Chacón.