US Senators Urge Change in Essential Business Designation
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US Senators Urge Change in Essential Business Designation

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Alejandro Enríquez By Alejandro Enríquez | Journalist and Industry Analyst - Thu, 04/30/2020 - 12:41

In some US states and in Mexico, the automotive industry has not been labeled as an essential activity, making it problematic for automakers to start operations before lockdown measures are eased. Even though the Mexican Ministry of Economy announced an 'ongoing cooperation' with US and Canadian government on a common strategy towards the automotive industry in North America, US Senators have urged Secretary of State, Mike Pompeo, to act.

On a letter addressed to Pompeo, 11 Senators from both parties, "urge the State Department to coordinate with the Mexican government to clarify Mexico's definition of essential businesses to avoid disruptions in the US supply chain." Senators highlighted the disparities between essential businesses in both countries admitting that "Mexico serves an integral role in the US supply chain and is crucial to the functioning of essential American business."

"We urge the State Department to coordinate with the Mexican government to clarify Mexico's definition of essential businesses to avoid disruptions in the US supply chain." 

US Senators.

In Mexico, only industrial activities related to the construction of the federal government's biggest infrastructure projects are allowed: a new airport for Mexico City, the Mayan Train in the southern part of the country and the Dos Bocas refinery. Production of food and medical equipment is also labeled as essential. "It has become clear that our integrated supply chains will continue to suffer disruptions unless the Mexican government clarifies its definition of 'essential businesses,'" the letter says. Food, medical, transportation, infrastructure, aerospace, automotive and defense are the sectors the Senators are worried the most about.

Neither the Department of State nor the Mexican government have commented on the matter. Earlier today, the Mexican Ministry of economy participated in the G20 extraordinary meeting on digital economy before the COVID-19.

OEMs Operations Remain Suspended

COVID-19 still has automotive manufacturing in North America against the ropes. A suspension that was expected to last until mid-April has been extended a month. Lockdown measures in the US and in Mexico have forced OEMs to adjust their operations restarting date. Mexico's top vehicle producers have extended their operations suspension until mid-May. Nissan, Volkswagen, FCA, GM and Ford expect to resume production on May 18, two weeks later than the expected date set to May 4. 

Toyota announced May 11 as the earliest date so far to restart operations at all its North American plants. Audi, on the other hand, has announced May 31 as the intended date to restart operations at its plant in Puebla, which already sums two months without production.

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