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.
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
Source: Inegi
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
Source: FDI
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 Name |
Number of
|
Capital
|
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
|
Source: The expansion data used in this newsletter comes from the Conway Data New Plant Report, a publication of Conway Inc. and Site Selection magazine.
