Many industrial manufacturers are now developing mexican suppliers substituting Asian companies. The shortages of components and reduced manufacturing capacity following the closure of production plants in China (affected by the Covid-19).
According to Mexico Industry, some experts in this sector believe that industry in Mexico is facing economic challenges but new investment and business opportunities are in the pipeline.
Furthermore, 80% of Mexico’s manufacturing output is exported to the United States, which positions it as a supplier country with capacity to respond when the US economy is reactivated.
According to Luis Aguirre Lang, chairman of the National In-Bond and Export Manufacturing Industry Board (Index), some Japanese companies have been visiting different regions of the country for references to make decisions on relocating their production. This will make them look for local suppliers. Aguirre Lang notes that the supply sources that have been affected, include Asian products and supply chains. Companies will look for local firms based on the strategy of increasing national content.
At the same time, Mexico’s industrial supply chain, including the automotive sector in El Bajio, has been strengthened in recent months and this is generating dynamism to attract investment. The switching by Asian companies of their operations to Mexico therefore means that the country has good references abroad.
Global supply chains and the supply of components for industry have prompted China to take these strategies into account, which will allow the economy and industry to function and generate flows. This provides Mexico with the opportunity to attract more supplier companies.
It is clear that many companies are already taking steps to expand their supply base beyond Asia, so they will make the most of this situation and even seek out local suppliers so that national companies will reassess the situation and start looking at other market outlets.
Manuel Montoya Ortega, director of the Automotive Cluster of Nuevo Leon (CLAUT) and chairman of the National Network of Automotive Industry Clusters, said that the USMCA will move manufacturing lines to North America, because the content needs to increase from 62 to 75%, which means 12% more North American content
As a result there can be growth not only in Mexico but in the three countries of North America, and our country has a greater opportunity because of wages and labor costs.
Given the current situation, Montoya believes this year will be complicated for the United States. It will also be necessary to wait and see how long the post-pandemic economic crisis will last, as it could rebound. Mexico would benefit from the combination of all these factors.
Renato Villaseñor, chairman of the Queretaro Automotive Cluster, said that industry in Mexico is watchful of the changes being caused by the current global health contingency.
The panorama is very changeable, so customer production requirements are constantly reviewed to attend to them and make any necessary adjustments to the operations.
Enrique Castro Septién, director of the National Index Social Responsibility Committee, points out that the export manufacturing industry has been contemplating the opportunities brought by the Covid-19 contingency. There will be major challenges for many people who will have to adapt and be flexible to the production needs of clients. However, the manufacturing industry has the capacity to adapt and allow it to move forward fast offering international companies to rely more on mexican suppliers.
As a result of the current situation, companies will seek new investment destinations, speed up changes in their supply chains and no longer depend on markets on the other side of the world.
This is where new opportunities are emerging for Mexican suppliers. Industrial parks like Oradel Industrial Center have the necessary infrastructure to build industrial premises so foreign companies can set up their operations very close to the US border.