News, Insights and Best Practices for Manufacturing in Mexico

Saltillo’s Automotive Industry Primed for Acceleration

11 Jan 2013

Category: Automotive Manufacturing, Manufacturing in Mexico

With the economic turndown of 2008 in its rear-view mirror, automotive manufacturing in Mexico is revving up  once again – and one expert says the city of Saltillo is primed for business.

“In Saltillo, an entire automobile can almost be built,” Miguel Hernandez observes. “We don’t have a tire manufacturer here, but most of the auto parts are manufactured here in Saltillo.

Automotive Industry Mexico engine photo

“Also, union leaders have understood the need to change their way of doing business, and they’ve been very business friendly, which has created a positive atmosphere to attract the automotive and other industries.”

Hernandez is general manager of The Offshore Group’s Manufacturas Zapalinamé in Saltillo, Coahuila Mexico, which delivers comprehensive Mexico Shelter Plan services to companies manufacturing automotive, aerospace and transportation equipment, electronics, medical devices and multiple other products. (Its La Angostura Industrial Park serves 14 companies utilizing 2,700 local employees, with room to construct an additional 62 industrial buildings.)

“I see more automotive and other suppliers coming down to manufacturing in this part of Mexico,” Hernandez adds. “We have Fiat currently setting up operations in Saltillo. As a result, we are seeing a lot of automotive OEM suppliers coming to town.”

Though interest in Saltillo has picked up recently, it is not new territory for automotive manufacturers. When John Deere came to town some 60 years ago, vocational training efforts began – only to pick up speed when General Motors situated its first factory here 31 years ago, followed by Chrysler and others.

Newer business partners also are making their mark in Mexico: Automotive World reports that Daimler Trucks North America recently celebrated its third year of operations in Saltillo as the Mexico plant produced its 100,000th Freightliner Cascadia.

Hernandez notes there are many features making Saltillo an attractive place for auto manufacturers to do business. One is geography, as Saltillo is near the NAFTA Highway (Highway 67), running from Laredo, Texas, to Mexico City. Another is education infrastructure.

“Saltillo is the city with the most universities per capita in Mexico,” he points out. “You can find all types of academic-degree levels, from business administration to specialized quality engineers.”

Additionally, Saltillo is more cost-effective for manufacturers than the bigger city of Monterrey. Hernandez says the cost of living in Monterrey is 20 percent more than in Saltillo – so wages paid in Monterrey also are higher.

Saltillo also has the advantage of elevation, as it is positioned approximately a mile above sea level. (Electric bills can nearly double in Monterrey, only 600 meters above sea level – something worth considering when figuring factory overhead costs.)

Some American executives have stalled regarding moving operations to Mexico because they are concerned about crime. Still, it remains that nine automotive manufacturers – including Ford, Honda, Toyota and Volkswagen – produce 42 brands in 20 Mexican manufacturing plants. And statistics from the Mexican Association of Automotive Industry show the total number of cars and trucks exported from Mexico has accelerated from more than 1.2 million in 2009 to 2.14 million last year.

Would that be happening if these manufacturers perceived danger? Hernandez says no, explaining most violence occurs within gangs or drug cartels.

“Violence in Mexico is not as widespread as the media would have us believe,” he insists. “Violent crime typically doesn’t touch the manufacturing industry in Mexico, or regular people or workers.

“We send trucks to the U.S. every single day from Saltillo to McAllen, Texas, and have never had an issue,” he adds. “We’re talking about moving hundreds of trucks per week.”

Readers with additional questions about doing business in Mexico may e-mail Hernandez at miguel.hernandez@zapa.com.mx or call him at 011(52)-844-411-3833.

“There is room to grow,” he affirms. “We have talented people. We have space, buildings, infrastructure and everything else that the industry requires to get the job done. I do see a bright future.”

Image courtesy of FreeDigitalPhotos.net

Related posts