An Automotive Cluster in Zacatecas, Mexico?

Commentary by Doug Donahue

As reported in Cluster Industrial in Spanish, Zacatecas will soon have a chapter of the Nuevo Leon Automotive Cluster, due to the quality and number of supplier companies in the State, according to Manuel Fernando Sescosse Varela, Chairman of the State Council for Economic Development.

Sescosse mentioned that there are currently around 15 supplier companies in Zacatecas, with more anticipated to arrive soon, due to BMW’s forthcoming facility in San Luis Potosi within a short drive and Nissan in Aguascalientes.

This development caused us to take stock and consider the strengths of Zacatecas, a central state in Mexico where Entrada’s industrial park has been situated for more than 13 years. As we recently blogged, Zacatecas may be the ideal location for small- and mid-size suppliers who are looking to service BMW. Our Fresnillo plant is less than 250km from where BMW’s San Luis Potosi plant will come to life in 2019. That is certainly a serviceable distance for Tier Two companies that want to enter BMW’s ecosystem. But it’s also just far enough away for such companies to maintain a low profile and protect their cost structure.

It’s important to note that wages in central Mexico (El Bajio) are lower than prevailing wages found nearer to the US border. That means companies with well run operations in Bajio can keep their overall operating costs as much as 40% lower than wages paid at border locations.

At the same time, there is no trade off as far as the big picture goes. All the strengths of Mexican manufacturing still apply in the Bajio: proximity to US and Canadian markets; access to strong intermodal transport (rail, road and port) networks; youthful educated workforce; and, perhaps best of all, an open trade policy at the national level that makes Mexico a manufacturing hub for countries in North America, South America, Europe and even Asia. That’s why an automotive cluster in the state of Zacatecas makes sense and why the government should affect policy to enable companies from overseas to enter Mexico.

Source: Cluster Industrial

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