News Article

Should Auto Production Be Considered an Essential Activity?

By Franco Zúñiga | Thu, 04/09/2020 - 14:11

Governments around the world asked companies to stop non-essential business activities despite the social and economic impact this could bring. Mexico was not the exception and the official decree of what is consider an essential activity was published on March 30 in the Federal Official Gazette. Should the automotive industry be considered an essential activity? If not, what would be the consequences for the Mexican automotive industry?

According to AMDA, Mexico is a worldwide leader in car and auto part exports. This represents 3.8 percent of Mexico’s GDP and 20.5 percent of Mexico’s manufacturing GDP, along with 980,000 direct jobs and 3.6 million of people in Mexico indirectly depending on the industry.

The federal government labeled activities such as social programs, health services, public security, industrial maintenance, transportation, food and beverage production as essential activities. However, none of these activities can be carried without the automotive industry. The agroindustry cannot deliver food without transportation. Neither medical devices nor health services can function without vehicles. The federal government mentioned that fundamental sectors for the economy could also keep operating, which was the case with iron, glass, and cement production. Could stopping the automotive industry represent an irreversible threat to the country?

AMIA is currently asking the Ministry of Economy to be consider as an essential business to prevent a complete cease of operations. “In order to maintain workers active and continue benefiting millions of Mexicans, we need to be cataloged as essential. In that way, we can continue with our contribution to bringing the economy back to normal,” said Director General Fausto Cuevas.

The automotive industry is key for the Mexican economy and a crucial sector to brave the economic recession. Many companies are starting to use their resources to produce face masks and ventilators reflecting their social responsibility. In Florida, the local government acknowledged automotive industry as essential. Could we see a similar ruling in Mexico in the near future?

The data used in this article was sourced from:  
El economista, cluster Industria, AMDA, AMIA, Expansión
Franco Zúñiga Franco Zúñiga Industry specialist