Ford recently confirmed it will open a new plant in Mexico, upping its bet on Mexico as one of the most sophisticated and fastest developing automobile manufacturing hubs in the world. As Ford expands in Mexico, it is most likely that other automakers will be confident to do the same.
Automotive Industry in Mexico
The recent announcement that Ford expands in Mexico, and will build an automotive plant in the Mexican state of San Luis Potosí comes as no surprise for those following the surging automotive industry in the Latin American’s most dynamic economy. The country is one of the fastest growing manufacturers of automobiles and auto parts in the world. Ford already has a significant presence in the country, along with other leading automotive companies like GM, Chrysler, BMW, Mercedes-Benz, Daimler, Nissan, Mazda, and Hyundai. The country specializes in low- to medium-value light vehicles and already has 18 production facilities based in 11 states.
By the numbers:
- Mexico currently manufactures approximately 3.3 million light vehicles annually.
- Mexico accounts for 20% of all North American light-vehicle production.
- Though the US has been, by far, the largest automotive producer in North America, a full third of all new spending in the North American automotive sector went to Mexico in the past five years.
- Mexico is the 6th largest producer of heavy vehicles in the world.
- Mexico is the 8th largest automotive component exporter in the world.
Ford’s New Mexico Plant
In early 2016, the Wall Street Journal reported that Ford planned to double its production capacity in Mexico. According to the report, Ford’s strategy would be to shift focus on light vehicles to Mexico and leave manufacturing of high-end and heavy vehicles in the US. Two weeks ago, this report was confirmed with the announcement of a new plant to be built in San Luis Potosí, beginning this summer and to be completed in 2018. The manufacturing facility will cost approximately $1.6 billion USD and will employ 2,800 workers as Ford further expands in Mexico.
The company has yet to reveal which models the new plant will produce, but some have predicted they will include the Focus and C-Max models, since Ford announced last year that the production of these models in Wayne, Michigan would be suspended. No doubt part of the decision to shift production of small vehicles to Mexico rather than the US was driven by the decline in small-car purchases in the US due to lower fuel costs.