Automobile component manufacturers move to Mexico

Mexico is continuing its meteoric rise in the world of automotive manufacturing. According to a recent article in The Wall Street Journal, auto industry participants have committed over $21 billion of investment and infrastructure in Mexico. Their reasoning is part of an increasingly common story:

• Mexico has over 40 free-trade agreements
• It's strategically placed to take advantage of the enormous North American markets
• The Mexican government has made a serious commitment to invest in workforce development and education
• Mexico's highly-trained workforce is competitively priced against traditional, low-cost labor markets like China
• As the world scrambles to compete for low-cost energy, Mexico is positioned to capitalize on the abundance of new, affordable natural gas from the U.S.

Auto manufacturers continue to invest money in Mexico.

The Goodyear Tire & Rubber Co. is one such supplier. The company has announced plans to invest $550 million in a new production facility in San Luis Potosí, south of The Offshore Group's Saltillo, Coahuila's manufacturing community. As with the burgeoning aerospace and medical equipment industries, up-stream suppliers are moving to Mexico to stay close to the major manufacturers.In a related article, The Journal reported that Ford Motor Co. announced a $2.5 billion investment for expansion of two manufacturing sites in Mexico. The move will create thousands of new jobs, and Ford is looking to Mexico to support that need. It's not just the automakers that are looking to Mexico as a competitive manufacturing option. Auto part and component producers are moving to Mexico to better support the major manufacturers.

The Journal reports that Goodyear has five commercial plants in North America, as well as several facilities in South America. The company's new plant in Mexico will be the first new North American facility since 1990.  With logistical advantages, trade agreements and increasingly attractive wage rates, expect to see additional investment in Mexico from automotive manufacturers and the competent producers that support them.