Mazda in Mexico – Lessons for Suppliers?
Commentary by John Paul McDaris
Mazda recently began production in their new plant in Mexico, located in Salamanca within the state of Guanajuato. Add the Japanese OEM to the long list of auto manufacturers and suppliers who see a presence in central Mexico as a strategic necessity.
What’s interesting, if you dig a bit deeper, is that Mazda sees Mexico as a hub for global production capacity – they aren’t just focusing on the US market. This underscores the benefits companies of all types are realizing with the move to Mexico manufacturing.
Because the stakes are high for Mazda, they are protecting their investment as much as possible. As a risk mitigant, they try to work with Japanese suppliers who are known entities. Thus they are providing incentive for Japanese suppliers to set up in Mexico as well, and more and more Japanese suppliers are doing just that. This makes it that much more difficult for North American suppliers who haven’t yet established operations in Mexico to compete.
Mazda is investing in training too. They sent 150 engineers and supervisors who will work in the new Guanajuato facility to Japan for training. The company feels they will be able to produce vehicles in Mexico at the same level of quality they do in Japan. Mazda sees the base level of training that the Mexican state provides for engineers and technicians as high, and they complement that with specific expertise and processes engineers will acquire in Japan.
What can suppliers learn from Mazda?
Large global OEMs like Mazda can afford to send 150 engineers to Mexico. They can also afford a Mexico strategy where they enter and set up on their own because they are big enough, can afford to make some mistakes and have something of a Mexico track record.
But most companies, certainly smaller tier suppliers, cannot. Most companies don’t have the economies of scale to set up operations in Mexico on their own and to assume the risks associated with import/export, payroll and benefits, taxation and compliance, just to name a few. For most smaller manufacturers, the better strategy is to turn to an expert like Entrada Group, who can handle that setup quickly (usually within 90 days) and can assume that risk.