Giant Ford and Toyota Investments Help Fuel Mexican Auto Industry Boom Jerry Hirsch - The Los Angeles Times
go to original April 21, 2015

Workers assemble Honda Fits at a new factory in Celaya, Mexico, last year. Ford and Toyota plan to spend $3.5 billion on new factories and expansions in Mexico, helping fuel an auto industry boom in the country. (Honda)

Investment in the Mexican auto industry is soaring as automakers take advantage of low labor rates, an increasingly sophisticated workforce and a plethora of free trade agreements.

Ford Motor Co. said that it will spend $2.5 billion to build and expand engine and transmission factories in the Mexican states of Chihuahua and Guanajuato, creating 3,800 jobs.

Ford’s investment follows Toyota Motor Corp.’s announcement earlier this week that it will spend $1 billion to construct a new factory in central Mexico, where it will build Corolla compact cars.

“The Mexican auto industry is coming of age,” said Mike Jackson, an analyst at IHS Automotive, an industry research firm.

To be sure, wages top the list of Mexico’s auto manufacturing advantages. Workers at the auto assembly plants south of the border earn an average $5.64 an hour compared to $27.78 for their U.S. counterparts, according to the Center for Automotive Research, an industry think tank in Ann Arbor, Mich. Those at the parts suppliers earn just $2.47 an hour. Workers at U.S. auto suppliers average $19.65.

But that’s just one factor, Jackson said. The Mexican auto industry is turning out more sophisticated vehicles than it could a decade ago. That’s why luxury automaker BMW also revealed plans for a $1-billion plant in San Luis Potosi last July. Mercedes-Benz and Nissan are building a joint, $1.4-billion plant in Aguascalientes. Audi is constructing a $1.3-billion factory near Puebla.

Altogether, auto companies and suppliers have announced almost $5.5 billion in factory expansion and construction so far this year, according to the Center for Automotive Research.

Read the rest at The Los Angeles Times

Becoming one of the top auto manufacturers in the world is no easy task - but it's happening in Mexico, the world's 4th largest exporter of cars. (Mexico)

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