Taking The Next Step Through Collaboration With Canada
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Taking The Next Step Through Collaboration With Canada

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Pedro Alcalá By Pedro Alcalá | Senior Journalist & Industry Analyst - Tue, 11/09/2021 - 11:50

You can watch the video of this presentation here.

Through partnerships with their Canadian counterparts, Mexican automotive companies can venture into the future in terms of growth and prosperity, but most importantly, in terms of innovation, said Canadian Ambassador to Mexico Graeme Clark. “Mexico’s automotive players should think of Canada as a strategic ally in their expansion plans. We are convinced that an important part of your long-term objectives should be your internationalization process,” he highlighted at the International Mexican Automotive Industry Congress (CIIAM), an event organized by INA, in collaboration with Mexico Business.

Mexico and Canada share a 67-year-old history of close diplomatic relations and strong pathways of exchange. Over 2.5 million Canadians visit Mexico each year and both countries are each other’s third strongest commercial partner. Moreover, in 2020, Canada was the second most important foreign investor in Mexico. “Together with the US, we form the largest and most prosperous economic region in the world, contributing 27 percent of the world's GDP,” said Clark.

Although MBN has previously reported on Clark’s involvement in the extensive collaboration between Mexico and Canada in the mining sector, Clark believes that the automotive industry represents a similarly important part of the common bonds between the two nations, noting that the automotive sector represents the most developed and integrated industry in the USMCA region. “This sector occupies the first place in commercial exchange volume between the three countries.” 

There are over 60 Canadian suppliers and service providers in the automotive industry who have invested in the construction of over 120 factories and manufacturing plants in Mexico. According to Clark, these Canadian facilities employ over 40,000 Mexicans with great salaries, working conditions and professional growth opportunities. The issue at hand is to know how this collaboration can be deepened, especially as the sector undergoes what might be its historically largest technological shift in the form of EVs and autonomous vehicles, emerging niches which Clark believes will generate opportunities for Canadian investment in Mexico to grow even more.  

Canadian innovation already plays an important role in Mexico’s automotive industry. For example, Clark notes that one of Canada’s key contributions to Mexico’s automotive supply chains are its tooling fabrication experts, who manage workshops in various states all over the country. “This has been an area of Canadian excellence that has enriched Mexico’s industrial standards,” says Clark. During the event, the ambassador invited companies in the Mexican automotive sector to deepen their knowledge and experiences of the supply capabilities of Canadian companies, noting that commercial delegates at the embassy, in collaboration with consulates, are specialists of the automotive sector. “They can be key allies in the process of identifying the suppliers that are best fitted to help companies in this industry reach their objectives in terms of quality, cost and local content.”

One of Canada’s objectives at the moment is to be a part of the future of Mexico’s automotive sector both in terms of expansion and also in terms of innovation. “Growth and diversification are essential to the optimization of company and industry competitiveness. Canada can be an ideal destination for the growth of advanced manufacturing operations and also for the strengthening of research and development capabilities,” said Clark. 

Canada already hosts a number of prominent research centers for the development of autonomous vehicle technologies for companies such as Ford, General Motors, Blackberry and Magna International, among other global companies that work closely with world-class universities. There are also public schemes that promote innovation, which Mexican companies can take advantage of. Clark highlights that the Canadian government offers generous incentives for companies to invest in innovation programs, such as funding for special projects and tax credits for the acquisition of specialized machinery. Another example of Canada’s commitment with innovation is the creation of the Advanced Manufacturing Supercluster, based in Ontario. Over US$10.45 billion in resources have been committed over the next decade to the development of this supercluster.

Although the pandemic’s impact on supply chains remains, Clark celebrates INA’s leadership in Mexico and its role in providing guidance and support, especially as the industry faces another important challenge in the form of the upcoming electricity reform, which some Canadian companies believe could generate a scarcity of electrical power and a rise in its cost. Besides being a detriment to investment in automotive and other sectors, as previously reported by MBN, this could also impact companies’ commitments to reach a zero net carbon emissions objective. According to Clark, this would force assemblers who still wish to reach their climate change goals to modify their supply chains and import more supplies from countries where manufacturing plants have reduced their environmental impact. 

Canadian officials want to find a “collaborative solution” to these challenges to ensure that the automotive industry can remain an engine for economic development and growth both in Canada and in Mexico. “For Canada, the success of Mexico’s automotive sector is a matter of great importance and interest,” said Clark.

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