In Mexico and other manufacturing nations, the automotive industry is considered a strategic economic pillar by virtue of the different benefits that the generation of large-scale jobs brings, the tax collections derived from the commercial operations of the industry, the training of personnel, the development of local suppliers and related technological modernization. Although Mexico has traditionally remained within the group of the leading countries in world vehicle production, it has been gradually displaced by the incursion of emerging nations to occupy the eleventh position since 2004; coupled with the fact that the local market for the commercialization of vehicles does not manage to rebound as it was expected to do with the entry of the new century.
The subject is approached in this work starting from a historical review of how the formation of this industry took place until reaching a definition of the current situation, in which it is sought to offer a strategic profile of the course to follow to ensure competitiveness the international market.
Keywords: automotive industry, strategy and competitiveness.
The potential of the Mexican automotive industry is such that it represents the second most important economic sector in the country, in addition to being the primary element in its modernization and globalization strategies. This industry operates in a privileged geographical area; it is located next to the largest consumer market in the world: the United States; in an environment of commercial deregulation, experienced workforce, proven technology transfer, and considerable production infrastructure.
However, and despite its importance, this industry is going through a period of crisis in which the country is not responding in a timely manner to the globalization that has arisen in recent years as organizations lack an effective strategy and have It stopped taking advantage of various opportunities that could promote its growth, going from being a main area for attracting investment to an observer of the global economic phenomenon. In a study ordered by the Economic Commission for Latin America and the Caribbean (ECLAC) called “Foreign investment in Latin America and the Caribbean, Report 2003” it is concluded, among other things, that despite the nearly 50 billion dollars foreign direct investment (FDI) in the automotive sector throughout the region,
This work addresses this problem in four parts: the first of them makes a historical review of how the automotive industry in Mexico has evolved, which has its origins in the second quarter of the last century, including the different automotive decrees that have constituted the industrial development policy of the sector; evolution that in the second part becomes an analysis of the growth of the automotive sector; the third includes a description of the economic importance and current situation in terms of infrastructure in its two aspects: the terminal industry and the auto parts industry; finally, a strategic profile is established on which it is proposed to base the growth of this industry,
For the preparation of this work, different investigations have been consulted that address the subject from different perspectives (Moreno Brid, 1996; Muller et al. 1998; Brown, 1998; Vieyra Medrano, 1999 and 2000; Juárez Núñez, 2000 and Álvarez, 2002) . Information collected by the Mexican Association of the Automotive Industry (AMIA) and the National Auto Parts Industry (INA) was reviewed, whose statistics are presented as a strategic analysis; Likewise, the main observations derived from the first, second and third International Congress of the Automotive Industry in Mexico (CIIAM), held in 2003, 2004 and 2005 respectively, are also included here.
1. Development of the automotive industry in Mexico: definition and transformation of its regulatory policy
The development of the automotive industry in Mexico is the result of a series of events and transformations that include, on the one hand, the evolution towards globalization of the sector at the international level, as well as the alignment with industrial policy at the national level; aspects that have allowed it to maintain a process of constant evolution.
The automotive sector in Mexico has always been a cornerstone of the industrial development of the country rock and, therefore, since its origin has specific development programs that over the years have been framed within what is known as “auto Decrees” , which are issued by the federal government and are intended to regulate production and sales; This includes limitations on the number of terminal companies, restrictions on the participation of foreign investment in auto parts companies and some prohibitions such as: i) importing vehicles, ii) importing parts that were produced locally and iii) producing auto parts in terminal companies, in addition to local content quotas in automobiles (Brown, 1998).
However, on some occasions these decrees have shown not to be very consistent because they tend to reflect the industrial policy of each of the different governments that have released them (Moreno Brid, 1996).
It is in the sixties – following the policy of the import substitution model in all the different sectors of the country – when the first automotive decree was issued, it sought to strengthen the automotive industry focused on the domestic market. By the mid-eighties, the government opened the border mainly for the purchase of auto parts, a situation that is reaching its peak as a consequence of the North American Free Trade Agreement (NAFTA), in which, gradually, from In 1994, the tariff rates of some component parts were reduced and in the same way, the minimum national content requirement for terminal industry manufacturers located in the country has been decreasing until the sector was fully liberalized in 2004. not only for auto parts but also for finished vehicles; With this, the protectionism policy towards the automotive industry ended. The following is a detailed analysis of the strategic development of this industry through six clearly identified phases.
First phase: Birth of the industry and start of operations (1925–1960)
The history of the automotive industry in Mexico dates back to 1925 with the installation of Ford’s assembly lines, whose development in the United States increased notably; later, in 1935, what would ultimately become the world’s largest vehicle manufacturer: General Motors, while in 1938 Automex began operations, which would later become Chrysler. All of them focused their operational activity on the assembly of vehicles destined for the local market that previously satisfied its demand with imports.
There were several reasons that initially moved North American manufacturers and later Europeans and Asians to move their manufacturing center to Mexico, Dombois (1990) 2 handles the following:
1) Reduction of production costs. Due to the fact that the import costs of CKD (Completely Knocked Down) kits used for the assembly were lower than those paid for the importation of vehicles.
2) Low transportation costs.
3) Low wages. Mainly in the labor used in assembly tasks.
4) Expectations of a feasible market to monopolize.
The main characteristic in all the automotive plants was that they worked with a low level of productivity, the result of minimal investments and lack of infrastructure. It is not until after the Second World War that the government directs its efforts towards the industrialization of the country; By 1950, Mexico made a turn in its economic structure until then dependent on agriculture and acquired a full focus on industrial development. A situation that, as will be seen later, greatly strengthened the automotive sector.
Second phase: Growth based on import substitution (1962–1976)
As previously indicated, vehicles have been manufactured in Mexico since 1925; It was until 1962 that the first automotive decree was issued, with which the automotive development in our country began on a firmer basis; the prevailing situation at that time was characterized by exclusively assembly plants in which less than 20% of the components were of national origin, while sales were mainly covered with imported vehicles.
This first decree oriented the sector towards the satisfaction of the domestic market and included aspects such as the following:
• Vehicle imports were limited.
• The importation of complete main assemblies such as engines and transmissions was limited.
• It set the minimum national content at 60% for vehicles manufactured in national territory.
• Limited investments in auto parts manufacturing plants to 40% of foreign capital.
• Established a price control in order to contain profits and encourage increased productivity.
Among the most important movements to be mentioned by the terminal industry organizations that occurred at that time under the existing regulatory scheme, we have the following:
• In 1964 Volkswagen, which for a decade before was dedicated to the commercialization of imported vehicles, began its assembly operations in the State of Mexico and three years later moved its production center to the state of Puebla
• Ford expanded its production in 1964 and installed two new plants in the State of Mexico, while General Motors inaugurated the engine and foundry complex in Toluca in 1965, mainly destined to supply 6-cylinder engines and spare parts. foundry to the plant located in Mexico City
• Following the same path, Chrysler opened an engine plant in Toluca in 1964 and in 1968 inaugurated its assembly plant.
• Finally, Nissan Mexicana, which was established in 1961 and which has been selling vehicles in Mexico since 1959, begins operations at the Cuernava Valley Industrial City (CIVAC) plant, in the state of Morelos, manufacturing the Datsun Sedan Bluebird.
As was to be expected given the protectionism of the domestic market, the automotive industry grew notably and from the 96,781 vehicles manufactured in 1965 it went to 250,000 units in 1970. Having achieved the goal of national content was considerably reflected in the activation of the sector of auto parts and this phenomenon spread to other sectors of the country’s economy.
By the early 1970s, only seven vehicle manufacturers remained in the country with plants located around Mexico City, the vast majority of which had a technological production infrastructure that became obsolete year after year. However, just as it is true that production had a considerable increase, it is also true that quality levels were not very satisfactory and production costs were above those that occurred in other nations, but given the prevailing closure of borders , the lack of international competitiveness was not a factor of concern for the leaders of that time.
Third phase: Approach oriented towards international competitiveness through trade protection and export promotion (1977–1989)
With the issuance of the second automotive decree of 1972, the government implemented new regulatory policies with the aim of improving the functioning of the markets, of which the following stood out:
– The percentage of minimum local content for vehicles destined for the export market was reduced
– Manufacturers of the terminal industry were obliged to export an equivalent of 30% of the value of their imports
However, although in theory the model was coupled to the new market needs, in reality and given the obsolescence of the production infrastructure there was very little progress and by 1975 the exports of the automotive industry were below 16% of what the sector imported, so the trade balance of the same year entered into crisis, a characteristic situation of the different industrial branches given the prevailing macroeconomic phenomenon.
The change in government strategy from the import substitution model to the concept of export promotion, Brown (1998) attributes it to two main factors: On the one hand, Mexico, as a producer country, found it difficult to face the effects of the oil crisis and the consequent and growing deficit in the balance of payments. On the other, the devaluation of the peso in 1976 and the recession that ensued severely affected the automotive industry.
The crisis in the balance of payments, largely derived from the lack of competitiveness of the different industrial sectors administered by the government, was the evidence that the industry in general had to increase its productivity levels, and the automotive sector was the first not only in understanding it but in putting it into practice as part of a restructuring model (Moreno Brid, 1996).
Given the great expectations that the discovery of the oil fields brought to the country and, therefore, the expected benefits in the domestic market economy, as well as taking advantage of the competitive conditions that existed in the international automotive market, the government publishes a new decree in 1977, whose main objective was to transform Mexico into a highly competitive exporting country, for which it opened the sector for foreign investment.
This decree established a strict control over the trade balance of the manufacturers of the terminal industry, to which the level of their imports was measured, including that which was transferred to them by their direct suppliers. This decree included that at least 50% of the commercial exchange of the assembly companies had to come from the export of locally produced auto parts, while as another protection measure for the national auto parts sector, foreign capital was not allowed to have the largest share. investment participation.
Given the need to increase competitiveness in order to face international markets, the sector’s technological infrastructure had to be modernized; This situation was adapted in parallel to the structural adjustments that North American companies carried out in their country in order to cope with the increasingly smaller, more efficient and economical Japanese vehicles, which by the end of the 1970s were beginning to penetrate the American market, manufactured in plants that were installed throughout its territory. Faced with this situation, North American companies began to increase their investments in the northern part of Mexico, where considerable amounts of millions of dollars arrived, converted into production centers; An example of this was the start-up of the assembly plants and engines that General Motors installed in the Ramos Arizpe complex, Coahuila in 1981, which at the time represented the largest investment of this corporation in all of Latin America. The Chrysler engine plant also in Ramos Arizpe in 1981, the Ford engine plant in Chihuahua (1983) and the assembly plant in Hermosillo, Sonora (1986) in conjunction with Mazda dedicated to the export market, the same as at that time represented the assembly plant with the highest level of technology in Mexico.
Making a comparison of how the country’s exports were accelerating, it is found that by 1977 they reached an amount equivalent to 181 million dollars (of which 83.7% corresponded to auto parts). For that year, automotive exports only represented 4.3% of the country’s total and 10.9% of the manufacturing sector. The proportion of auto parts in exports maintained a considerably higher participation margin until 1987, which is when in some way vehicle exports were activated to a large extent, for 1989 of the 3.9 billion dollars that were captured by exports , auto parts represented only 57% of the total (see figure 1 ).
Technology transfer played a very relevant role in this industrial restructuring process reflected in the start-up of different production plants in which the equipment, machinery and new working conditions contrasted considerably with the old plants of the sixties located mainly around Mexico City (Moreno Brid, 1996). Another considerable difference that characterized the new plants was that the vast majority of the workers were younger, more skilled, and better trained to perform a very wide range of tasks than those who made up the workforce at the existing plants. Promotions and special assignments began to be based on individual performance and skills of workers,
Said restructuring process could not immediately fulfill the central objective: to reverse the deficit in the sector’s trade balance, a situation that continued to persist during the five years after the decree was signed; This was mainly caused by the appreciation of the peso against the dollar, the increase in domestic demand and the pressure from other countries to have more favorable trade conditions, such that by 1982, when the Mexican economy collapsed, the deficit in the sector’s trade balance exceeded one trillion dollars. It is precisely from the structural crisis of the Mexican economy that year that the trade liberalization model begins to form part of the new policy of economic opening and restructuring of the productive apparatus (Vieyra Medrano, 1999).
For 1983 and in view of the unfavorable macroeconomic situation, a new regulation is established under the name of “Decree for the rationalization of the automotive industry”, which marked an important orientation towards the strengthening of exports, the central attention was fixed more in the export of vehicles than in that of auto parts, for which the minimum content of national integration was once again reduced in vehicles destined for international markets.
This new regulation, together with the increase in domestic demand, the exchange rate and the increases in productivity in the new plants soon caused the sector’s trade balance to have a surplus; at the same time, the government sold the shares it owned in Renault and Mexican Automotive Vehicles (VAM) to French and North American investors, thus culminating the investment of national capital in the terminal industry.
As a relevant characteristic of this period, it is important to note that the evolution that transnational companies had from the second half of the eighties, when designing their expansion based on the development mainly of the external sector, meant a determining factor for the Current situation.
Phase Four: The Beginning of Trade Liberalization (1990–1993)
Convinced that in order to consolidate the achievements previously made in the face of international circumstances and seeking to adapt to the new objectives of the industrial and foreign trade policy of that time, the government of President Salinas issued a new decree in December 1989. In it it was He clearly understood that in order to compete within the industry’s globalization scheme, it was necessary to modernize the sector, for which a process of economic deregulation, as well as an acceleration in the rate of investments, was imminent. Seeking as a final point to raise the levels of efficiency, productivity and technology to international levels.
The new regulation known as the Decree for the Modernization and Promotion of the Automotive Industry 3 authorized the importation of new vehicles for the first time since 1962, as long as the terminal industry maintained a positive balance in its trade balance. This situation meant that more than 15% of the vehicles sold in Mexico between 1991 and 1992 were imported, a figure that reached a level of 20% in 1993.
The companies received tax concessions for the equivalent of 30% of their investments, while the auto parts industry was strengthened in the same way by establishing that at least the vehicles manufactured in national territory should include at least 36% of their manufactured components. locally, allowing exceptions in export vehicles (Moreno Brid, 1996).
Fifth phase: The free trade agreement and the gradual liberalization of the automotive industry
Although it is true that before the signing of NAFTA, the US automotive market was open to imports from Mexico —with extremely low tariff rates: 2.5% on average for automobiles and 3% for auto parts—, it is with the entry into force of the aforementioned treaty on the first day of January 1994, when the sector began to undergo a major transformation process totally removed from the protectionism that had characterized it to adapt to the consumption needs of an expanding market; The agreements on the automotive sector played a very relevant role during the negotiations of the global agreement, due to the fact that for Mexico, the United States and Canada it represented the largest sector in terms of economic exchange.in 1992 65% of US exports of vehicles and auto parts went to Mexico ($ 6.8 billion) and Canada ($ 23.7 billion).
Among the most relevant aspects that the signing of the treaty brought with it, are the following:
• Import tariffs were cut in half
• The import tariff for cars and light trucks was reduced from 20 to 10%, and it was agreed to be completely eliminated as of 2004
• 16% of the auto parts fractions suffered a reduction of the same rates immediately, 54% in the period of the first five subsequent years, being totally deducted after ten years
• Specifically, the tariff rate on auto parts went from 14% in 1993 to 10% in 1994 and 3% in 1998
• The trade balance compensation factor was reduced from 1.75 to 0.8, with which the manufacturing companies established in Mexico were able to accelerate the rhythm of their imports.
• The national content margin for vehicles manufactured in Mexico was defined under the following scheme: 34 – 36% in 1993, 29% in 1998 and 0% for 2004
Undoubtedly, with the signing of NAFTA, the automotive sector has been one of the most active, the specific Gross Domestic Product (GDP) in Mexico rose on average by 8.8% between 1998 and 1999. The gradual deregulation of the sector from 1994 until becoming total as of 2004 has created business opportunities for foreign companies and this is forcing auto parts manufacturers installed in the country to raise the quality and reduce the production costs of their products in order to maintain and / or increase their business after 2003, for which they must meet the requirements of export markets.
It can be said that the terminal industry at the beginning and the auto parts industry later, went from an assembly process and little productive integration to a phase of greater integration and technological evolution. Along with this process of industrialization of the sector, a series of changes were triggered, from the geographical reconfiguration of production to the adoption of new technologies that impacted on the productive organization of work and on the entire system of suppliers that supply this industry (Vieyra Medrano, 1999 and 2000).
In an investigation ordered by the Ontario Ministry of Economic Development in Canada, in order to compare the competitiveness factors of the automotive industry between this country and Mexico, the following was concluded: 4
• The return on investments is higher in Mexico than in Canada and the United States.
• In the case of the terminal industry, the two main reasons for investing in Mexico are: low cost of labor and expectations of growth in domestic demand for automobiles.
• In the case of auto parts, the main reason for investing in Mexico is the high transportation costs involved in supplying the assembly plants with products from abroad.
• While global labor productivity is lower in Mexico than in Canada due to the level of technology involved, taking stock of invested capital, Mexican labor is as productive as Canadian.
• In certain cases, the high level of productivity in the Mexican workforce is attributed to a more flexible workforce than that of Canada.
• NAFTA has been important in simplifying investment processes, but it has not been a determining factor in increasing investment.
• The free trade agreement with the European Economic Community (EEC), which entered into force as of July 1, 2000, will have a significant impact on investments in the automotive sector in the long term.
• Mexico has a competitive disadvantage in the production of certain inputs, particularly steel plates, plastic resins and, in general, parts that require great technology.
• Within Mexico, further industrial expansion at potential sites is hampered by a lack of water supply and an inadequate infrastructure regarding transportation facilities and systems.
• In the case of the terminal industry, investments are expected to grow in the long term.
• In the case of the auto parts industry, investments are directly related to investment decisions in the terminal industry, given the high rate of parts that are imported into the country and the preference of assembly companies for using locally manufactured parts, in In general, it is thought that investments in this area will grow considerably.
• In the case of the terminal industry, it is estimated that investments will grow considerably in the long term, while in the short term the excess of current installed capacity largely determines investments in new production centers.
Phase Six: Modern Approach to Strengthening Competitiveness and Development of the Domestic Market
In December 2003, the administration of President Fox published the “Decree to support the competitiveness of the terminal automotive industry and promote the development of the domestic automobile market”; in which the federal government is aware of the opening and entry into force of the applicable deregulations in this industry contracted by Mexico in the international context – which include those contained in the free trade agreement with the EEC, in addition to those already discussed within NAFTA— recognizes the need to create new mechanisms that promote increased competitiveness in the automotive sector, seeking, among other things, the strengthening of the domestic market.
This decree contemplates:
• Continue stimulating the arrival of investments for the construction and / or expansion of production facilities in Mexico.
• Decrease in import costs through tariff reduction.
• Authorization for the registration of new production companies in the terminal industry in the national territory (as long as their investment in fixed assets is at least 100 million dollars) and they contemplate the manufacture of at least 50 thousand vehicles per year, with a deadline for the compliance of three years from the start of operations.
• Benefits to the importation of certain vehicles with a zero rate in tariffs, reaching volumes of up to the equivalent of 10% of the production of the immediately preceding year.
• Authorization for companies to import larger quantities of vehicles, as long as they present concrete commitments to increase investment in order to expand their production infrastructure in Mexico, continue with training and development programs, develop local suppliers and transfer their technology to first and second tier providers.
The response to this industrial policy for the sector has not been slow to take shape mainly in the terminal industry, which is proven with the start-up of the new Toyota plant in the Northwest of the country, Nissan’s investments in the Aguascalientes plant , Volkswagen at the Puebla plant and expansion and investment announcements from General Motors (including the construction of a test track in the State of Michoacán), Daimler Chrysler and Ford at the plants located in northern Mexico.
In July 2004, the second CIIAM was held, under the slogan of “Competitiveness” as opposed to “The commercial opening of 2004” of the first congress in 2003. The conclusions of this second congress coincide in the need to strengthen the market internally, increasing participation in the world market and increasing productivity as a competitive means.
2. Analysis of the development of the sector
As previously noted in the review of the different phases that have characterized the development of the automotive industry in Mexico, and despite the fact that since 1925 cars were already manufactured in the country, it is from 1962 with the appearance of the first automotive decree that starts on firmer bases the automotive development in our country. However, and despite the fact that Mexico has more than four decades of experience in this sector, its industrialization has not reached the levels of other countries, such as Korea, which started its automotive industry eleven years after Mexico and by the end of the In the eighties it produced twice as many vehicles as Mexico. According to a study conducted at the Institute for Economic Development of Japan on the limited Mexican automotive development compared to Korean development,
1) Automotive decrees
The first automotive decree was oriented exclusively to the production of vehicles for the domestic market and did not set a limit of assembly plants in the terminal industry, which meant that by 1965, the year in which the manufacture of auto parts was released, they were only produced between the seven existing companies 96,781 vehicles that due to their variety made it impossible to use the economy of scale. While Korea with its first automotive decree sought economies of scale by directing its production to both the domestic and export markets, setting levels of domestic content in the manufacture of its vehicles of 90 and 70% for the domestic and export markets. respectively. In addition to the fact that only four assembly companies (all of Korean origin) and 250 auto parts manufacturers were allowed to establish,
With the second and third automotive decree of 1972 and 1977, respectively, an attempt was made to correct this error by opening the market to exports; However, the oil crisis of the early 1970s forced a contraction in US demand for vehicles (the main export destination) and export expectations collapsed, making the second decree fail; while the third suffered a setback with the oil boom in Mexico that once again attracted attention to the domestic market (due to the supposed purchasing power that it was expected to achieve), disinterested in exports.
2) Industrial organization
The growth of the Mexican automotive industry occurred without a pre-established order of development; that is to say, it was not known to stratify in a correct way each one of the elements that intervene in the productive chain of the automotive industry. Allowing that manufacturers of common auto parts for all assemblers appeared everywhere, which in most cases lack specialization given the diversity of products they maintain on the market and which gives rise to low productivity, motivated among other things by the so complicated exchange relations between suppliers and assemblers.
To the above we can add that when Mexico decided to move towards commercial opening and globalization at the end of the eighties, the infrastructure of this industry did not allow it to adapt to the international requirements that in terms of quality, productivity and cost were lived and continue to be in force. in the leading markets for automotive production and sales. Although it is true that the terminal industry appears to function satisfactorily in the new world model, and although the behavior of production has been upward since the 1990s, it does not maintain the same level of growth as other emerging nations, so in 2004 was displaced to eleventh position in terms of leading vehicle producing countries.
This problem is experienced in a more intense way in the auto parts industry, where every day the companies installed in Mexico lose their market due to the incursion in the manufacture of component parts vehicles imported mainly from the countries of origin of the companies of the terminal industry with locally developed suppliers, whose quality and productivity levels allow them to export parts to Mexico at competitive prices.
3. Current structure
The automotive industry sector made up of both the terminal industry and the auto parts industry undoubtedly has a relevant role within the current national economy; According to the National Institute of Geography and Information Statistics (INEGI) as well as the Ministry of Economy (SE), 2005, some of the most representative indicators are the following:
• Generates 1.6% of all national employment (488,900 direct jobs)
• 18% of employment in the manufacturing sector
• It contributes around 2.5% of the national GDP
• 16% of the GDP of the manufacturing sector
• 19% of total exports (second only to oil exports)
• 21% of total manufacturing exports
• 11% of total imports
• Original equipment market estimated at $ 26 billion
• Amount of exports 32.5 billion dollars
• Amount of imports 23 billion dollars
These numbers are nothing more than the result of the structural change from which this industry has evolved and that today make it an export sector par excellence as it is one of the areas that most benefited from the signing of NAFTA and whose infrastructure places it as the eleventh power in the world. Regarding the immediate future, the most important aspect of the macroeconomy for the automotive sector is the expected growth in domestic demand in order to follow the model of the Canadian and US markets, whose automotive structure and vehicle fleet are considerable; For this reason, a relevant part of the global strategy for the coming years should be to encourage domestic consumption, contracted during the eighties and nineties mainly due to the concurrent economic crises.
An example of the relevance of this industry in the country is the fact that six of the top ten transnational companies are automotive: General Motors, Delphi, Volkswagen, Daimler Chrysler, Ford and Nissan; which represents the main focus of attraction of FDI in the region. Information from the SE (2004) shows that in the period between 1999 and 2004, FDI reached 9.39 billion dollars; equivalent to 21.2% of FDI from the manufacturing sector in the same period. The countries of origin of this investment in the automotive industry were: the United States, with 57.6%; Japan, with 18%; Canada, 8.9%; Germany, 6.6%; France, 4%; Spain, 3% and other countries, 1.9%. In 2004 alone, FDI in the automotive industry reached 2.018 billion dollars. In 2005, 1 were obtained,
Terminal industry capacity
As of the first quarter of 2006, nine vehicle assembly companies were installed in the national territory (see their geographical distribution in figure 2 ):
BMW. With a plant in Lerma, State of Mexico that began operations at the end of 1994 and in which armored vehicles are currently produced for the national and export markets, since the production of the BMW 3 Series was decided to substitute with imports from Germany .
Daimler Chrysler. A truck plant in Santiago Tianguistenco (formerly Mercedes Benz) in which the products of the Freigthliner line are manufactured, one in Toluca (inaugurated in 1968) in which the PT Cruiser is manufactured, which is exported to 60 countries and the truck plant and engines in Ramos Arizpe, Coahuila, from where they are exported to the United States and Canada. In the latter, according to information from Peter Rosenfeld, executive vice president of purchasing and supplies, an investment of 210 million dollars is planned aimed at the search for greater flexibility in the manufacturing processes for which the number of robots in the bodywork area will pass from 160 to 360, with which the plant will have the capacity to produce different types of vehicles on the same production line. 5
Ford. With plants in Cuautitlán, State of Mexico; Chihuahua, Chihuahua and Hermosillo, Sonora, which will benefit from the business plan that the company has for North America, which includes a total investment of 1,600 million dollars, with which the installed capacity will reach the 300,000 units per year, in addition to the construction of an industrial park of suppliers similar to the modular plants in Brazil. The company’s plans are to produce in this plant the Ford Fusion from 2006 and two other additional models for export to the United States, with which the company seeks to turn this production center into a strategic bastion within the competing dispute of this market with Japanese manufacturers. 6
After the announcement made by the executives of this company in 2005 regarding the closure of different plants in North America, the one located in Cuautitlán -which was one of those indicated as a candidate to close its operations- has put aside these rumors by being confirmed since the corporate in Dearborn, Michigan, that there is a new program for this plant, the Ford bronco, which is expected to start production in the second half of 2007.
General Motors. A foundry, engines and trucks complex in Toluca, State of Mexico (opened in 1963), in which Kodiak light trucks and Volvo heavy trucks are produced; an assembly plant in Silao, Guanajuato (inaugurated in 1994) where Suburban, Silverado, Tahoe and Yukon trucks are produced, mainly for the export market; and another industrial complex in which it produces engines, stamped parts and vehicles: Rendezvous and Chevy, in addition to the most recent incursion: the HHR, in Ramos Arizpe, Coahuila 7 . This plant is in preparation to begin the manufacture of a new utility vehicle from 2007.
Sling. In 1994, the construction of a car assembly plant began in El Salto, Jalisco, in which the Accord has been manufactured since 1995, whose volume at a very small start has increased significantly for the company. Since 2002 part of the Accord Sedan production has been exported to Brazil.
Nissan. With a plant in Cuernavaca, Morelos (inaugurated in 1966), which has a production capacity of 132,000 cars and 86,000 light trucks, both in two shifts, in which the vehicles are currently manufactured: Tsuru, Tsubame, their series of light trucks and the Renault Scénic. While in Aguascalientes it has one of the most modern plants in Latin America with an installed capacity of 202,500 cars in two shifts, currently manufacturing the Sentra, Platina and the Renault Clio; in addition to having an installed capacity that allows it to manufacture annually: 168,000 transaxles (1 shift), 648,000 engines (two shifts) and 11,280 tons of cast aluminum.
Volkswagen. With its traditional plant in the city of Puebla, in which around 10,000 workers work, which before the output of production of the Volkswagen Sedan (before its low sales: 36,500 units in 1999, 41,200 in 2000, 38,800 in 2001, 24,400 in 2002 and only 14,500 in 2003) is dedicated from this year exclusively to the manufacture of the Beetle, the Jetta version 5 and the Bora, mainly, destined for export to Europe and the United States; for which an investment of 2,000 million dollars has been allocated to be completed between 2003 and 2008. Information provided by Thomas Kerig 8, director of corporate relations and strategy at Volkswagen de México, points out that due to the devaluation of the US dollar against the euro, the parent company plans to add the fifth generation Golf model to the previously described models to be manufactured at the Puebla plant as part of a program that seeks to increase the competitiveness of the company worldwide.
Volkswagen handles the possibility of raising the production volume of the new Jetta to 400,000 units per year instead of the 250,000, which were originally contemplated. With what according to information from Otto Lindner, president of the company in Mexico, there is the possibility of infrastructure growth in this country as part of the international strategy of this company to produce at dollar costs vehicles that will be sold in dollars , given the strong devaluation of this currency against the euro and, therefore, the increase in production costs in Europe.
Information is being handled from Germany about the possibility of increasing the infrastructure in Puebla with a new plant or even locating it in the north of the country, although the United States and Brazil are struggling to attract this investment.
After negotiations that took more than a decade, the Japanese firm Toyota Motor Corp., the second largest vehicle manufacturer in the world, confirmed since the end of 2002 an investment of 140 million dollars to build a new assembly plant in Tijuana, Baja California Norte in the one that contemplates to initially manufacture 30,000 units per year of the Tacoma truck that has been exported to the United States since 2006. This plant began operations in September 2004 with the manufacture of automotive components for the United States plants.
Regarding the behavior of total production in Mexico, in 2000 a historical volume was reached with 1’889,486 vehicles produced; but later, as can be seen in figure 3 , it shows a downward behavior of 3.8% in 2001, 6% in 2002, 18.5% in 2003 and 20% in 2004; while 2005 shows some recovery, reaching a total volume of 1,606,460 units, of which 74% was destined for the export market (see figure 4 ).
The downward behavior of the first years of this decade is mainly attributed to the slowdown in the US economy, whose recovery in the numbers of the automotive industry began to show until 2005.
Although in the nineties the sector was dominated by companies such as Daimler Chrysler and Volkswagen, the entrance of the new century represented the leadership of General Motors, given its diversification strategies and the increase in exports to North America, in 2005 it produced the 27 % of national production, Nissan reached a level of 22%, Daimler Chrysler 21% and Volkswagen 19% (see figure 5 ).
According to data from the Mexican Automotive Sector Information System (SISAM), the assembly plants installed in Mexico operated at 60% of their capacity in 2004 with a growth of just 6% in 2005 and with growth expectations of 15% for 2006; while China is emerging as the car factory in Europe and the assemblers installed in Brazil have maintained a considerable growth rate during the last four years.
In the area of sales, these had a real considerable boom as of 1997 as the national economy showed a gradual improvement, reaching a total of 977,558 units sold in 2002, 66% more than in 1994, 14% above 2000 and 6% more than in 2001. As in production, it is General Motors that has dominated this area since the second part of the nineties, closely followed by Nissan, Volkswagen and more recently Ford. (see figure 6 ).
Finally, in 2004 it was possible to exceed one million units sold by reaching the figure of 1’096,777, which increased by 3% in 2005, the year in which 1,131,768 vehicles were sold in the country; manifesting the leadership of General Motors with 23% market share followed by Nissan with 21% (see figure 7 ).
The unfavorable point is that vehicle imports have grown notably, going from 11.5% of what was sold in 1994 to 37.6% in 1999, 46.5% in 2000, 52.6% in 2001, 53.5% in 2002 and between 2003 and 2005 ; an average of 63% of the total vehicles sold in Mexico came from abroad (see figure 8 ).
Auto parts industry
According to information from the INA, 600 manufacturers of automotive components are installed in the national territory, of which 230 companies are large, 162 medium and 208 are small and / or micro. As a whole, they generate 89% of the direct employment in the automotive industry and 41% of the total employment generated by the automotive chain, which reaches 1,062,542 jobs; while they cover almost 9% of the exports of the manufacturing sector; in 2005, this industry reported sales of 23.5 billion dollars.
Of the total 450 are original equipment suppliers, and of these only 33% are companies considered as first level suppliers, that is, they have a direct relationship with companies in the terminal industry. The rest are made up of second and third level companies that do not have direct negotiations with the assemblers, but only supply components to first level suppliers. As far as specialization is concerned, the auto parts industry presents more development in the manufacture of components for engine, transmission and bodywork, the experience is very noticeable in the manufacture of rings, monoblocks, pistons, camshafts, carburettors, transmissions, axles, electrical harnesses, wheels, glass, stampings and plastic parts (see figure 9 ).
Although in the terminal industry, Mexico has proven to be an important competitor at the world level by virtue of the still competitive cost of labor and its easy disposition towards training as well as logistical issues. The auto parts sector does not present an equivalent competitive position, it requires investment with more accessible credits, greater training of the workforce and, above all, developing a better environment for business development, mainly because its Canadian competitors , Americans, Europeans and Asians hope to take advantage of the opening of the markets. In the course of the first three years of this century, of the total exports of auto parts, only 35% went directly, the rest was made via vehicle exports. 9
Among the auto parts that report positive numbers in the trade balance are: electrical systems, dashboards, windshields, windshield wipers, transmissions, engine assembly.
While the following auto parts show low competitiveness (negative trade balance): carpets and seats, stamped parts, engine components, tires, paints and chemicals
In his analysis of the auto parts industry, Álvarez (2002) found that some local companies remain as suppliers of the terminal industry only by importing and distributing components; A strategy without which they would not be able to face the current unequal negotiations, which year after year mean a reduction in sales prices.
The application of highly competitive production systems, characterized by Just in Time (JIT) production or by its application in Mexico of the system known as Just in Sequence,Where companies in the Terminal industry have moved, it forced the incorporation of experienced and reliable supplier networks with a primary role in the performance of each assembly plant. This new system places suppliers in industrial parks around the final assembly plants, which supply the parts in the same order in which they are going to be used to manufacture the various types of vehicles and even in some cases the suppliers are located within the same final assembly plants. They are a kind of “satellite” providers for whom the quality requirements are much higher than those that would be had with another type of supply; in them, the assemblers have greater control of the process,
This work system is notably observed in the Volkswagen plants in Puebla, Nissan in Aguascalientes and those of General Motors both in Silao, Guanajuato and in Ramos Arizpe, Coahuila; In the vast majority of cases, the suppliers are from the same origin as the companies in the terminal industry.
After reviewing the general context under which the Mexican automotive sector develops and is formed, some of the characteristics that define its current situation are concluded and that allow us to establish what the current prospects for change are if no strategic model that seeks to restructure is implemented its development margin due to the fact that this sector in a global way is one of those that has suffered the most from the world economic recession.
a) Terminal industry
– To a certain extent, the domestic market has been activated as a result of the financing that the assembly companies are offering for up to 36 months, as well as the reduction in sales prices connoted from the 2002 models.
– Mexican exports fell due to the decrease in demand from its main client: the United States; the current symptoms of recovery are still linked to the demand in this market.
– The largest investments in the terminal industry in Mexico are those of the big three North Americans, which have been suffering a drop in their sales in the United States due to the great acceptance that Japanese vehicles are having in that same market 10 .
– If only the US market is envisioned as an option that determines the growth of exports, it is important to remember that currently that country faces the largest trade deficit in its history; This has been helped by imports of durable consumer goods, including vehicles and auto parts. Although such a trade deficit situation could be sustainable for some years thanks to the rhythm and potential of the US economy, there is a risk that in the future there will be a contraction in demand and one of the markets that would suffer the most from this slowdown would be that of the automotive section.
– It is important to note that the North American market has shown a certain preference in recent years for European and Asian vehicles, manufactured both in the United States and imported from their countries of origin, so that the recovery of the economy of that country has not shown the same effect in Mexico.
b) Auto parts industry
– This sector has based its competitiveness at the international level on the fulfillment of the requirements set by the assembly companies through the certification of their production, distribution and shipping processes.
– A disadvantage of the sector is that despite the investments in recent years, these have been oriented towards production and have not reached the administration systems. This has resulted in a drop in productivity and has not allowed him to establish strategies that allow him to detect and take advantage of opportunities.
– After the total liberalization of auto parts within the NAFTA framework, a development is not expected for the first decade of this century of the organizations that compose it, but rather a contraction of the same.
– According to studies by the Center for Economic Studies of the Private Sector (CEESP) in 2004 it was estimated that 40% of the auto parts factories in our country will disappear or be absorbed by the end of 2006. Attributing the causes to the lack of credit, acceleration of imports, the entry of illegal products and especially the entry of China into the World Trade Organization (WTO). The same study concludes that only 20% of the auto parts manufacturers that account for 55% of the national production will be able to face the opening of the market competitively.
– Organizations are obliged to specialize in order to maintain their participation in the domestic market and expand their borders.
– New investments in the sector will be focused on production for the export market.
– Investments in this sector can be increased as the investments of the assembly companies also do so.
– UK Trade & Investment analysts foresee that given the high levels of investment that Asian and European suppliers have made in the United States, new investments from those destinations could reach Mexico.
With some initial ups and downs, the automotive industry installed in Mexico has overcome the stumbling block that the growth limitations of the domestic market and the uneven development of industrial infrastructure can represent for any sector; However, with regard to future behavior, it is necessary to point out that with the level of automation achieved by the automotive sector and the lowering of technology, low wage costs will not be enough to justify the expansion of operations in Mexico. The status achieved by the automotive industry necessarily forces it to rethink its current role in the Mexican economy and its link with new forms of industrial development.
In the ECLAC report of 2003, which was previously commented, the analytical framework used to monitor the performance of FDI is highlighted, which consists of an assessment not only based on monitoring the aggregate level of flows, but also on the their “quality”, that is, highlighting the role played by microeconomic fundamentals. In this regard, the corporate strategies that companies follow and that are decisive with respect to FDI flows destined for Latin America and the Caribbean are considered, highlighting the case of Mexico, where transnational companies direct FDI flows following a strategy of increase in efficiency with a view to penetrating and dominating other markets, mainly the United States.
In this context, the analysis carried out in the section on Investment and business strategies in the automotive industry is relevant, where the competitive situation of the automotive sector in Brazil and Mexico is evaluated, noting that transnational companies, in their search strategy to increase their efficiency , have established International Integrated Production Systems (SIPI) through FDI. Likewise, the implementation of NAFTA, as well as the public policies implemented to encourage the entry of foreign investment, allowed companies a greater dynamism in the sector, achieving the establishment of an export platform and thus channeling FDI flows with you look to satisfy the demanding North American market.
This section indicates that the main challenge for the Mexican automotive industry is the consolidation of an efficient network of suppliers, whose operations are transnational in nature with a view to facilitating the establishment of the main automotive companies in the region and thus achieving , a synergistic integration of the sector that results in advances in operational efficiency and international competitiveness.
Within the framework of the second CIIAM, the SE established three main lines of action in the medium term for this industry:
1) Promote competitiveness with greater production capacity, development of more second and third level suppliers and guarantee access to inputs in good condition
2) Strengthen the domestic market through the participation of all stakeholders
3) Adapt the regulatory framework of the automotive sector, updating and developing standards for new vehicles, in circulation and auto parts in order to have a market with better competitive conditions.
Aspects that require a solid strategic plan that supports the expected development.
3.2 Competitiveness of the automotive industry in Mexico
Despite the low growth of this industry and the great threats posed by the incursion of emerging countries into it, today Mexico bases its competitiveness on the following elements:
Geographical position. The United States is undoubtedly the world’s largest consumer of vehicles and related parts, which is why Mexico is a strategic center, both for manufacturing and distribution, for all those nations interested in accessing the US market. The country has important access ports in both the Pacific Ocean and the Atlantic Ocean.
Infrastructure. Vehicle assembly plants operate below their installed capacity, which, together with the restructuring plans announced by General Motors and Ford, which includes the closure of plants in the United States, makes them the first option to increase their volumes. production and continue supplying that market. While on the side of the companies of Japanese origin, the possibility of increasing their production levels is imminent due to the commercial success that their products are having both in the United States and Canada, as well as in Central and South America.
Industrial parks located mainly in the Bajío and northern Mexico play a relevant role in the search for competitive advantage, by virtue of the significant investments converted into production technology made during the 1990s and early this century. in addition to the rail and road infrastructure that communicates it both with the center and with the north of the country. The automotive plants located in the north of Mexico have been characterized by their intensive development of flexible systems, which are due to a strategy of competition and global supply, rather than an orientation towards the domestic market that the plants located in the center of the country (Vieyra Medrano, 1999).
Trade agreements. Mexico becomes attractive to foreign investments by virtue of the fact that the plants installed in the national territory comply with the rules of origin of the agreements with North America and Europe; In addition, it represents an advantage for exports by having trade agreements in other regions, mainly Central and South America, an element of great attraction during the recent signing of the Free Trade Agreement with Japan.
Technology transfer. For decades, the manufacturing plants installed in the national territory have proven the efficient use of the technologies used around the operations, where an adequate balance is maintained between state-of-the-art technology and adapted traditional production systems.
The production centers in Mexico have managed to match and even exceed the quality standards of the plants of origin, proof of this are the plants of Nissan in Aguascalientes, General Motors in Silao, Daimler-Chrysler in Ramos Arizpe and Ford in Hermosillo.
Skilled labor. The economic importance of this sector and the high dependence on technology in the countries of origin have fostered the development of a qualified workforce that goes far beyond the direct operators of the production lines. Mexico has sufficiently experienced personnel in planning, quality, production and design; many of them trained abroad by the same auto companies during the 1990s. A situation that, given the increased cost of these activities in the countries of origin, represents a competitive advantage of singular importance.
Proof of the validity of these five elements of competitiveness is the most recent announcement made by General Motors, which confirms the construction of a new plant in San Luís Potosí, in which 650 million dollars will be invested, with what the current government will reach the figure of 8 trillion dollars of FDI in the automotive industry 11 ; According to information coming directly from the company, this plant will begin to be built as of June 2006, and operations are expected to start from the second half of 2008. This plant will be in charge of the manufacture of a new compact vehicle whose design has its own origin in its Korean subsidiary Daewoo, destined both for the domestic market and for export to Latin America and even the United States and Canada.12
4. Strategic profile
The current world scenario in which the automotive industry is developing requires a strengthening and / or rethinking of the strategies to be followed, aimed at reaching levels of international competitiveness, for which the active involvement of all actors is imminent. Government and private organizations have to work together in order to put in place systems that are strategically aligned and lead the country to achieve this objective.
The strategic lines to be followed should be oriented in the following aspects:
Development of local suppliers
The organizations that to date manufacture automotive components in Mexico must establish second and third level supply chains through the establishment of long-term contracts, extending throughout the same quality systems that are used in the first level suppliers of the same way in which companies in the terminal industry have extended it to them as a means of quality assurance.
Effective quality systems
For more than two decades, productive organizations in Mexico, and mainly automotive ones, have been enrolled in the process of certifying their quality systems based on ISO 9000 standards, which has practically become a primary requirement of the automotive industry. . However, and despite the fact that the certification processes have been complied with, few organizations have managed to raise their quality levels, by virtue of the fact that these certifications have remained only on paper, by complying with the protocol framed within the standards. ISO 9000, but they have not been reflected in the products that leave the production lines in a significant way. The problem described is more noticeable in the auto parts industry than in the terminal industry,
The management of organizations must focus their efforts on implementing effective quality systems that can put into practice the statement that quality is the equivalent of productivity, directly relating the benefits of quality systems with increased profitability.
The export platform that to date maintains a direct dependence on the North American market, mainly in the terminal industry, must diversify its destinations. According to information from the AMIA, as of February 2006 this industry maintains an export pattern of 87% of its production to this region, while 9% is sent to Europe and only 4% is destined for Latin America and the Caribbean. The joint exports of General Motors, Ford and Daimler Chrysler represent 65% of this total.
Although it is true that free trade agreements with the EEC and Japan represent an advantage for companies of that origin to export to the United States, the presence of European and Asian brands in Latin America is very strong, so this market is a strategic option to increase exports.
The global production model to which several plants moved during the nineties represents a high dependence on the success of a vehicle, given the current market diversification conditions, dedicating plants exclusively to the production of a single model turns out not to be the Better option. Companies in the terminal industry must continue to establish flexible manufacturing systems that allow them to face changes in market requirements with the option of being able to manufacture different models of vehicles without distinction.
The situation is not the same in the auto parts industry, where what must be pursued is the specialization of manufacturers, who in most cases diversified their production so much that today they cannot compete internationally.
The new paradigm of flexible production requires among other things: flexibility of the workforce, decentralization of functions and processes outside the backbone of operations, promotion of outsourcing, continuous improvement, relationship of the company with its environment; in addition to the formation of networks between large, medium and small companies through the use of computer systems, close technological cooperation, training, investment and production planning (Álvarez, 2002).
Diversification in investments
Although it is true that investments in production centers generate considerable benefits for economic activity, which must continue, Mexico must take the next step by seeking capital flows for the installation of research, engineering and / or testing centers. The rising cost of labor, especially specialized in both Western Europe and the United States, is forcing large transnational companies to move their engineering support activities outside their countries of origin; for which the strengthening of the country’s educational systems is required.
Development of the local market with national production
The strengthening of the domestic market is essential for the growth of the automotive industry, the flexibility in the production systems of the plants in Mexico must be used in one way or another to be able to offer a variable product portfolio and at competitive prices, considerably substituting the importation of vehicles that has been behaving in an upward way since the last decade.
Each of the automotive decrees analyzed shaped the development of the Mexican automotive industry from different perspectives, that is, from an initial phase of integration to its current focus on international competitiveness.
The signing of NAFTA consolidated the export orientation of the terminal industry and placed Mexico in a strategic position for negotiations with Europe and Japan, but trade opening also resulted in a contraction of the auto parts industry to the point that only the A third of these are considered top-tier suppliers, especially by virtue of their low levels of productivity and quality that result in a loss of competitiveness, given the inclusion by terminal industry organizations of parts coming from their countries of origin, whose quality is recognized internationally (Brown, 1998 and Álvarez, 2002).The growth of auto parts supplier companies has been more noticeable in those whose production process requires a considerable number of manual operations acting in parallel to semi-automatic processes, so the next step should be to seek investments aimed at modernizing their systems of production, as it has been occurring in the terminal industry.
The role of auto parts suppliers within the restructuring processes of the different organizations of the terminal industry —which, in the face of the pressure that the global globalization of this sector is imminently leading them towards the implantation of flexible production systems— takes singular. importance by opening up a possibility of growth, as long as suppliers are prepared to work with systems that allow them to supply the components to the production lines in the same sequence in which they are required according to market needs. This new type of organization not only requires working at higher levels of productivity and quality —through the implementation of computer-aided design and manufacturing systems, process automation, supervision integrated into the process, statistical and total quality control (Brown, 1998) – if not it also implies the geographic relocation of suppliers to nearby places around the plants of the terminal industry or even within themselves; In addition, the involvement of the suppliers must take place from the initial stages of planning and design of the vehicles. In practice, it is observed that the vast majority of suppliers that have managed to adapt to this system are those that have established commercial alliances with foreign companies; The rethinking of the strategy to be followed by the auto parts industry must occur in two main aspects: on the one hand, it must consolidate its export capacity and strengthen its presence in the US market; and on the other,
2005 represented the first year of recovery of the total production of the terminal industry, since exports went down from 2001, this positive trend is due in part to the changes in strategies, especially of the North American assembly companies that Faced with the pressure represented by the growth in sales of Asian companies in the United States, they seek to reduce their production costs, so increasing imports from plants located in Canada and especially in Mexico becomes the first option. The current underutilized infrastructure coupled with the announcements of new investments in the country allows estimating that this favorable production trend will increase and within a maximum period of three years, total production must exceed 2 million units;
Although inconsistently, the behavior of vehicle sales in Mexico has shown some growth in the last decade, with the exception of the 2002-2003 period in which sales fell by close to 2%. The proliferation of financing plans and the varied offer of products for different economic levels of society has helped this phenomenon; however, it must be sought to align this favorable trend with the supply of national production and thereby be able to reduce the boom in imports, especially of Korean vehicles that are entering the country.
Definitely, the information analyzed allows us to affirm that the current structure of this industry continues to place Mexico in an acceptable competitive position on the international scene, but with a downward trend due to the growth of emerging nations. Faced with this situation, the implementation of actions such as those recommended in this article by all the actors involved in this industry, should greatly help to strengthen it, as long as it seeks to align the national strategic development of the entire automotive industry with the individual reconfiguration plans of North American and European companies, as well as those of sustained growth characteristic of Asian firms in order to take advantage of all the existing opportunities on the world scene.
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1 This work is part of the contextual framework in which the doctoral research entitled: “The incidence of quality and productivity in the competitiveness of organizations: The case of two automotive companies in Mexico” is developed, which will be presented as a thesis of doctorate in Administrative Sciences at the Higher School of Commerce and Administration of the National Polytechnic Institute.
2 Cited by JA Vieyra Medrano, 1999, p. 3.
3 This decree was modified in the years 1990, 1995 and 1998.
4 Industry Canada and The Ontario Ministry of Economic Development, 2001.
5 El Norte de Monterrey, “Business”, October 1, 2004, p. 1.
6 In 2003, Toyota displaced Ford from second place in vehicle sales worldwide. Nissan reported earnings of $ 2,402 on each vehicle marketed in the United States, 30% more than Toyota; while Ford and Daimler Chrysler reported losses (Source: Expansión, September 29, 2004).
7 The Chevrolet Cavalier and Pontiac Aztek were manufactured at this plant until the end of 2004.
8 El Financiero, “Negocios”, Claudia Espinoza García, April 15, 2004, p. 9.
9 Information from the United States Department of Commerce indicates that although in 2005 Mexico continued to be the number one supplier of auto parts in that country, in the last five years it has lost ground to nations such as Germany, Japan, Korea and more recently China.
10 In February 2003, Ford, GM and Chrysler sales represented 61.6% of the market, while for the same month of 2004 that figure fell to 59% (Source: Banamex).
11 Secretary of Economy, 2006.
12 El Economista, March 27, 2006, p. 26.