Mexico has leapfrogged other auto producing nations. In 2009, Mexico was the world’s 10thlargest auto producer. But it’s soared past Spain and France, and earlier this year it surged by Brazil to become the world’s No. 7 automaker and the fourth largest exporter. Experts say Mexico is one of the most dynamic hubs of the global auto industry.
“In 2013, we had procurement of about $4.4 billion. By 2016, we plan to triple that to almost $13 billion,” Morfin said.
As auto plants spring up across Mexico in cities like Celaya, San Luis Potosi, Monterrey, Salamanca and Saltillo, factories making electronics, tires and other automotive components are popping up, lining highways in central Mexico.
“It’s just a brutal knock-on effect. If you pass by Queretaro, it’s one factory after another. And it’s all auto parts,” said PricewaterhouseCoopers’ Lozano, who noted that some 550,000 people now work in some aspect of the nation’s auto industry.
About a third of all Japanese investment in Mexico now concentrates in the state of Aguascalientes, whose capital city of the same name has a population of about 1 million people. Garza de Vega, the state’s head of economic development, said 70 Japanese companies have set up in the state, some in logistics, services and spare parts for machinery.
A few billboards for real estate developments carry Japanese lettering. City officials estimate a Japanese population of about 1,100 people, enough families to fill the Japanese School of Aguascalientes, which goes through ninth grade. As Japanese kids sat on the floor eating their box lunches with chopsticks, a school employee, Jaime Gomez, said nearly everyone feels prosperity from the boom.
“There’s no unemployment in Aguascalientes. If you look for work, you will find it,” Gomez said. Engineering departments at local universities “are saturated” with local students hoping to get some of the higher paying jobs at the auto plants.
Mexico’s automotive industry is spread out, and analysts say that is a good thing. Ford has plants in Chihuahua and Sonora in the north as well as Morelos state near the capital. Puebla, near Mexico City, is hub of Germany’s Volkswagen. Honda produces vehicles in Guanajuato state and near Guadalajara, both in central Mexico. Toyota builds Tacoma pickups in Tijuana at the border. General Motors makes pickups and the Cadillac Escalade in Silao in Guanajuato state as well as sedans in Coahuila state abutting Texas.
“Car plants have definitely brought some of these cities onto the map. If you look at Hermosillo and the role of the Ford plant, or the Nissan plant in Aguascalientes, it’s made a big difference in those cities,” said Guido Vildozo, who oversees Latin America for HIS Automotive, a consultancy.
When Kia announced its new plant, which will begin making up to 300,000 cars a year in 2016, it chose a suburb of Monterrey, the northeastern industrial hub. In July, BMW said it would build a $1 billion plant in San Luis Potosi to produce up to 150,000 units a year of an unspecified luxury model, starting in 2019.
“The more the plants are spread out, the better off you are,” said Vildozo, adding that transportation systems don’t get overtaxed in any one area and employment benefits are shared among regions.
Overall production is soaring. Mexico built 2.93 million vehicles last year, the vast majority for export, and it is expected to speed past 4 million vehicles by 2017. As production soars and plants hire new workers, different Mexican states pull out the stops to draw automakers to their areas, trying to induce them to invest.
States cater in other ways to the German and Asian automakers coming in the current wave of investment.
Garza de Vega, Aguascalientes’ economic development director, said he got his job partly because he lived in Japan for 11 years, where he attended high school, later returning for an investment job.