Multidisciplinary Approach to Support Manufacturing Companies

Q: What are the principles and best practices that have led Jáuregui y Del Valle to be among the Top 500 law firms in Latin America?

A: There are three main principles. First, we have always focused on integrity. Some firms promote excellence, respect, and honesty, all of which are really important, but we sum them up as integrity. Second, we have worked to become a multidisciplinary firm and there are only a few firms in the country that can compare to us in that regard. We cover almost all aspects of the law. Third, we look forward to internal collaboration. All practice areas, while independent, collaborate to identify our customers’ needs and challenges. Those are the main reasons that have made us one of the top firms in the region, besides the fact that we have been in the market for over half of a century.

Q: How does the firm add value to companies in the automotive sector?

A: Most law practices are involved in automotive and manufacturing operations. These companies are strongly focused on foreign trade, consumer protection, cross-border and domestic fiscal law, corporate law, transactional practices, financial law, labor law, as well as litigation on civil, trade, and labor affairs. Two practices are particularly relevant in this field, which are intellectual property law and its litigation, as well as arbitration. To support an international manufacturing company in the automotive sector requires outstanding law practices that best cover their needs. We are proud to support our customers in all disciplines of the law they need to rely on.

Q: What are the implications of new labor standards introduced by USMCA?

A: First, USMCA Chapter 23 will cause automotive and all industries in general to apply more democratic, transparent, and effective rules for the election and operation of unions and the respect of workers´ labor rights. Second, concerning the manufacture of light and heavy vehicles, USMCA provides for more strict rules of origin, requiring generally up to 75% regional value content, up to 70% of steel and aluminum content, and up to 45% of labor value content earning a minimum wage of 16 dollars per hour. These changes will cause various kinds of actions by manufacturers, such as:

(i) the redesign of materials or auto part contents; (ii) increase of some salaries; (iii) the establishment of auto part manufacturers in North America; and (iv) considering payment of general tariffs on exports to the US (around 2.5%) instead of preferential USMCA tariffs. We are working alongside our customers in the sector to update company policies to comply with these new labor requirements.

Q: How do you see the trend toward mergers and joint ventures in the sector? How do you support customers in this regard?

A: All projects require a regulatory analysis at the federal, state, and municipal level. Companies should consider the benefits that states can grant to manufacturing plants when looking to move to a new location. At the same time, companies need to evaluate security issues that are ongoing problems. All this must be taken into account, while at the same time building strategies to comply with USMCA’s new standards. The availability of having qualified labor, as well as executives who fully understand regulations and new standards, is important for automotive companies. New challenges have led to restructuring, meaning mergers or other corporate ventures to address the relevant topics mentioned before.

Q: From a legal perspective, what other relevant topics are influencing the automotive industry in Mexico?

A: USMCA continues to be a relevant topic for the sector. Foreign trade remains important, particularly regarding imports. For manufacturing companies, the environmental aspect has become relevant as well, not only to comply with environmental law but also to cut down carbon emissions. Mexican environmental regulation has evolved considerably. Although Mexican law has not reached standards seen in Europe or California, it has advanced significantly in preventing soil and water pollution. Authorities are paying close attention to this matter with an increasing number of audits to ensure manufacturing companies comply with these standards. Our customers ask us to help them to be prepared in environmental matters to prevent risks and contingencies.

Q: What challenges are you facing as a result of the pandemic?

A: Challenges have been diverse. The very first one was to address the uncertainty that government policies created. The very first decision was to close manufacturing facilities that gradually started to reopen due to pressure from the US government given the strong ties between the countries’ supply chains. To support our customers, we held senior-level conversations with the Mexican Ministry of Foreign Affairs and the President’s Office to address concerns and generate certainty.

There have been logistical challenges because government officials were working remotely or were on leave. Moreover, the traffic light system to regulate economic activities during the pandemic introduced challenges to law practice as only justice procurement and fiscal law were labeled as essential activities.

Q: What are Jáuregui y Del Valle’s priorities for 2021?

A: This year, we will focus on economic recovery, as well as the new standards introduced as a result of the pandemic, including the way manufacturing companies work and labor relations modified by home office practices. Digitalization of plants will also continue. Companies need to be at the forefront of economic development, as well as the changes introduced by the pandemic.

Jáuregui y Del Valle, S.C. is a Mexican law firm ranked as one of the Top 500 law firms in Latin America. It covers all law practices and has more than 50 years of history.