Talent Development: a Priority for Business Growth

Q: How important is German investment in the development of the Mexican automotive industry?

A: There are already almost 2,000 German companies that have come to Mexico, totaling an investment of approximately US$35 billion. This amount is not restricted to the automotive industry but we have identified this sector as a pillar for Germany’s commercial relationship with Mexico. With the exception of Porsche, almost all German automakers have already brought manufacturing operations to the country. Although OEM presence is clear, the business opportunity that German investment has created for automotive suppliers and the effect this has had on employment generation is also noticeable. According to our estimations, for each direct job created by an OEM or provider, three indirect jobs are generated. German companies are responsible for about 150,000 direct jobs across all industries, impacting over 450,000 jobs in total.

Q: How have initiatives like the German dual-education program permeated the Mexican industry?

A: When companies like Volkswagen arrived to Mexico, they brought their own training practices based on the German dual-education program. Talent in Mexico grew to German standards but it was mostly because of a private effort from German investors. In 2013, Mexico created its own dualeducation system supported by the German government, to develop a strong network of Mexican talent that could participate in Mexican and German companies, as well as in corporations from any other country. At the moment, there are approximately 5,000 students enrolled in the dual-education system and the Mexican government’s goal is to reach a total of 10,000 trainees by 2018.

Mexico needs both the government and the private sector to be involved in talent development so companies can have a rich pool of potential hires with the skills the industry demands. At the same time, training must not be limited to college-level students but promoted at the technician level. In Germany, 60 percent of all high-school graduates do not go to university. Instead, they are trained directly by companies for two or three years until they become technicians and specialists in their own sectors.

Q: What are the main opportunities to strengthen Mexico’s commercial relationship with Germany?

A: Germany is already Mexico’s first commercial partner in the EU and almost one-third of all commercial transactions are managed with Germany accounting for over US$18 billion. The country is part of the NAFTA region, opening the door to one of the largest consumer markets in the world, and its commercial agreements result in tariff-free trade with 46 countries. There is still opportunity to grow our collaboration and we think there is still much potential to grow Mexican exports going to Germany in sectors like automotive, electronics and agriculture. Similarly, we see an opportunity to bring more Tier 2 and Tier 3 providers to the country.

The biggest challenge companies face is the scarcity of skilled talent, particularly in the most industrialized regions of the country. Labor turnover has become a real problem among companies, creating a war for the best talent. Now that the industry is moving toward new trends such as electric mobility and autonomous driving, companies need specialized people who can actively participate in the development of these technologies.

Q: How might the economic and political chill in US-Mexico relations alter the position of investors?

A: We have observed that German players remain satisfied with their ventures in Mexico. There is caution regarding Mexico’s current relationship with the US but companies know their investments are long-term projects. No player invests with a four, eight or even a 12-year vision and particularly in the automotive sector, new projects require over US$1 billion in resources that can only be justified with a long-term development plan. Companies trust in Mexico and there has not been one German company that has expressed to us its desire to leave the country.