Remote Work: COVID-19’s Greatest Lesson for The Industry

Q: How is the cluster addressing the COVID-19 pandemic?

A: We are aware that sales volumes will not be the same as before but we expect them to be enough to cover costs. We have helped companies by providing strategic information regarding their next steps. In the uncertain moments before the government provided guidance for resuming operations, we gathered all the information needed to make our case, including the conditions of the automotive sector in other countries, as well as best health and safety practices that were observed in plants around the world and that the federal government was not aware of.

From early May, we sent to our members a presentation about the elements that they need to take care of, including logistics, transportation and the psychological conditions of their personnel. Even before IMSS released its protocols, we had already prepared similar elements for companies to get ready to reopen. For those members who listened, they can more easily get IMSS’ approval and for those who did not, this will take a little more time.

Q: How is the state government helping the sector cope with the pandemic?

A: San Luis Potosi's government has worked with both companies and the cluster so information can flow more efficiently. We held meetings with ministers of economic development and labor and around 100 companies registered for the virtual meetings. These were usual for global players. SMEs, on the other hand, were not that used to such meetings but this phenomenon boosted their participation in these schemes.

We do not have the figures yet regarding job losses directly caused by COVID-19 in the sector. We are aware that 10 percent of positions may be subject to cuts, but nothing is certain yet.

Q: How are the cluster's members getting ready for USMCA?

A: All provisions have been set. There are three main elements on which the industry should focus. The first is labor. NOM-035 has helped in this regard since its implementation in November 2019. The second element is labor costs, which could be difficult to get to the standard established by USMCA. Companies should not worry about increasing labor costs. Rather, this should be a motivation to gain efficiency in processes so labor cost increases do not have a considerable impact. Finally, companies should focus on buying raw materials in Mexico instead of importing components. Through our supplier development committee, we aim to link big companies and small or medium suppliers in the San Luis Potosi region.

Q: What milestones has the cluster achieved and what opportunities lie ahead?

A: Half a year has been lost to the pandemic. The other half was heavily influenced by the implementation of NOM-035 and the coming changes in rules of origin. Those two topics were our main focus. We also had our auto supplier forum, while participating in other events.

As for the opportunities that are to come, the lesson for most companies after the pandemic is how to address home office. In some cases, companies can achieve better performance as this creates a more favorable environment for employees with health conditions, pregnancies or disabilities. In some countries, there is even a scheme in which simple assembly operations can take place at home. Essential materials are provided to the collaborator so they can work at home and they bring the final piece to the plant. This practice has been carried out in Eastern Europe and Germany. This scheme has not been implemented in Mexico, thus COVID-19 opens our mind to other forms of labor where heavy logistics operations are not needed and employees can better use their time.

Q: What are the cluster’s plans to foster regional efforts?

A: Joint efforts with other states will be useful to create new synergies. Through our webinars, we have had up to 500 companies in the same conference room from Tlaxcala, Chihuahua, Nuevo Leon and the Bajio. Before, even people working for the same company but in different locations did not know each other. These webinars have helped us to accelerate the communication the clusters provide.

The best opportunity for the Bajio region is economic growth. Geographic location is indeed important, but what we are looking for is fewer imports and more local production. The region also concentrates a great number of automotive companies that could help new companies to come or current players to expand their operations.

Q: What priorities should companies enforce to be sustainable in the long term?

A: First, we need suppliers that are closer, which will reduce logistics costs. Once there is a closer supply chain, companies will manage lower stock levels. By reducing logistics and stock costs, there is a great opportunity already. Second, companies need to work on improving their human capital efficiency in every way. Home office could help to achieve greater productivity levels. A new working environment is opening.

Q: How will the automotive industry transform in 2021?

A: For those states that have the honor to host the automotive sector, we need to be open-minded about the participation of non-automotive states in the sector to help tackle income inequality in the country. There are states with little industrial participation that are looking at really archaic sectors, such as oil, but they could take a more active role in the automotive sector. States in Mexico should be more strategic.

The San Luis Potosi Automotive Cluster is a civil association that groups players involved in the sector, including academic institutions, private companies and the government