Local auto suppliers urged to invest in Mexico

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Local auto suppliers urged to invest in Mexico

The region’s  mould, tool and die industry was urged Wednesday to set up operations in Mexico to support that country’s fast-growing auto industry.

“We have a tremendous need for local tool manufacturers,”  Ignacio Altamirano, purchasing director at Nissan Americas, told the Automotive Parts Manufacturers Association’s regional conference in Windsor. “That is one thing we are requesting very hard. Hopefully with the help of the Canadian industry, we can have this in Mexico.”

Altamirano was among a panel of speakers who promoted “the tremendous opportunities” in Mexico’s auto sector, which is home to plants run by Nissan, Ford, Chrysler, General Motors, Fiat, Volkswagen, Honda and Toyota.

Canadian suppliers can play role in Nissan’s goal to increase the local content of vehicles manufactured in Mexico, said Altamirano. “What we expect from our suppliers is top-level product quality, cost competitiveness and on-time delivery. We have to deliver great-quality cars, and establishing excellent relationships with our suppliers is one of the key success factors in our company.”

Mexico’s share of North American auto production is expected to grow from 18 per cent to 25 per cent in five years, said Cesar Bueno, Mexico’s trade and investment commissioner, based in Toronto.

His country also is the world’s fifth largest auto parts manufacturer, behind Japan, the U.S., China and Germany.

David McQueen, business developer director with The Offshore Group, a firm that helps companies  set up shop in foreign countries, said Mexico’s lower labour costs and flexible unions are among that country’s competitive advantages.

For example, in the moulding, casting and materials processing sector, all-in  hourly labour costs can range from $2.49 to $4.27, said McQueen.

“Unions,” said Diego Zarroca, chief commercial officer at GE Capital Mexico,  are “more flexible and pro-business,” than their  Canadian counterparts.  As well,  Mexico has passed labour legislation that allows companies to hire “contract workers or workers by the hour.”

“It used to be hard to find people and fire them,”  he  said. “You now can have the labour you need at any point of time.”

There are some challenges to doing business in Mexico, McQueen cautioned; most notably the higher cost of electricity and natural gas as well as haphazard transportation infrastructure in some parts of the country.

Speakers downplayed concerns about safety and security in a country struggling with drug cartels and violent crime.

“We have 57 clients with 16,000 employees and we haven’t had a single incident with our people,” said McQueen, who suggested some American cities, such as Detroit, were more dangerous. “That city across the river is more dangerous than Mexico for violence. I don’t worry, but I don’t do certain things either. You need to take prudent steps and the same precautions you would take in Detroit.”

Roy Verstraete, former president and CEO of Anchor Danly, which has operations in the U.S. and Canada, says companies will follow their customers to Mexico. “The increased emphasis on that need will drive more successful toolmakers and mouldmakers to Mexico, which will encourage us to follow.”

“If we don’t do it, others will start in Mexico and they’ll come back to here and import back into our zones, Ontario Michigan, Ohio, and there’s more risk way,” he added. “If we start those facilities in Mexico, we will continue to have relationships and  supply components to our customers. So, that’s the benefit for us. And we’ll also have the engineering and management skill levels reinforced here in the Windsor area.”

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