Tackling Supply Chain Dependence on Asia

North America is one of the most important economic regions in the world and the USMCA brings numerous opportunities for the three countries. The automotive industry is one of the region’s most important sectors. However, constant manufacturing stops caused by the shortage of microprocessor and other raw materials have limited the industry’s growth. 

Automakers, OEMs and suppliers are facing a critical challenge. Experts agree that it is important for the industry to advance as it brings great opportunities to Mexico. Through investment, the country could be a powerhouse in the automotive industry thanks to its unique advantages, such as a privileged geographical position and competitive labor force. 

To achieve this goal, the country needs to change its mindset, especially regarding electrification. For a smooth transition to electrification, the Mexican government could copy the best policies that other countries are using, explained Oscar Domínguez, President Operations, Lear Corporations.

“The US government recently approved a very significant investment that aims to develop microprocessors. Mexico also has great potential in this sector. However, it is necessary to create alliances with companies that currently produce microprocessors to understand the process and know-how, and from there take the advantage of Mexico’s highly qualified labor force,” said Domínguez. 

Back-end logistics could play a key role in the future of the automotive industry, said Jorge Pardi, Comptroller, Aptiv Latin America, adding that this key factor could reduce the region’s dependence in Asian microprocessors. “We are in a privileged position. Although the automotive market is growing at an acceptable rate, the EV sector within the industry is growing by leaps and bounds. We have heard from 175 companies that are already undergoing an electric transformation. However, we must be ready to create and implement these types of electric solutions to the Mexican fleet,” said Pardi.

Mexico, however, still needs to improve its infrastructure to take advantage of this emerging opportunity, as there will be strong competition. A few decades ago, Mexico was attractive due to its manufacturing capabilities. This is changing, as more companies open their own engineering centers. 

Alfredo Alonso, EVP and President, Fluids Business Unit Martinrea International, highlighted that it is important to reinforce Mexico’s automotive infrastructure to capitalize on the opportunities that lie ahead. 

Experts remain optimistic of the industry’s future. “We will be able to meet the expectations. A huge avalanche of investments is coming to the country and we need to have the infrastructure to sustain these new investments, from the quality and safety of the roads to the functioning of the borders and customs,” said Domínguez. 

The automotive industry has a duty to innovate to improve sustainability, efficiency and safety. While there are different ways to achieve zero emissions, hydrogen combustion presents an interesting alternative to further reduce emissions, especially in the long term, said Javier Valadez, CEO, PACCAR Mexico.