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Made in Mexico – Automotive Manufacturing

by Josh Bays, on Oct 27, 2015 12:50:33 PM

The manufacturing sector in the United States no longer considers Asia to be its primary competition. Due to rising operating costs in Asia and the cost of transportation to serve the Americas, a much more formidable competitor has emerged closer to home. Companies, especially automotive manufacturers, are continuing to invest in Mexico at a rapid rate for their new manufacturing plants.Distribution

 

The site selection process in Mexico is also becoming more sophisticated by the day. Economic development practices are improving, Mexican states and cities are playing the economic incentives game, and proactive industrial development is taking place all of the Country. Site Selection Group, a full-service location advisory firm, analyzed key Mexico site selection trends in the automotive industry that are impacting corporate investment.

 

Automotive manufacturing in Mexico over time

Historically, the automotive industry in Mexico has been particularly strong.  Ford has had a facility in Mexico since 1925 and General Motors has had a Mexican presence since 1935. Mexico has a firm foundation in automotive manufacturing that continues to grow. The graph below shows the growth in total employment in automotive manufacturing since January 2007, including employment in the manufacture of cars and trucks, of bodies and trailers, and of automotive parts. The growth in jobs is impacting site selection decisions as companies are forced to evaluate labor availability, quality and sustainability metrics.

 

Total Employment in Automotive
Manufacturing in Mexico

 

Total Employment in Automotive Manufacturing in Mexico

 

 

Mexico automotive industry continues growth

Additionally, according to the Organisation Internationale des Constructeurs d’Automobiles (OICA), Mexico was the fifth largest producer of automobiles in the second quarter of 2015. The country produced more than 1.8 million motor vehicles in Q2, which represents an 8.6% increase over production in second quarter 2014.  Mexico still lags behind China, the U.S., Japan and Germany but has surpassed Brazil and Spain.

 

Mexico continues to attract investment from companies located outside of Mexico. Since 2003, the country has seen 514 projects in foreign direct investment in automotive OEM and automotive components.  The graph below shows these statistics by year.

 

Automotive Foreign Direct Investment
Projects in Mexico

 

 

Recent announcements in Mexico

While Ford and GM were initial pioneers into the country, many automotive manufacturers and automotive suppliers are located in the country.  Major companies with a facility in Mexico also include Chrysler, Audi, Volkswagen, Honeywell and Delphi. States with major automotive clusters include Baja California, Sonora, Chihuahua, Coahuila, Aguascalientes, San Luis Potosí, Mexico, Morelos and Puebla.

 

The table below shows major announcements since January 2014 for companies establishing a new operation or expanding within Mexico.

 

Company NameNumber of
Employees
Capital
Investment
Location
Alcoa 1,700 $37M Acuña, Coahuila
Robert Bosch 1,600 $160M Juárez, Chih.
BMW 1,500 $1B San Luis Potosí, SLP
Nidec 800 $42M San Luis Potosí
Hitachi 700 $100M Querétaro, Quer.
Electricfil Automotive 600 $15M Tlajomulco, Jalisco
LG Innotek 600 -- San Juan del Rio, Quer.
Denso Corp. 500 $54M Apodaca, Nuevo Léon
Evercast 500 $120M Irapuato, Gua.
Mahle Behr 360 $59M Ramos Arizpe, Coa.
Tokai Rika Co. 200 $34M Salinas Victoria, NL


Topics:Distribution CentersManufacturingEconomic Incentives

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