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The Big Picture San Diego Blog


Industry

November 29, 2012

A series of recent articles and reports emphasize what San Diego mega-region watchers already know: Mexico’s auto industry is quickly becoming one of the country’s major manufacturing success stories. A publication released by Jones Lang LaSalle outlined why they believe Mexico “is an increasingly attractive supply chain (manufacturing and distribution) location when looking to access the United States and elsewhere.” They mention low labor costs (while China’s are increasing), a skilled workforce (more than 90,000 students graduate from engineering and technology programs every year) and ever-improving supply chain infrastructure – with shipping lead times a fraction of what they are from China (15-20 days or more to US ports from China versus 48-72 hours direct to market by truck from Mexico).

The Wall Street Journal weighed in on the topic with an article detailing the plans major car makers have for expanding production facilities in Mexico, including Volkswagen, Honda, General Motors, Mazda, Fiat and Nissan. Volkswagen’s Audi division is planning a new plant with a $1.3 billion price tag.

According to the Wall Street Journal, one in 10 cars sold in the US last year was made in Mexico. The country ranks fourth in auto exports behind Germany, Japan and South Korea but the Mexican government believes they will pass South Korea in the coming years based on the level of planned expansions.

Finally, a special section dedicated to Mexico appeared in The Economist magazine with one article aptly titled “Seńores, start your engines.” In addition to the same positive comments regarding labor costs, skilled workers and transportation, their commentary points to the ambition of new president Enrique Peńa Nieto to increase annual growth in the Mexican economy to 6% during his six-year term. The auto industry will play a significant role in making that growth a reality.