Tier 2 Suppliers a Priority for CLAUT

Q:How has Nuevo Leon's government helped the local automotive industry to grow?

A: We collaborate with Nuevo Leon’s Ministry of Economy, which has an active Deputy Ministry of Investment. The investments that are arriving to the state are the result of the efforts this institution has made during the past five years.

Many Chinese companies are choosing Mexico as they look to transfer their operations following the update of the USMCA Rules of Origin. But there are also investments to supply EV manufacturers as Austin, Texas, has become a hub for EVs after the move by Tesla and its suppliers to the region. Nuevo Leon’s infrastructure, lower manufacturing costs and short distance to Austin have made the state an attractive investment destination. Nuevo Leon also offers companies access to technical schools and universities. There is also the Invest in Monterrey initiative backed by private actors to attract foreign investment.

Q:What is the role of CLAUT in the acceleration of the adoption of the industry 4.0?

A: Industry 4.0 involves the adoption of new technologies in manufacturing processes, in which we have been working for six years. The state government of Nuevo Leon and local businesses are directing the Nuevo Leon 4.0 initiative to help manufacturing companies to incorporate new technologies such as AI and IoT.

Within the cluster, we have an Industry 4.0 committee to collaborate with plant representatives, sharing practices and information to get acquainted with local suppliers that are offering 4.0 solutions. Even large companies, like tractor manufacturers, have developed local suppliers because sometimes the solutions offered by suppliers from Germany, the US or Asia do not align with the needs of plants in Mexico. Here is where SMEs become essential. We also have the Development of Suppliers of Industry 4.0 committee alongside the Software Cluster, in which automation and software companies offer solutions to our members.

We are expanding the ecosystem to shift to new technologies. If we do not do it, organizations in other regions will s-surpass us.

Q:Can Mexico rely on "friend-shoring" for a long period of time?

A: Regionalization is displacing globalization. The COVID-19 pandemic highlighted the need to have closer supply chains. The EU is relying more on Eastern Europe and Asia, while the USMCA is making the North American region depend on itself more. This regionalization is a reality. The EU, for example, will rely less on Russia and its allies. With friend-shoring, countries are closer to their supply chains, which will not be affected by political problems.

Q: How is CLAUT promoting the industry's decabonization efforts?

A: The industry is adopting new EV technologies and we have to adapt to this new reality. ICE vehicles will remain for a long time in Mexico, Latin America and some countries in Africa and Asia. But our main client, the US, is on its way to achieving full electrification. We are helping companies participate in the supply chains of EVs, specifically those involved with the engine and parts related to the gasoline system, which will need to start producing components for EVs.

Materials are also changing. EVs use more plastic and aluminum and we are encouraging Tier 2 suppliers to adopt these materials.  For example, we were working with a stamping company that only worked with steel. We helped them switch to aluminum.

There will be a point where we are going to be involved in both the ICE and EV worlds. But we cannot wait for this shift without preparing. As long as there is no public policy in Mexico, the transition toward electromobility will not accelerate. If there are no incentives in the country, decarbonization will not happen because EVs are expensive. There are many EVs in the EU because the region incentivizes their use.

Q: How is CLAUT supporting the development of talent in the state?

A: Universities like Tec de Monterrey and Universidad Nacional Autónoma de Nuevo León (UANL) have been collaborating with us since the beginning of the cluster in 2007. They are part of all the committees. For example, we have closely collaborated with Tec de Monterrey on all the efforts related to electromobility. As a result, its students collaborate with us on different projects. We are also building a consortium with different companies and universities like Tec de Monterrey, Universidad de Monterrey (UDM) and UNAL. This consortium will strengthen Nuevo Leon’s capacities for EV manufacturing. We also collaborate with Escuela Alvaro Obregón to train technicians, who are essential for the industry.

Q: What are the threats from the lack of water to the progress of the industry in the state?

 A: The industry has worked to manage water more efficiently but we are experiencing a difficult situation because this year has been very dry. The lack of water poses threats but we are collaborating with the government to find new solutions. In the past, authorities did not invest in this problem and we are suffering the consequences. However, now the government is aware of the problem and it recently launched a program to guarantee water' supply.

Q: What are CLAUT's main priorities for the second half of 2022?

A:We are focusing on Tier 2 suppliers. Many transnational companies that had their own suppliers abroad are now relying on Mexican companies. There is more demand than offer and we want to support Tier 2 suppliers to leverage this opportunity. We also want to attract foreign players to the country, especially suppliers of tractor manufacturers.

All working to strengthen the supply chain because companies that were used to importing are now being forced to integrate into the North American region. Mexico must take advantage of this opportunity.