The Automotive Manufacturing Cluster in Mexico
The automotive manufacturing cluster in Mexico is present in approximately 14 states of the republic. This industry grouping is located in the nation’s border region and in some of the centrally located states of the country.
Recent studies reveal that companies in the automotive manufacturing cluster in Mexico have a total of 20 production complexes in 14 states. Figuring prominently among them are those found in Baja California, Sonora, Chihuahua, Coahuila, San Luis Potosí, Puebla, Aguascalientes, Guanajuato, Jalisco, State of Mexico, Morelos, and Nuevo León. Activities taking place at these facilities range from OEM vehicle assembly to the casting and metal stamping of vehicles and engines.
In addition to the automotive industry cluster in Mexico, heavy vehicles are also manufactured in the country. Currently there are 10 manufacturers of this type of vehicle that have production facilities in 8 states of the Mexican Republic.
According to an official at the country’s Secretariat of the Economy, cluster development in Mexico has been a key factor in strengthening industries such as automotive: “An example of this is Nuevo León, a state that in 2006 pioneered the creation of a cluster for the automotive industry,” says Undersecretary Rogelio Garza.
The Nuevo León Automotive Cluster is a civil association made up of world-class automotive manufacturers and academic and government institutions related to the industry. It seeks the development of the integrated production chain from OEM vehicle assemblers to first, second, and third-tier suppliers, as well as automotive support companies such as logistics services, consulting companies, among others.
In order to promote the growth of the industry in the state, a Citizen’s Advisory Council for the Automotive Industry of Nuevo León was established in 2006 as the managing body of collaborative industry initiatives. From there, the action was taken to organize the Nuevo León Automotive Cluster (NLAC) organization, which would eventually take legal form on July 7, 2007. The founding group of the NLAC was comprised of 7 companies in the automotive cluster in Mexico. They were: Arnecom, Ficosa, Grupo IMSA, Metalsa, Navistar, Nemak, and Vitro. At the same time, academic institutions such as the Tecnológico de Monterrey and the Universidad Autónoma de Nuevo León were represented on the Council. Additionally, the state government’s Secretariat for Economic Development and the Institute of Innovation and Technology Transfer participated.
Another successful case of an automotive manufacturing cluster in Mexico is in the state of Guanajuato. Today it is made up of 297 companies. Among those that stand out are General Motors and Volkswagen in Silao; Mazda in Salamanca and Honda in Celaya, as well as the prestigious Pirelli Tire company and other manufacturers of auto parts, transmissions, and components for cars.
It should be noted that, in recent years, Toyota has established a plant in the state with an investment of US $1 billion and Ford has set up a US $1.2 billion transmission plant in the city of Irapuato.
In Puebla, the automotive cluster began with Volkswagen’s arrival in Mexico. It was in June 1965 that construction work began on the German company’s manufacturing facility in the state. In October 1967, the first Volkswagen Sedan was produced at the plant.
Tn recent years the OEM assembler announced the expansion of its plant, with an investment of US $1 billion. Adding to this is the arrival of Audi, which will begin operations in mid-2016. Due to these developments, the state seeks to consolidate itself as Mexico’s main automotive cluster.
For its part, integrated into the Baja California Automotive Cluster, according to state government data, are Original Equipment Manufacturers: Toyota, which has more than 10 years in the state and truck manufacturer Kenworth. The latter has been established in Baja California for more than 50 years.
Additionally, in this automotive manufacturing cluster in Mexico, there are more than 80 companies in the auto parts sector that are classified at Tier 1, 2, and 3 production levels. Similarly, there is a Linkage Committee between the Universities and Technical Schools of the State and the companies belonging to this manufacturing sector.
In the case of the State of Mexico, the entity’s Automotive Cluster consists of original equipment manufacturers, Tier 1, 2, and 3 suppliers, as well as service companies dedicated to consulting, logistics, and customs agency. Seven assemblers and approximately 250 auto parts producers are currently established there. This represents 18% of the OEM industry and 25% of auto parts companies in the automotive manufacturing cluster in Mexico. The State of Mexico also ranks third nationally in the automotive and auto parts industry, as well as generates 10% of the total value of the industry in the country, only after Coahuila and Puebla.
According to state government information, in the case of Sonora, the entity’s automotive cluster is the largest Pacific region in the Americas, producing 443,000 vehicles annually and having a value chain that consists of 42 Tier 1 and Tier 2 companies.
For its part, in Chihuahua, the automotive cluster is one of the main economic engines in the entity. According to a recent government report, it generates 21% of the total state jobs. It is comprised of 150 established automotive and auto-related companies that are primarily export-oriented and integral to North America’s automotive production chain.
In the case of the latter two states (Sonora and Chihuahua), Ford is the OEM that fostered the development of the automotive clusters of each. In 1986, the company opened its plant in Hermosillo in 1986, while in Chihuahua the Ford Complex of Chihuahua (CHEP I) came online in 1983. Finally, the CHEP II Complex began operations in 2009.
In Aguascalientes, the Automotive Development Cluster is dedicated to integrating automotive and auto parts companies. Nissan has been the axis of this cluster since 1982 when it started operations with an investment of $1.3 billion. Also, in 2013 the Nissan Aguascalientes plant, A2, started operations.
Similarly, in recent years an investment between the Renault-Nissan Alliance and Daimler was announced to build a manufacturing facility in Aguascalientes.
In Morelos, the automotive manufacturing cluster in Mexico accounts for approximately 30% of production, while generating an approximately 4000 jobs. In this state, Nissan is present as one of the most important companies in the sector since 1966, when the Cuernavaca plant started operations.
It should also be noted that in 2017 Bridgestone announced a $129 million investment aimed at expanding the premium tire production line at its Cuernavaca plant.
State government information notes that in San Luis Potosí the automotive and auto parts industry is a benchmark of manufacturing industrial development, “it is one of the leading areas of the manufacturing sector in the state. This is due to the payrolls that it generates, its capital formation, and the value that it adds to its products. Its activity is concentrated in the manufacture of parts for motor vehicles. Currently, the industry is made up of approximately 151 companies and accounts for more than 50% of San Luis Potosí’s total export activity.
In Coahuila, the Coahuila State Innovation System for the Automotive Cluster (SIECCA) is a scientific and technological organization whose objective is to carry out research, development, innovation, and human resources training to improve the competitiveness and productivity of the automotive cluster
According to state government data, Coahuila accounts for about 9.5% of total vehicle production in the automotive manufacturing cluster in Mexico. Present in the state are OEMs such as Chrysler and General Motors. It is important to note that 37.8% of the state’s GDP is represented by production in the automotive sector.
In the case of the auto parts industry, it is linked to automotive clusters. According to the National Auto Parts Industry (INA), Coahuila is the main producer of auto parts with approximately 18% of total national production, followed by Chihuahua with 14%, Nuevo León 10%, State of Mexico 7%, Guanajuato, Puebla, Querétaro and Tamaulipas with 6%, as well as San Luis Potosí and Aguascalientes with 5%.
