Companies from the automotive sector will be consolidated in 2019, adding large investments for the State

The Central-Bajio area of the country is generating the highest investment attraction, with an annual growth of 4.9 %, and even, the total direct investment that arrived in 2017, 18 % remained in the states of San Luis Potosi, Guanajuato, Queretaro and Aguascalientes.

In 2018, the states of Guanajuato, Aguascalientes, Chihuahua, Queretaro and Puebla represent a strong production in the automotive sector, as they have received and important foreign investment in the last years; however, the Bajio region has been benefited by these big investments.

Guanajuato has received an investment of 677.4 million dollars, and is estimated that for 2020, it will become the first place in cars production nationwide, this according to the information from the Ministry of Sustainable Economic Development (SDES, by its Spanish initials.)

This is how it has the fourth place in the country in job generation, since in the last six years 279 companies invested, making it the most dynamic center of the automotive industry in Latin America.

According to information from SDES, local companies participate in 20 % on the manufacturing of engine vehicles, in addition of producing 1 of every 5 cars in the country.

Regarding this, Alejandro Hernandez Fonseca, undersecretary of Sustainable Economic Development, said in interview for Mexico Industry, that 2018 closed with 34 new projects, which have jobs committed by 14,600 and the total investment represented little more than 1,017 million dollars, therefore, for 2019 there is a different scenario, as there are international aspects to be considered; however, he said that there are anchor companies that have triggered the investment in neighboring States, such as BMW in San Luis Potosi which increased from 125 thousand units per year to almost 170 thousand, what requires supply and there are some companies in Guanajuato that are facing that, such is the case of the German company Waldashaff installed in Guanajuato at mid-2017 in the Vynmsa Industrial Park in Leon, being the first supplier of the firm in being installed in Guanajuato, from where they manufacture crash management systems.

“This kind of investments are the ones strengthening the automotive cluster Guanajuato considered the most dynamic in North America, in addition of betting on the solidification of the auto-parts sector supply chain, through the specialized talent complemented by the infrastructure conditions and connectivity in the entity,” he referred.

He anticipated that there are two more German companies planning on settling in the state of Guanajuato to work as BMW suppliers in San Luis Potosi, although he did not discharged that even suppliers of Mercedes Benz which is in Aguascalientes; as well as VW and Audi settled in Puebla are maybe analyzing in settling in the entity.

“The new rules of regional content integration represent opportunities for more companies to come to the center of the country and we will be promoting Guanajuato as main destination,” he noted.

Likely, Hernandez Fonseca explained that the commercial war between China and the United States is making Chinese companies turn to Mexico, as otherwise it will be unsustainable to produce their components with 25 % tax imposed to different components, therefore Guanajuato will use this juncture to land investment projects.

Development for supplying SME’s

Alejandro Hernandez Fonseca explained that there is a punctual agenda in SME’s development and the strengthening of the supply chain in Guanajuato, as there will be special attention in companies that already have operations in Guanajuato and that report expansion processes of their current operations.

“We believe that companies as Toyota could benefit from the local supply chain as Nissan did at the moment with more than a dozen of SME’s suppliers from Leon, Silao and Irapuato; we hope this happens with Toyota,” he said.

Since 2014, year when Mazda began its production in Guanajuato, they have positioned as a leading company in the Industrial Corridor where they offer more than 5 thousand 200 jobs that make possible an annual production capability of 250 automotive units for sales in Mexico and export to several countries.

Likewise, he announced that there are other sectors where it is intended to encourage SME’s in Guanajuato, mainly in workforce training through specialized foreign institutions with the intention of investing in Guanajuato, in addition of promoting the subject of clean and renewable energies in other municipalities such as San Luis de la Paz and San Felipe, which will require supply in services that could be supplied through companies settled in this areas of the State.

Consolidation inertia in 2019

According to Alfredo Arzola, director of the Automotive Cluster Guanajuato, a very dynamic in investments 2018 closed with about 200 thousand direct jobs from the automotive chain and in job generation was of 21 thousand.  Regarding automotive production, he said that Guanajuato was close to reach the million, but a considerable increase is anticipated in 2019.

Concerning automotive investments, said that in 2019 is anticipated the consolidation of the assemblers and of Tier 1 settled in the State, although new investment projects have not being announced, expansions are anticipated from automotive companies by several million pesos.

“This year there are no conspicuous investments anticipated, but if we have a report from settled companies are thinking about increasing their investments and this also is favorable for the State, because they are also expanding their supply chain,” he added.

Regarding the supply network of Toyota, he said that it will begin at the end of this year with 10 new companies in Apaseo, in addition of the entire supply network where Japanese companies will be installed throughout Guanajuato, over more than 100 Tier 1 companies.

With regard to the number of members the Automotive Cluster Guanajuato has, he said that there are 110 companies and they are anticipating integrating 50 new more in 2019, in addition of waiting for the startup of 10 new companies in the State that will probable entering the cluster.

Exports Grow

With grows of up to two digits, the traditional sectors in Guanajuato recorded an increase in its exports value, regarding this, Luis Ernesto Rojas Avila, general director of the Foreign Trade Promotion Coordinator (COFOCE, by its Spanish initials) said that up to November exports in Guanajuato generated a value higher than 21 billion dollars; and Silao, Salamanca, Irapuato, Celaya and Leon are the municipalities with higher participation in exports activity.

He added that agrifood industries showed an increase of 4.5 %, footwear wit 6.3 %, while leather 11.6 %, among other sectors of traditional export vocation which settled a favorable balance.

Rojas Avila explained that it is important to know the profit margin of companies; this means, how much profit the businessmen obtain per each exported dollar.  He noted that it is an important factor to measure the economic development, beyond the economic growth.

Likewise, he recognized the importance of having companies prepared to diversify the potential exportable offer Guanajuato has to other destinations.

Finally, Rojas Avila explained that this year the work with MSME’s will be strengthened even more in order for them to be prepared, certified and with tools that allow them to consolidate in a better way within foreign trade.