Audi’s New Supplier Park in Mexico
Commentary by JP McDaris
Much has been written about Audi recently breaking ground on a new “Supplier’s Park” in Puebla that will be part of the German OEM’s $1.3 Billion manufacturing site, on which they broke ground just over a year ago.
The new facility will produce the Audi Q5, with about 35% of production intended for the North American market. The remaining 65% will be shipped to other, global fast-growing markets. No other location in the western hemisphere could offer the combination of 44 free trade agreements and easy access to a world-class port like Vera Cruz, making Mexico the ideal location for production of the luxury auto.
These dual factors, both which translate to high growth potential, and not low-cost labor are the reason Audi is in Mexico. It’s also noteworthy that about 2/3 of the Q5’s components will be produced in the NAFTA region, with this expected to grow to 90% eventually, once the supply chain is fully fleshed out.
Opportunities for Suppliers – If They Are in Mexico
To reach that 90% target, Audi is encouraging tier 1 and tier 2 suppliers to commit to a Mexico presence. For example, last year they invited 200 suppliers to attend a workshop, and they will be inviting seven of those companies as finalists to move into their new supplier’s park by the end of this year. If you’re a supplier reading this and hearing of it for the first time, chances are that you aren’t among the 200 suppliers initially considered, much less the final seven. The message again should be loud and clear – to have a chance at opportunity in Mexico, you must have a local presence.
The park, which is expected to cover some 24,000 meters in its first phase, will include an onsite training center. Estimates peg job creation in the area to be about 20,000 due to the Audi presence.
That’s good news to almost everyone except for suppliers that are already present in the area, who will certainly see wages go up due to Audi coming to town.