As automotive manufacturing migrates and expands to Mexico, Canadian suppliers are following suit and thriving, given that they heed several key precautions.
For M.I. Integration, based in Sherbrooke, Que., two major challenges surfaced: overcoming the initial risk, and adapting to the culture.
“For sure there is a risk at the beginning because you have to launch yourself without being sure that the revenue will be there,” said Vincent Houle, vice-president of strategy for M.I. Integration.
“You can have a good feeling, you can talk with the customers and tar-get some programs and some projects that you could be awarded, but at first this is the risk.”
M.I. Integration is a parts manufacturer operating mainly in the auto-motive sealing market. It has been in business for more than 25 years.
The company saw a number of its OEM and Tier 1 partners begin to invest in Mexico and decided to build its own facilities there.
“To have a proximity strategy with our customers and the OEMs in Mexico, we decided to start our induction molding facility in 2011,” said Houle.
“It just brings more volume to our total business.” Today, the company employs 100 people in Mexico, in addition to 160 in Sherbrooke.
According to data collected by the Government of Canada and provided by the Automotive Parts Manufacturers Association (APMA), 52 Canadian automotive companies have already expanded into Mexico, occupying 107 facilities, the majority being based in the states of Coahuila and Queretaro, which have become epicentres of vehicle and parts manufacturing in Mexico. In addition to one OEM (Bombardier), the remaining Canadian entities comprise 31 parts manufacturers, 24 tooling and machinery operations, and 29 others.
Broadly, there are two approaches that can be taken to expansion into Mexico: outsourcing to existing, locally based suppliers, or building and staffing a dedicated facility.