Goodyear broke ground July 28 for the first plant it will build in the Americas in 25 years, Tire Business reported. The more than 1-million-square-foot plant will be built in an industrial zone on the southern edge of the city of San Luis Potosi in central Mexico, and involves an investment of up to $550 million.
According to Martin Rosales, president and managing director of Goodyear in Mexico, the facility is expected to be operational by July 2017. When asked about financial incentives to support the company's plant in Mexico, Rosales insisted the benefits of manufacturing in Mexico, such as infrastructure including railroads and highways, and the seriousness of the Mexican government, were more important that financial incentives.
"These (financial incentives) are always short term," Rosales told Tire Business. "Infrastructure is long term. This is much more important than a fiscal incentive."
A reflection on Mexico's auto sector
Goodyear's move to Mexico is just a fraction of the development within the industry that reflects positively upon Mexico's auto sector. The Wall Street Journal noted Goodyear is among many auto component makers moving into the country to supply the growing number of auto assembly plants. As such, employment in the auto supplier sector in Mexico is expected to grow from 700,000 to 1 million in the next few years.
Manufacturers in Mexico leverage the country's cheaper natural gas imports, proximity to the U.S., Canada and Latin America, rapidly developing infrastructure, more than 40 free trade agreements and low labor costs. As a result, The Wall Street Journal stated carmakers and their suppliers have invested more than $21 billion in the country in just over two years.
Keeping up with big industry names
As more manufacturers move to Mexico, they will have a competitive advantage due to the low operation costs and efficiencies the country provides. Goodyear's new plant in Mexico is an important indicator that manufacturers must consider the benefits of manufacturing in Mexico to keep up with big industry names.
As stated by Tire Business, General Motors already has a car assembly plant in San Luis Potosi, and BMW A.G. plans to start assembling 150,000 vehicles a year at a $1 billion-plant the company is building there in 2019. Further, The Wall Street Journal reported Toyota plans to spend $1 billion for a new plant in Mexico.