The Student News Site of North Carolina A&T State University

The A&T Register

The Student News Site of North Carolina A&T State University

The A&T Register

The Student News Site of North Carolina A&T State University

The A&T Register

    Mexico a Major Force in World’s Auto Industry

    September 24, 2014

    Tim JohnsonMCT Campus 

    AGUASCALIENTES, Mexico — It might be a stretch to describe Aguascalientes in north-central Mexico as the new Detroit. But it wouldn’t be a huge stretch.

    Mexico’s automotive sector is at full throttle, and Aguascalientes is one of several cities primed by foreign car manufacturers to rev its engines. Once a sleepy railway crossroads, Aguascalientes now has two massive auto plants and a third on the way. This is making it what one national newspaper called a “mini-Detroit.”

    “We’re going to produce 1.1 million vehicles just in Aguascalientes by 2020,” said Rodolfo Esau Garza de Vega, head of economic development in the state.

    Nearly every major global automaker now either builds in Mexico or plans to erect an assembly plant in the country. Billions in investment have arrived.

    Mexico has leapfrogged other auto producing nations. In 2009, Mexico was the world’s 10th largest auto producer. But it’s soared past Spain and France, and earlier this year it surged by Brazil to become the world’s No. 7 automaker and the fourth largest exporter. Experts say Mexico is one of the most dynamic hubs of the global auto industry.

    Gone are the days when Mexico produced only compact sedans and pickup trucks. Later this decade, new plants will be producing premium vehicles, BMWs and Mercedes, Infinitis and Audis. Many Nissan vehicles that roll out of the existing plants in Aguascalientes are bound not for domestic showrooms or to auto dealers in the United States but for Brazil, Colombia, the United Arab Emirates and dozens of other markets.

    The huge growth comes not just because of Mexico’s good highways and railways, its healthy steel industry and its cheap wages. It’s also because of plentiful engineers and the skill of global automakers at keeping quality high, wherever their cars are built.

    “The quality and cost of Mexican (automotive) products have no equal in Latin America,” said Luis Lozano Soto, automotive team leader at the Mexico City offices of PricewaterhouseCoopers, a global consulting firm.

    There’s another key factor. President Enrique Pena Nieto, in announcing in August that the South Korean automaker Kia would build a $1 billion plant outside Monterrey, noted that Mexico has free-trade agreements with 45 nations. The United States, in contrast, has free-trade accords in force with only 20 countries. Brazil has only eight free-trade agreements.

    “We have a unique geographical location with privileged access not only to North and Latin America markets but also those of Europe and Asia,” Pena Nieto said.

    About 66 percent of Mexico’s auto exports currently go to the U.S. market, 8 percent to Canada, 11-12 percent to Latin America, 8.3 percent to Europe and the remainder to Asia and the Middle East, Lozano said.

    The history of Nissan, the Japanese automaker, in Mexico reflects the growth of the auto industry as a whole.

    More than half a century ago, Nissan chose Mexico as the site for its first assembly plant outside Asia. Now it dominates the Mexican market, with a 26 percent share. Five of the top 10 best-selling vehicles are Nissan models.

    Nissan built its first plant in Cuernavaca, near Mexico City. It built a second plant in Aguascalientes three decades ago. Then in November, it inaugurated a second Aguascalientes plant, which it had built in a record 19 months. Now, its two Aguascalientes plants produce a car every 38 seconds during working hours.

    Nissan exports cars it produces in Mexico to 50 countries, said spokesman Herman Morfin Ortiz.

    At the new plant, a stamping facility that molds rolled steel into fenders and chassis parts clangs and hisses. But overall, the rest of the factory has little of the racket of older auto assembly plants. Each chassis moves along the assembly line on a silent robotic vehicle that follows a magnetic strip. It’s a major advance from the noisier overhead rails that pull a vehicle at the other Aguascalientes plant.

    All workers wear gloves.

    “The idea is that no worker touches the vehicle directly until the new owner takes possession,” said Irvin Herrera, who led visitors through the plant.

    Next to the Nissan plant is the Douki Seisan industrial park, home to three component manufacturers. Shuttle vehicles deliver components, like new seats or engine hoses, to the Nissan plant, often more than once an hour.

    The direct investment of automakers in cities like Aguascalientes has been huge. But Mexico also benefits from an incoming tide of auto parts manufacturers.

    Nissan has about 300 suppliers today, 39 of them Mexican-owned companies, said spokesman Morfin.

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