European automaker’s new Mexican plant will boost region’s economy
The world’s second largest manufacturer of luxury cars, Audi, will start building the Q5 sport-utility at its new Mexican plant in 2016.
During the first year of production the factory is planned to assemble one hundred and fifty thousand vehicles. San Jose Chiapa, a town between Mexico City and the East Coast port of Veracruz, will be the location of the company’s new $1.3 billion production facility. Audi’s local manufacturing activities will eventually generate 3,800 direct labor positions.
The siting of Audi’s new facility in Mexico is part of a growing trend of global automotive OEMs to use the country as a springboard from which to export vehicles to the United States and Canada, as well as to many other nations with which it has negotiated free trade agreements.
Recently the company disclosed that more than one hundred and thirty suppliers will service the Mexican plant by providing manufactured aut parts and assemblies. Of this number seventy-five percent will be of Mexican, US and Canadian origin, twenty percent of the suppliers to the new Audi Mexican plant will be European, while the remaining five percent of suppliers to the San Jose Chiapa facility will be resident in a number of other different nations. With this structure for its supplier base, production at Audi’s Mexican plant will comply with NAFTA rules of content requirements for the automotive industry.
In additon to the direct labor aforementioned direct labor postions created in San Jose Chiapa, Puebla, Audi officials estimate that the multiplier effect related to production activity of its Mexican plant will result in the creation of an additional twenty thousand regional jobs over the course of the next ten years. Future plans under consideration include boosting the factory’s initial production number of one hundred and fifty thousand Q-5 SUV’s to three hundred thousand over the longer term.
Read the primary source for this post in its original Spanish at El Financiero.