Mexico courting Japanese parts suppliers

auto industry spare parts production

TOKYO — Mexico is trying to lure Japanese autoparts makers. Although the country makes more cars than any other Latin American country, its automakers share a structural weakness — underdeveloped supporting industries.

Workers attend to a car inside Nissan Motor’s plant in the Mexican state of Aguascalientes. Mexico lacks the layers of reliable domestic suppliers needed to ensure the car industry’s steady, long-term expansion. Concerns about this shaky foundation have been apparent in recent visits to Japan by the governors of some Mexican states.

The governors tried to persuade Japanese suppliers of car parts and materials to expand into their states.

At a seminar in Yokohama, just south of Tokyo in Kanagawa Prefecture, held in late October, Carlos Lozano, the governor of Aguascalientes, urged the prefecture’s auto suppliers to start operations in his state, where Nissan Motor has a plant.

The governor said large manufacturers have been developing the country’s auto industry and that there are business opportunities in the central Mexican state for small and midsize parts and materials suppliers.

Mexico has leveraged free trade agreements and its lower labor costs to become the world’s seventh largest car producer.

Still, Lozano is not content with the amount components makers are investing in his state.

The fact is, his is a countrywide problem. Mexico has failed to develop sufficient supporting industries and has consequently become a massive importer of autoparts and materials.

Basically, it is little more than a final assembler of expensive imported components.

A survey by the Japan External Trade Organization found that many Japanese carmakers operating in Mexico are troubled by the difficulty of procuring made-in-Mexico parts.

To continue reading this article, please go to http://asia.nikkei.com/Politics-Economy/Economy/Mexico-courting-Japanese-parts-suppliers?page=1

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