San Luis Potosi: Land of Opportunity

Q: What is your perspective on the recovery on the industry after the peak of the pandemic?

A: The economy has practically recovered. The earlier expectations for the automotive industry have been exceeded because of great demand from the US, the EU and Asia. We are facing different challenges not directly related to COVID-19, including supply chain disruptions, delays in logistics and semiconductor shortages. Overall, we are happy with the recovery and the vaccination process in Mexico.

Q: When should the industry expect a recovery from the chip shortage?

A: The shortage will not be solved in the short term. Most chip suppliers have changed their production to cater to the needs of the entertainment industry by building chips for telephones, computers and TVs. There is nothing that can be done in the short term. While there are some initiatives to build new capacity, this will take time.

Q: How does the investment landscape look in the state of San Luis Potosi and how is the cluster helping automotive companies?

A: There are many new investments in the automotive industry. New companies are arriving to San Luis Potosi, such as those from Asia, and many other companies are expanding their production sites in the state, which is a favorite destination for investment in Mexico.

For companies that are arriving, we facilitate communications with the government and with the local automotive industry. We also incorporate the new companies into our communities and address their needs regarding education. We create the appropriate educational training courses alongside local universities. We also introduce them to the best practices, strengths and supply chain footprint in the state.

Q: How is the cluster preparing to continue existing projects after the new state administration enters office?

A: We are in close contact with the state governor and the Ministry of Economy Development and we hold meetings frequently to address any issue concerning the automotive industry. We expect to continue having the same good relationship with the new government. Once newly elected Gov. Ricardo Gallardo Cardona enters office, we hope to work with the new Minister of Economic Development, who is normally our main partner. The automotive industry and the state of San Luis Potosi are closely connected and there are many things we can achieve together.

Q: How is the cluster supporting the introduction of Industry 4.0 manufacturing capabilities among its members?

A: Industry 4.0 offers complete solutions for the industry, especially for the foodstuffs, electronics and automotive industries. Industry 4.0 is very important for our cluster, given that the automotive industry has readily incorporated highly computerized manufacturing processes, including big data and IIoT. The Industry 4.0 cluster has already reached out to us to create alliances and we are creating a committee to collaborate directly with it.

Q: How are OEMs’ carbon neutrality goals influencing operations in San Luis Potosi?

A: The automotive industry aims to provide cleaner mobility products and solutions for both OEMs and consumers. The industry is aligned with the common goals of most industrial countries as consumers have become more aware of the impact of transportation on the environment.

In Mexico, we need to comply with local norms and with new rules established in the USMCA. This will enhance the practices across our industry. Moreover, by using local suppliers, the sector will reduce its carbon footprint by relying less on international transport.

Our supplier development program, which has a focus on carbon neutrality, aims to connect different companies and help smaller companies understand and implement the quality requirements necessary to operate with Tier 1s and OEMs.

Q: What opportunities are arising for the country with the emergence of electrification trends?

A: OEMs are committed to electrification, especially in the EU and China, which have subsidized emission-free cars and will eventually make them mandatory. In the EU, for instance, 14 years from now, only emission-free cars will be allowed. There are only two solutions: electrical vehicles or hydrogen-propelled vehicles. But those technologies require a large investment in infrastructure for charging stations.

In Mexico, there has been no investment in this type of infrastructure because the federal government is betting on combustion technology. In the US, electrification efforts are only taking place in a few states. The US and Mexico are oil producers, so incentives to accelerate electrification are not available.

Many companies are choosing to focus only on electrification, while others are trying to maintain both their combustion and electrification businesses. Others are already investing heavily in hydrogen propulsion. Mexico needs to take into account that although its platform is global, the country mostly supplies the US market. There will be changes in Mexico but not as strongly as in the EU or China. Since electrification might not be a priority here, we will probably lose some advantages if the largest automotive markets bet on electrification.

Q: How would you describe San Luis Potosi’s automotive expertise? What are your plans as the new president of the cluster?

A: Regional clusters strengthen the cooperation between government, universities and the automotive industry and allow the latter to find more opportunities to foster economic development. San Luis Potosi has BMW and GM, and it also has numerous and renowned Tier 1 and Tier 2 suppliers.

The cluster has more than 200 members, which supply OEMs. San Luis Potosi’s automotive industry generates over 82,000 jobs. We are a facilitator of best practices for educational programs and we provide a unique voice for the automotive industry with the authorities. We have focused on local supplier development to become one of the best destinations for investment.

We are reinventing ourselves and becoming more modern, more agile and more active. With our new Director General, Luis González, we are adding experience to the cluster. We want to have more personal contact with our plants by visiting the managing directors to obtain more information. Once we identify common needs, we will facilitate solutions through our workshops.

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