News, Insights and Best Practices for Manufacturing in Mexico

Japanese automakers call Mexico home

08 Jan 2015

Category: Automotive Manufacturing, Logistics Management, Manufacturing in Mexico

There are already a large number of companies based in the U.S. and abroad expanding to Mexico. The country has been systematically taking steps to make itself an attractive option for organizations looking to manufacture goods at a lower cost while taking advantage of a workforce that continues to grow in skill and technical proficiency.

In addition, the North American Free Trade Agreement makes it easy for companies operating in the country to import required materials needed for production and export finished goods to destinations where consumers will purchase them. Currently, Mexico has a NAFTA partnership with 45 different nations.

All told, Mexico has been aggressively working to make itself a prime destination for offshoring and has successfully taken a lot of business away from China, the country that has a longstanding reputation for being a place where organizations chose to have their goods manufactured and assembled.

However, for the better part of 50 years, Mexico has successfully managed to maintain its grip on an industry that continues to grow in both size and scope within the country: automotive.

According to McClatchy DC, as of 2009, Mexico was designated as the 10th largest auto-producing nation in the world. In 2014, the country had moved up to seventh place on the list, passing Brazil, Spain and France. In addition, Mexico now stands as the fourth largest auto-exporter and is now seen as one of the industry's major production hubs.

"The quality and cost of Mexican (automotive) products have no equal in Latin America," automotive team leader at PricewaterhouseCoopers Mexico, Luis Lozano Soto, told McClatchy DC.

The country currently benefits from a number of unique advantages. In addition to labor being highly skilled, yet low-cost, Mexico also boasts a good railroad and highway infrastructure that allows materials to easily flow into and out of the country. In addition, the country offers easy access to ports and with respect to auto manufacturing, Mexico's steel industry is also strong.

Ultimately, all of these attributes make it easy for automotive companies with a manufacturing presence in the country to have access to not only the Latin and North American markets, but Asia and Europe as well. It's no wonder that automakers around the world have their eyes set on Mexico as a prime destination for the manufacture and export of their vehicles.

A brand new model of a Mazda vehicle that was manufactured in MexicoMazda is one of many Japanese auto manufacturers with a production presence in Mexico.

Mazda celebrates production milestone in Mexico
According to an AutoBlog report, in 2011, Japanese car company, Mazda, broke ground on a manufacturing plant located in Salamanca, which sits in the state of Gunajuato. The Mazda de Mexico Vehicle Operations center was built to mass produce two vehicles, the Mazda2 hatchback and the Mazda3 sedan.

"With the start of mass production, we now have a system capable of offering vehicles of the same high quality as those made in Japan, on a global scale, and that is extremely gratifying." -- Keishi Egawa, CEO and president of Mazda Motor Manufacturing de Mexico

Mazda has maintained a presence in Mexico since 2000 and has already sold a total of 180,000 units in the country. In 2013, the company broke a record by selling 33,000 cars in Mexico and decided to ramp up production in an effort to produce 230,000 vehicles - an increase of 150 percent - on an annual basis.

"With the start of mass production, we now have a system capable of offering vehicles of the same high quality as those made in Japan, on a global scale, and that is extremely gratifying," Keishi Egawa, CEO and president of Mazda Motor Manufacturing de Mexico and managing executive officer of the company's new emerging market operations in Latin America, said via press release. "We are committed to continue our efforts to contribute to the growth of Mexico's economy through the production of vehicles and the development of personnel who support and lead the automobile industry here."

In a separate AutoBlog report, Mazda recently celebrated the production of its 100,000th Mazda2 vehicle, just 11 months after the company began assembling these vehicles in Mexico. In addition, the company has also struck a deal with Toyota and in 2016, will begin manufacturing its vehicles on a contract basis.

Japanese automakers descend on Aguascalientes
The population of Aguascalientes is approximately 1 million people, McClatchy DC wrote. Given the heavy presence of Japanese car companies with manufacturing facilities in the North-central Mexican nation, it has been considered as the new Detroit, which has long been the home to Ford Motor Company.

Currently nearly one-third of the Japanese auto manufacturing investment is centered in Aguascalientes and as many as 70 companies with automotive interests in the production of parts, logistics and other automotive services serve as their offshoring home.

Recently, Kia announced that it would set up a plant in Aguascalientes and will begin producing as many as 300,000 vehicles beginning in 2016. This is yet another example of Mexico's booming auto manufacturing industry and why so many companies are aggressively looking to establish operations n the country.

Mexico will continue to push the envelope and take any and all steps to make itself attractive to foreign companies, not just in the automotive industry, but all manufacturing sectors.

The Offshore Group: You Manufacture ... We Do The Rest

Related posts