Foreign direct investment dollars continue to roll into the Mexican automotive sector.
On April 17, 2015 company officials announced their plans to boost Ford Mexico manufacturing capacity by committing a total of US $2.5 billion new investment dollars to the country. These added resources will be applied to two projects.
Ford has earmarked US $1.3 billion for the upgrade and expansion of product and capacity at the company’s engine plant in the northern state of Chihuahua. The facility was established in 1983, and currently sits on 247 acres of land, upon which is situated 727,000 square feet of industrial space.
Ford Mexico manufacturing activities at the Chihuahua plant have recently centered on the production of the company’s I-4 diesel engines. According to the Wall Street Journal, however, the new capital infusion in Ford Mexico manufacturing in Chihuahua will bring the production of its 1.5-liter and 1.6 liter turbocharged four-cylinder EcoBoost gasoline engine to “North America for the first time.” Once additional facilities are built and increased capacity is installed, company officials estimate that the number of new manufacturing jobs that will be created at the Chihuahua plant will number at approximately 1,300. Ford’s production plant there is the largest engine plant in the country.
Ford Mexico manufacturing capacity will also receive a US $1.2 billion dollar boost in the South Central Mexican State of Guanajuato. Ford makes 6-speed transmissions in Mexico in a joint venture with Getrag of Germany. The new and greater production capacity that will result from the newly announced Guanajuato investment will give Ford the possibility of full ownership of new and additional production. Some estimates are that total job creation in Mexico by boosting Ford Mexico manufacturing capacity will be in the neighborhood of 4,000 new positions.
This latest move by one of the world’s largest OEM automotive manufacturers further demonstrates the magnitude of the boom that the Mexican passenger vehicle manufacturing sector is experiencing. The principle reason that is often given for Mexico’s ability to attract billions of dollars of manufacturing investment in the automotive, and other sector, over the last decade or more is cost. Another reason, however, that gives Mexico a marketable edge vis a vis competitors for automotive industry and other manufacturing investment is its well-developed network of trade agreements. Mexico has free trade accords in place that give the goods that it produces NAFTA-like duty free access to consumers in a total of forty four nations. Among the countries with which Mexico trades without the hindrance of tariff barriers are the members of the EU in its entirety, Japan, South Korea, Panama, Israel, Colombia, Peru and Ecuador among others.
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