Not All Workers Have the Same Priorities

Q: How has your presence in the country helped you understand the differences in labor conditions across the country?

A: Having offices in Guanajuato, Queretaro and Monterrey, we have realized labor mobility in the Bajio region is completely different to that of the north of the country. Companies along the northern border have a much higher maturity level, having started operations in the 1990s, while in Bajio they have an average of three to six years of established operations. This disparity impacts the technological level and strategy implemented at these plants, as well as the labor opportunities available in their regions.

In the north, companies are much more stable and they have a set payroll of up to 10,000 employees in some cases. The region is consolidated and companies do not normally introduce more production lines because the workforce and logistics infrastructure is insufficient to support a larger investment. On the contrary, given the dynamism of the Bajio region, companies are actively building new plants and even design and engineering centers because the availability of human labor allows that.

Q: How can Catch Consulting help companies in the automotive industry improve their labor conditions?

A: Almost 90 percent of our clients come from the automotive industry. What we can offer clients is understanding on what is happening in the industry regarding human capital development thus helping them make decisions on turnover, retention and growth. Turnover, in particular, has been a hot topic for years. Although turnover rates are similar in different states, the reasons behind employees’ decisions to leave a job are different across the board.

Focusing on the Bajio region, turnover in Guanajuato has mostly been related to the massive job offering in the state. If an employee chooses to leave their company, they can find a job in no time. Furthermore, since most companies in the region have just arrived to the country, they have more effective strategies in place to promote talent development and growth. This does not happen in states such as Coahuila or Sonora where companies have used the same human capital plans for the last 10 years.

There is also labor mobility between states caused by the creation of new opportunities with arriving companies. People in middle management positions in Queretaro, for example, may choose to migrate to San Luis Potosi where high-level positions are available now. Queretaro has been a great talent generator in the Bajio and now those people are looking for the best opportunities in the entire region. Similarly, Guanajuato will be a great source of operational talent for the new Toyota plant in Apaseo and the BMW facility in San Luis Potosi.

Q: What is the best strategy companies can implement to avoid talent scavenging?

A: The best opportunity for companies is to focus on development plans. Career plans should not be focused solely on wages as they are right now; there should be a well-established development plan regardless of the position an employee occupies in the companies. That way, people will think twice before leaving just because of a more attractive salary offering. Catch Consulting’s studies show that only 40 percent of employees who leave their job do so because of their salary. The working environment, the feeling of transcendence in the company, the training options and growth opportunities are factors that surpass the importance of wages in a worker’s mind today. That being said, salaries must remain at a competitive level when compared to the rest of the market. Otherwise, regardless of the career plan available, people will always choose to leave.

Q: Which positions are the hardest to fill and retain in the country at the moment?

A: In the north of the country, the hardest positions to fill are in the areas of tooling, metrology and quality. The Bajio region lacks maintenance, electromechanical and mold technicians. Meanwhile, states including Mexico, Puebla and Tlaxcala struggle to find middle management positions such as supervisors.

From a demographic standpoint, there is no lack of available labor in Mexico. However, many people of working age do not have manufacturing experience or are not geographically available to support growing operations. Therefore, companies must find talent where they can, even when the demographic conditions may not be ideal.

Q: How will USMCA impact salaries and company competitiveness in Mexico?

A: The new treaty establishes that 40 percent of the content in a vehicle must be manufactured with salaries of US$16 per hour. This is an excellent opportunity for Mexico. The country cannot keep anchoring its competitiveness to low wages and companies will have to increase their salaries 10 percent or even 15 percent year-on-year, instead of 5 percent as they have until now. The challenge will not be to raise salaries but to find a way to make that sustainable. Companies will have to create new competencies among their employees to eventually find new areas of opportunity that reduce costs and justify these increments.

Catch Consulting is a Mexican firm specialized in human resources, organizational development and market research on wages. The company has offices in Guanajuato, Queretaro and Monterrey