WINDSOR, Ont. — Canadian auto-parts suppliers are missing out by not following the trend to expand business in Mexico.
That’s the message Oscar Albin, executive president of the National Industry of Automotive Parts group (INA) in Mexico, and Rodrigo Contreras, investment and trade commissioner with ProMexico, brought to a conference of auto-parts executives here on June 15.
“Out of total imports (to Mexico), just six percent comes from Canada,” Contreras said. “There is a great opportunity to increase the participation of Canadian auto-parts makers within the Mexican market, whether you want to export from Canada or have a presence in Mexico.”
Mexico has become a larger player in global auto production in recent years as low labor costs and the country’s numerous free-trade agreements have made it attractive to automakers and suppliers. INA estimates that auto production will grow to 5.1 million vehicles in Mexico by 2022, up from 1.9 million in 2000.
As global automakers continue shifting production to Mexico, suppliers have often followed suit, Albin said.
But Canadian parts suppliers have lagged behind, accounting for only a small fraction of Mexican parts production, he said. About 1,300 suppliers have a Mexico presence.
Albin said he hopes to change that by highlighting the advantages of manufacturing in Mexico, chief among them trade and labor costs.
“It’s very expensive” to build parts in Canada or in the Midwestern United States, he said, adding “it doesn’t make any sense” to do so.
Canadian labor advocates say the country’s labor force is more highly trained than the Mexican work force and say Ontario’s proximity to the U.S. Great Lakes region make the country preferable to automakers, among other factors.
Albin acknowledged several challenges suppliers face in Mexico, including a lack of trained toolmakers and a shortage of Tier 2 and Tier 3 suppliers who produce the components that are used by Tier 1 suppliers to manufacture the parts they sell to OEMs.
To address those problems, he said the Mexico government is working to attract lower-tier suppliers and is in talks with schools in the country to begin training toolmakers.
“We are late,” he said. “We should have been doing this before, but we are starting.”