The automotive industry in Mexico faces two challenges: a new normal and a new regional Free Trade Agreement. In this webinar, industry leaders will discuss the protocols needed to resume operations, USMCA's rules of origin and uniform regulations, and successful crisis management strategies toward financial, operational and leadership tools to successfully navigate uncertain times caused by COVID-19, USMCA, increasing competition and lower volumes.

"Leadership to successfully navigate uncertain times" will include the participation of International Private Consultant and former AMIA Executive President Eduardo Solís. Richard Payne, engagement manager and automotive operational consultant, specializing in crisis management at Seraph that have successfully delivered projects in the Americas, Europe, China and India. Eduardo and Richard will be sharing best practices with the Managing Director of Alderney Advisors, Alicia Messe who is specialized in developing financial solutions and restructuring global automotive companies and the 30 year of experience coach in automotive supply chain, Jan Griffiths, President of Gravitas Detroit

Join the conversation and don't miss out on this unique opportunity! 

Leadership Tools To Successfully Navigate Uncertain Times
Audi Q5 Illustrative
Eduardo Solis
Former President of AMIA
Sponsored by
Seraph Logo
"Leadership to successfully navigate uncertain times" will include the participation of International Private Consultant and former AMIA Executive President Eduardo Solís
https://www.youtube.com/embed/Alz2C-Z5VhU
/sites/default/files/2020-07/Webinar%2021-07-2020%20AliciaMasse.pdf
/sites/default/files/2020-07/Webinar%2021-07-2020%20EduardoSolis.pdf
/sites/default/files/2020-07/Webinar%2021-07-2020%20RichardPayne.pdf
Mexico Plays Quite a Relevant Role in the Industry: Eduardo Solís
Home > Automotive > Article

Mexico Plays Quite a Relevant Role in the Industry: Eduardo Solís

Share it!
Alejandro Enríquez By Alejandro Enríquez | Journalist and Industry Analyst - Wed, 07/22/2020 - 10:00

Mexico is the sixth-largest vehicle manufacturer, the fourth-largest vehicle exporter in the world and the No.1 manufacturer in Latin America. Before NAFTA, México contributed 7 percent (1.08 million) to North America’s vehicle production, Canada 15 percent (2.2 million) and the US 78 percent (10.9 million). In 2019, Mexico’s share is now 23 percent (4 million vehicles), Canada’s is 12 percent (1.9 million) and the US’ is 65 percent (10.9 percent). The region contributes 18 percent of the world’s vehicle production. Reviewing the US’ vehicle trade, 52.2 percent of total imports come from Mexico and Canada, while 48.3 percent of all US vehicle exports go to Mexico and Canada, said Eduardo Solís, former Executive President of AMIA during the webinar, “Leadership Tools to Successfully Navigate Uncertain Times,” sponsored by Seraph and hosted by Mexico Business News.

"The automotive industry has generated a record-high surplus of US$89 billion in 2019 for Mexico. Production and exports grew quite nicely coming out of the 2009 crisis but the effects of COVID-19 were evident during April and May,” said Solís. He mentioned that compared to May 2019, light-vehicle production fell 93.7 percent in May 2020 and exports fell 95.1 percent. Between January and May 2020, production registered a drop of 43.2 percent and exports a drop of 42.4 percent.

The impact of the pandemic was not only seen in production figures, as sales forecasts were also adjusted. “We expect that by the end of the year, the US will see a drop in demand of 25 percent while in Mexico demand for new vehicles will drop accordingly. As companies resume operations, production will not ramp up to pre-pandemic levels. We are going to see 2019 numbers by the end of 2022 or 2023,” he mentioned.

After USMCA’s enforcement on July 1, NAFTA’s 62.5 percent of original content increased to 75 percent over a three-year period and included specifics for core parts, complimentary parts and other auto parts. Stricter still, according to Solís, is the requirement of 70 percent of steel and aluminum purchases that have to come from North America. USMCA’s labor value content (LVC) rule establishes an initial 25 percent LVC for heavy vehicles, increasing to 40 percent in a three-year period, and an initial 30 percent increasing to 45 percent in the same period for light vehicles. “LVC refers to places where salary is US$16 per hour, which is another way to say the US and Canada,” said Solís.

“Rules of origin are quite stringent. But there is a temporary waiver according to the treaty as OEMs can negotiate with the authority of the importing party a temporary transition regime. For instance, OEMs aiming to export to the US will have to sit with the USTR and explain how they will arrive to the stablished percentages. The original three-year period could be extended up to five years. Many companies have done that with specific models,” said Solís. Alternative regimes to the rule of origin are applicable in a case-by-case basis and can be presented only by OEMs. Tier 1 companies cannot make use of this mechanism.

As the new rules of origin will promote relocations to Mexico, Solís affirms that when an investment is landing in Mexico it is recommendable that companies establish a contact with the local academic sector.  “Talent has always been a key element for the automotive industry in the region. All of the companies that land in Mexico work together with the automotive industry. Employees in Mexico have been able to meet the demands of the sector, especially in the Bajio area which is a relevant automotive hub,” he says.

Download the webinar's presentation here:
https://bit.ly/39rwI6O

You May Like

Most popular

Newsletter

Industry Experts Discuss Best Strategies to Navigate Uncertainty
Home > Automotive > Article

Industry Experts Discuss Best Strategies to Navigate Uncertainty

Share it!
Alejandro Enríquez By Alejandro Enríquez | Journalist and Industry Analyst - Wed, 07/22/2020 - 06:00

The COVID-19 pandemic and USMCA’s enforcement on July 1 have put the automotive industry in North America in a complicated spot that resembles the 2008-2009 economic crisis scenario. Uncertain times call for great leadership. Strategic planning, communication and execution are the keys to successfully navigate them. Industry experts met during the webinar: "Leadership Tools to Successfully Navigate Uncertain Times" to address the state of the automotive industry in North America.

Automotive Results

Eduardo Solís, former Executive President of AMIA, highlighted the role that Mexico plays for the automotive industry in the world. "The country is the sixth-largest vehicle manufacturer, fourth-largest exporter and the No. 1 manufacturer in Latin America. Production and exports grew quite nicely coming out of the 2009 crisis but the effects of COVID-19 were evident during April and May,” said Solís.

With the implementation of USMCA, stricter rules of origin now promote nearshoring practices and supply chain regionalization. “Rules of origin are quite stringent. But there is a temporary waiver according to the treaty as OEMs can negotiate with the authority of the importing party a temporary transition regime. The original three-year period could be extended up to five years,” said Solís.

Alicia Masse, Principal Advisor at GlassRatner Capital Group, addressed the impact of the pandemic in the trends the industry was experiencing in pre-pandemic times. “We were in the 20-million-unit range for five years and now we are close to 16 million. What that means to the industry is that there is opportunity to put money into rainy day funds. The automotive industry learned a lot from 2008-2009," she said.

"As companies resume operations, production will not ramp up to pre-pandemic levels. We are not going back to the numbers we saw in 2019. We are going to see 2019 numbers by the end of 2022 or 2023,” Solís mentioned. The gap in demand, according to Masse, obeys to the pandemic impact on fleet purchasers and rental fleets. " The rental fleet segment is experiencing the most significant drop as travel ground to a halt for approximately eight weeks and is expected to recover at a gradual pace for the rest of 2020,” she said.

Navigate the Crisis or Freeze

Apart from paying close attention to financial results, crisis allows outstanding leaders to emerge. “Times of crisis are perfect for authentic leaders to rise up and shine. At this moment, it is critical that leaders connect at a very human level with their teams. While strong leaders shine in this situation, weak leaders fail,” said Jan Griffiths, President and Founder of Gravitas Detroit.

As the pandemic quickly developed a complicated scenario, Griiffths mentions that two things can happen when a human being faces a crisis: they can either embrace it and deal with it or freeze. “We have gone through a period of denial, then anger came, as well as some sort of loss because we lost our lives as we once knew them. But now, we are in this period of acceptance and understanding what this new normal is all about,” she explained.

A crisis scenario also presents an opportunity for companies not only to optimize procedures but to streamline their footprint or their entire business, says Richard Payne, Engagement Manager at Seraph. "Today, there are not only financial pressures for companies but geographical and political pressures, which will lead to more consolidation of businesses than what we saw in 2008 and 2009," he pointed out.

To help companies in the subsequent relocation or consolidation processes, the MOVE methodology, created by Seraph over the years proposes four keys to success: alignment, planning, execution and closure. Within this methodology, Payne highlighted, companies may never lose sight of their people. “It is not just about the products and the process. It is about our people. We need to have the same passion to taking care of our people, especially in difficult times such as the one we are going through,” he said. “If a company has 200 employees, its decisions not only influence those people but their families as well.”

You May Like

Most popular

Newsletter

Relocate, Consolidate: Decisions to Make in Times of COVID-19
Home > Automotive > Article

Relocate, Consolidate: Decisions to Make in Times of COVID-19

Share it!
Andrea Villar By Andrea Villar | Journalist and Industry Analyst - Tue, 07/21/2020 - 20:37

In times of crisis, companies, especially in the automotive sector, are faced with the decision of potentially relocating or consolidating their operations. Although these decisions are substantial, they do not have to represent despair or be complicated. Companies have an opportunity not only to optimize procedures but to streamline their footprint or their entire business, said Richard Payne, Engagement Manager at Seraph. "We encourage our clients to take an opportunistic view. Today, there are not only under financial but geographical and political pressures, which will lead to more consolidation of businesses than what we saw in 2008 and 2009," he pointed out during the webinar: “Leadership to Successfully Navigate Uncertain Times in the Automotive Industry,” sponsored by Seraph and hosted by Mexico Business News.

To help companies in the subsequent relocation or consolidation processes, the MOVE methodology, created by Seraph over the years, proposes four keys to success: alignment, planning, execution and closure. “The first two phases are critical.  We need to have a clear vision, understand where the company is going and why we are heading there. We want to make sure that we follow a plan. Because the plan is not just a suggestion, it is something that needs to be followed with discipline and perseverance. An objective without a plan is nothing more than just good intentions,” Payne explained. “If we do this right, chances of success go up exponentially. On the contrary, if we do this incorrectly we will have significant challenges to overcome along of the road to achieving success,” he explained.

In the executing phase, the company has already created the playbook and now it is a matter of running and executing properly. “In this stage, there will be things that will come up that we did not expect so we have to be able to resolve them. It is okay if that happens but we need to be prepared to make those changes,” said Payne. Lastly, in the closure stage, which is one of the shortest in the process, the company recalls all the lessons learned during the process. “Regardless of the crisis we are facing, we focus on leaving our clients with a sustainable situation.”

Within this methodology, Payne highlighted companies must never lose sight of their people. “It is not just about the products and the process. It is about our people. We need to have the same passion to taking care of our people, especially in difficult times such as the one we are going through,” he said. “On average, each employee represents a total of four family members whose lives are being impacted. A site of 250 people represents an impact on 1,000 people.” 

Communication is also a major pillar of success, he added. “Communication is like blood to the human body. It flows and gives life to the organization. And when it stops flowing it dies. But this can be something that we can turn into an opportunity to develop and engage our people. We need to have great leaders among employees. More than just project managers, a leader has to connect with people and to inspire and motivate their teams to reach high levels of success,” concludes Richard Payne.

Download the webinar's presentation here: https://bit.ly/2BwCbga

You May Like

Most popular

Newsletter

Planning, Communication, Execution: Keys to Bear With COVID-19
Home > Automotive > Article

Planning, Communication, Execution: Keys to Bear With COVID-19

Share it!
Andrea Villar By Andrea Villar | Journalist and Industry Analyst - Tue, 07/21/2020 - 12:33

As the COVID-19 crisis hit Mexico and people sheltered at home, something strange happened overnight: we got to see our boss, workmates and employees in their intimate spaces. All of this, while companies struggled to figure out how to overcome a health and economic crisis, inspire their team and then emerge stronger. 

“Times of crisis are perfect for authentic leaders to rise up and shine. At this moment, it is critical that leaders connect at a very human level with their teams. While strong leaders shine in this situation, weak leaders fail,” said Jan Griffiths, President and Founder of Gravitas Detroit at the webinar: “Leadership to Successfully Navigate Uncertain Times in the Automotive Industry” sponsored by Seraph and hosted by Mexico Business News. 

A crisis scenario means that things are moving really fast and in an uncertain way. According to Griffiths, two things can happen when a human being faces a crisis: they can either embrace it and deal with it or freeze. “We have gone through a period of denial, then anger came, as well as some sort of loss because we lost our lives as we once knew them. But now, we are in this period of acceptance and understanding what this new normal is all about,” she explained. 

It is in these situations, says Richard Payne, Engagement Manager at Seraph, that companies have an opportunity not only to optimize procedures but to streamline their footprint or their entire business. "Today, there are not only financial pressures for companies but geographical and political pressures, which will lead to more consolidation of businesses than what we saw in 2008 and 2009," he pointed out.

To help companies in the subsequent relocation or consolidation processes, the MOVE methodology, created by Seraph over the years proposes four key to success: alignment, planning, execution and closure. “The first two phases are critical.  We need to have a clear vision, understand where the company is going and why we are heading there. We want to make sure that we follow the plan. Because the plan is not just a suggestion, it is something that needs to be followed with discipline and perseverance. An objective without a plan is nothing more than just good intentions,” Richard Payne added.

Within this methodology, Payne highlighted, companies may never lose sight of their people. “It is not just about the products and the process. It is about our people. We need to have the same passion to taking care of our people, especially in difficult times such as the one we are going through,” he said. “If a company has 200 employees, its decisions not only influence those people but their families as well.” 

Taking care of people, Griffiths and Payne agree, has a lot to do with communication. For Griffiths, leaders need to manage the words they speak and even their body language to create a human connection with their teams and bring calm to the chaos while empowering them. However, showing vulnerability in times of crisis is also a sign of strength, she explained.

“We are not going to have all the answers and it is okay. In the automotive industry, we would like to have them. But at present, when dealing with suppliers, companies fail to negotiate and it takes great leadership to be able to put that script away and support them,” Griffiths pointed out.

“Communication is like blood to human body. It flows and gives life to the organization. And when it stops flowing it dies. But this can be something that we can turn into an opportunity to develop and engage our people. We need to have great leaders among employees. More than just project managers, a leader has to connect with people and to inspire and motivate their teams to reach high levels of success,” concludes Richard Payne.

You May Like

Most popular

Newsletter

Successfully Navigating Rules of Origin and the Pandemic
Home > Automotive > Article

Successfully Navigating Rules of Origin and the Pandemic

Share it!
Alejandro Enríquez By Alejandro Enríquez | Journalist and Industry Analyst - Tue, 07/21/2020 - 12:29

The COVID-19 pandemic and USMCA’s enforcement on July 1 have put the automotive industry in North America in a complicated spot that resembles the 2008-2009 economic crisis scenario. However, these moments are different as the sector has learned from that experience. Eduardo Solís, former Executive President of AMIA, and Alicia Masse, Principal Advisor at GlassRatner Capital Group, discussed the state of the automotive industry in North America during the webinar: "Leadership Tools to Successfully Navigate Uncertain Times."

Automotive Industry in North America and USMCA’s New Rules of Origin

"The automotive industry has generated a record-high surplus of US$89 billion in 2019 for Mexico. The country is the sixth-largest vehicle manufacturer, fourth-largest exporter and the No. 1 manufacturer in Latin America. Production and exports grew quite nicely coming out of the 2009 crisis but the effects of COVID-19 were evident during April and May,” said Solís.

Before NAFTA, México contributed 7 percent (1.08 million) to North America’s vehicle production, Canada 15 percent (2.2 million) and the US 78 percent (10.9 million). In 2019, Mexico’s share is now 23 percent (4 million vehicles), Canada’s is 12 percent (1.9 million) and the US’ is 65 percent (10.9 percent). The region contributes 18 percent of the world’s vehicle production. Reviewing the US’ vehicle trade, 52.2 percent of total imports come from Mexico and Canada, while 48.3 percent of all US vehicle exports go to Mexico and Canada.

After USMCA’s enforcement on July 1, NAFTA’s 62.5 percent of original content increased to 75 percent over a three-year period and included specifics for core parts, complimentary parts and other auto parts. Stricter still, according to Solís, is the requirement of 70 percent of steel and aluminum purchases that have to come from North America. USMCA’s labor value content (LVC) rule establishes an initial 25 percent LVC for heavy vehicles, increasing to 40 percent in a three-year period, and an initial 30 percent increasing to 45 percent in the same period for light vehicles. “LVC refers to places where salary is US$16 per hour, which is another way to say the US and Canada,” said Solís.

“Rules of origin are quite stringent. But there is a temporary waiver according to the treaty as OEMs can negotiate with the authority of the importing party a temporarily transition regime. For instance, US OEMs will have to sit with the USTR and explain how they will arrive to the stablished percentages. The original three-year period could be extended up to five years. Many companies have done that with specific models,” said Solís.

Differences between COVID-19 and the 2009 financial crisis.

Messe highlighted lessons learned from the 2009 financial crisis. “The automotive industry learned a lot from 2008-2009. As we entered into COVID-19, what we found was a reduction similar to what we had in 2009,” she mentioned. Reviewing the figures, North American light-vehicle sales emerged from the recession and grew by an annual average of 9 percent over a six-year period from 2009 to 2015. “Volumes remained stable from 2015-2019 and remained healthy in 2020 before the pandemic," she said.

Solís highlighted the effect of the pandemic on new vehicle demand in North America. “We expect that by the end of the year, the US will see a drop in demand by 25 percent while in Mexico demand for new vehicles will drop accordingly. Thus, as companies resume operations, production will not ramp up to pre-pandemic levels. We are not going back to the numbers we saw in 2019. We are going to see 2019 numbers by the end of 2022 or 2023,” he mentioned.

The biggest gap in demand for new vehicles is among fleet purchasers and rental fleets. According to Masse, fleet sales declined significantly in April and May. Data shows a continuing streak of significant monthly declines since the pandemic. The rental fleet segment is experiencing the most significant drop as travel ground to a halt for approximately eight weeks and is expected to recover at a gradual pace for the rest of 2020. “You will not see us producing at pre-COVID-19 levels because fleets are not certain about when they are coming back,” Masse said.

A key difference between 2009 and 2020 is how ready companies were in terms of liquidity and the region’s economic performance. “When COVID-19 reached the region, the three North American economies were performing strongly. But as the lockdown went on for weeks in the US, the entire supply chain in North America started to feel the effects of the pandemic,” said Masse.

“Suppliers should be very disciplined about understanding their liquidity. There is a standard in the industry where you do a 13-week cashflow update every week to make sure that the numbers are close to the forecasts. This gives you a 90-day outlook to be able to implement actions in that period to manage your liquidity,” said Masse.

You May Like

Most popular

Newsletter

Securing Suppliers Solvency
Home > Automotive > Article

Securing Suppliers Solvency

Share it!
Alejandro Enríquez By Alejandro Enríquez | Journalist and Industry Analyst - Wed, 07/22/2020 - 14:00

As the pandemic brought challenging conditions for the automotive supply chain, actions should be taken and best practices ought to be followed to secure long-term financial stability. Alicia Masse, Principal Advisor at GlassRatner Capital Group, discussed the financial outlook of the automotive industry in North America, as well as strategies to secure liquidity during the webinar: "Leadership Tools to Successfully Navigate Uncertain Times."

Masse highlighted what the industry has learned from the 2009 financial crisis. “We were in the 20-million-unit range for five years. What that means for the industry is that there is opportunity to put money into rainy day funds. The automotive industry learned a lot from 2008-2009. As we entered COVID-19, we saw a drop in operations similar to what we had in 2009,” she mentioned. Reviewing the figures, North American light-vehicle sales emerged from the financial recession and grew by an annual average of 9 percent over a six-year period from 2009 to 2015. “Volumes remained stable from 2015-2019 and stayed healthy in 2020 before the pandemic," she said.

The demand for new vehicles that is missing in North America belongs to fleet purchasers and rental fleets. According to Masse, fleet sales declined significantly in April and May. Data shows a continuing streak of significant monthly declines since the pandemic. The rental fleet segment is experiencing the most significant drop as travel ground to a halt for approximately eight weeks and is expected to recover at a gradual pace for the rest of 2020. “We will not reach pre-COVID-19 production levels because fleets are not certain about when they are coming back,” Masse said.

A key difference between 2009 and 2020 is how ready companies were in terms of liquidity and the region’s economic performance. “By the time COVID-19 impacted the region, the three North American economies were performing strongly. There was also a lot of access to liquidity in the supply chain. There was cash in the balance sheet and people were accessing that liquidity. But as the lockdown went on for weeks in the US, companies began to feel the effects of the pandemic,” said Masse.

“Suppliers should be very disciplined about understanding their liquidity. There is a standard in the industry where you do a 13-week cashflow update every week to make sure that earnings are close to the forecasts. This gives you a 90-day outlook to be able to implement actions in that period to manage your liquidity,” said Masse.

As USMCA will foster supply chain regionalization, acquisitions and mergers will eventually take place, according to Masse. "We will see more consolidation within this period. The reason is that the capacity that is out there is actually needed capacity. It cannot be taken out of the industry at this point. We will see companies that were not in a strong enough position that will be purchased, especially the ones with a strategic location,” she said.

Download the webinar's presentation here: https://bit.ly/39srzew

You May Like

Most popular

Newsletter

Team Leaders Essential to Cope With Crisis
Home > Automotive > Article

Team Leaders Essential to Cope With Crisis

Share it!
Andrea Villar By Andrea Villar | Journalist and Industry Analyst - Tue, 07/21/2020 - 20:04

Everyone can recognize great leadership. They are the ones that have your back, believe in you, the ones that you love to work for, that offer trust and transparency and support you, even if you make a mistake, said Jan Griffiths, President and Founder of Gravitas Detroit during the webinar: “Leadership to Successfully Navigate Uncertain Times in the Automotive Industry,” sponsored by Seraph and hosted by Mexico Business News.

In the midst of a pandemic and economic downturn, it is the perfect time to recognize and develop this type of leadership. “Times of crisis are perfect for authentic leaders to rise up and shine. At this moment, it is critical that leaders connect at a very human level with their teams. While strong leaders shine in these situations, weak leaders fail,” said Griffiths.

A crisis scenario means that things are moving really fast and in an uncertain way. Leaders need to make decisions and do it quickly. According to Griffiths, two things can happen when a human being faces a crisis: they can either embrace it and deal with it or freeze. “We have gone through a period of denial, then anger came, as well as some sort of loss because we lost our lives as we once knew them. But now, we are in this period of acceptance and understanding what this new normal is all about,” she explained.

But how can people manage to overcome this type of grief? During a time of crisis, it is critical that leaders connect a at very deep human level with their teams, said Griffiths. “It takes leaders with the right mindset to get themselves together and move beyond those stages before they can get their teams and business through that grief cycle.”

Taking care of people, Griffiths added, has a lot to do with communication. For her, leaders need to manage the words they speak and even their body language to create a human connection with their teams and bring calm to the chaos while empowering employees. However, showing vulnerability in times of crisis is also a sign of strength, she said.

“We are not going to have all the answers and it is okay. In the automotive industry, we would like to have them. But at present, when dealing with suppliers, companies fail to negotiate and it takes great leadership to be able to put that script away and support companies,” Griffiths pointed out.

You May Like

Most popular

Newsletter

0