Recently American Industries hosted a webinar focusing on how automotive manufacturing in Mexico can benefit from the new USMCA and some critical considerations companies will need to keep in mind regarding changes in automotive rules of origin affecting manufacturers and for starting up operations in Mexico. Panelists shared valuable information for companies considering Mexico manufacturing, including past and current market trends and predictions for future growth and opportunities in the area due to changes in the global economy and trade policies.
The first presenter, Jim Swanson, who has served as President of The Stewart Company for 32 years, shared his perspective and experience as a manufacturer’s representative focused on Asian automotive OEMs representing 20 main companies. He highlighted the benefits of offshore manufacturing in Mexico, including reduced labor costs, the country’s numerous open trade agreements, existing industry clusters, and reduced travel time and similar time zones compared to Asian low-cost countries (LCCs). He also listed some important considerations when moving operations to Mexico, including the importance of clearly defining objectives, legal and operational strategies, and target market, as well as thorough market analysis and identifying competitors. He further emphasized the opportunity that Mexico manufacturing currently represents, stating that “If your competitors aren’t already in Mexico, they are considering it.”
The next presenter was Kenneth Smith Ramos, Former USMCA Chief Negotiator for the Government of Mexico and nowadays Partner at AGON, a company offering legal, strategic and financial consulting services. He gave a detailed presentation regarding the modernization of NAFTA and USMCA automotive rules of origin, explaining how they were negotiated, their importance, and how they work to grant preferential access for qualifying exported goods to promote value chain integration in North America and encourage productive linkages between regional industries.
Additionally, he shared specifically how these changes will affect the automotive industry Mexico and how manufacturers will need to adapt, and the timelines they will have to implement them. It is important to note that these include transition periods of 3 to 7 years depending on the vehicle category, in addition to a clause allowing a case by case review for companies that need more time.
Mr. Smith also shared how reductions in intermediate Chinese inputs have created significant opportunities for other countries across a wide variety of sectors and how Mexico’s existing investment clusters make it ready to host nearshoring operations.
The third guest was Jim Scott, president of Ground Effects, Limited, an OEM direct second stage manufacturer, which has grown under his leadership over the last seven years from a 5-facility operation to a 30-facility international operation. He shared his experience in setting up offshore manufacturing in Mexico in Guanajuato and how it has become the company’s flagship site with the highest quality and best overall productivity.
All panelists mentioned that having a trusted partner specializing in shelter services in Mexico was key to their success. This support allowed them to leverage the providers’ on-the-ground experience, connections and logistics, and the immigration, customs, warehousing, management and back-office expertise needed for international companies in Mexico to start up operations in a streamlined and profitable manner.
Lastly, Gerardo González, American Industries’ general director for the Guanajuato Region (the most important for automotive manufacturing) gave tips and recommendations on ensuring a soft landing in Mexico. He also highlighted additional reasons Mexico is the ideal place to set up nearshore and offshore manufacturing and the facilitation process for companies wanting to start up operations in Mexico, from site selection to the provision of day-to-day management and logistics services.
All panelists made one thing very clear: right now is the perfect time to look into starting up operations in Mexico to take advantage of the numerous opportunities it offers
By Isaías Rivera | Mkt & Business Development Manager | American Industries Group®
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