CNBC.com recently posted an article on its website entitled, “Mexico stakes claim as hottest hub for auto production. It has been over the course of the past several years now that industry watchers have sat up and taken notice of the astounding growth that is taking place in the Mexican automotive industry.
That article points out that this week, Nissan is opening is second final assembly plant in the country in the South Central city of Aguascalientes. For most people, the name “Aguascalientes” is anything but a household word, but for those cognizant of the rate at which manufacturing in the Mexican automotive industry is growing, it has quite a familiar ring.
Along with Aguascalientes. Guanajuato, Celaya and Queretaro have been eminently successful in attracting automotive industry foreign direct investment during this decade. Because of this development, Mexico is on track to be the source of nineteen percent of all passenger vehicles manufactured in North America in 2013. This represents upwards of three million vehicles.
In addition to Nissan, other companies that continue to sink significant investment dollars into automotive manufacturing in Mexico of late include Honda, Audi and Mazda. At this juncture, Mexico has overtaken Canada with for second place among automotive production among NAFTA signatories. To be even more precise, according to the CNBC.com article, “Mexico is among the fastest growing locations anywhere for auto assembly and parts production.”
Experts concur that the factors that the Mexican automotive industry is capitalizing on include favorable labor costs, and qualified and available human resources, and geographic proximity to the world’s largest consumer of passenger vehicles. Another factor that has been critical in attracting automotive investment to Mexico is the strategic network of free trade agreements that the country has build since it signed the North American Free Trade agreement in 1994. Because of the free trade agreements that are in place, companies making parts and fully assembled products in the Mexican automotive industry can ship product to forty-four nations, at this point, duty free. Automotive producers in Mexico can ship their production to Brazil at reduced duty rates, with some stipulations, as well. Additionally, a free trade agreement with South Korea will give Mexican product access to that Asian nation’s consumer marked in the foreseeable future.
Some analysts believe that the flexing of Mexican automotive industry muscle will exert downward pressure on the number of units produced in the U.S., and Mexico, while others believe that, if the U.S. can negotiate trade arrangements with the European Union, and companies can further streamline operations, particularly in the Southeast, Mexican and U.S. automakers in that part of the country can stand on somewhat even competitive footing.
Read the primary source for this post at CNBC.com.
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