Wednesday, June 17, 2015
Mexico is the place for future auto jobs
From: Detroit Free Press
Mexico is the auto industry darling, Canada is struggling to retain a manufacturing footprint, and the U.S. is a house divided with most of the new automotive investment and jobs headed south of the Mason-Dixon line.
The three countries are a united trading block under the North American Free Trade Agreement, or NAFTA, but they're fierce rivals in the boardrooms where auto executives decide where to invest in the latest equipment and additional jobs.
The relative fortunes of the three countries have changed over the years, but right now, and for the foreseeable future, the farther south you are located, the better.
Of the vehicles built in North America last year, Mexico produced about one in five, or double the rate from 2004. WardsAuto, which tracks production data, expects the rate to increase to one in four by 2020.
"The U.S. South and Mexico are winning the battle," said Dennis DesRosiers, president of DesRosiers Automotive Consultants near Toronto. "Over half the capacity and 80%-90% of investment dollars are going to the U.S. South or Mexico."
Where is your car made?
The auto industry is global, but increasingly companies want to build in the region where they sell. Which means chances are your new vehicle will continue to be built in North America but may not be made in the U.S.A.
Back in 2004, 11.6 million vehicles were built in the U.S., or 74% of the 15.8 million industry total. Canada built 2.7 million, or 17% of the capacity; and Mexico contributed only 1.4 million vehicles, or 9%, according to WardsAuto.
In 2014, signs were evident the tide had turned.
Mexico's production had more than doubled to 3.2 million units, or 19% of the 16.9 million industry total. It came at the expense of the U.S., which dipped to 11.4 million units, or 67%; and Canada, which was down to 2.4 million, or 14%.
And the trend will continue. Wards forecasts new plants will add 1.2 million units of capacity in North America by 2020 and it is not evenly split.
Building boom in Mexico
Virtually every automaker is adding capacity in Mexico, including General Motors, Ford, Toyota, Honda, Volkswagen, Audi, BMW, Hyundai and Mazda.
The country is a "massive untapped market" that could grow by another 1 million to 2 million vehicles a year, DesRosiers said.
By 2020, Mexico is expected to build one in four vehicles in a North American industry of 18.6 million units. The U.S. will hold its own at two-thirds of the output, or 12.2 million vehicles. Canada is the big loser, down to 1.6 million vehicles and 9% of the output.