Mitchell Plastics in Querétaro — An Interesting Site Selection

Commentary by John Paul McDaris

Mitchell Plastics, a Canadian auto parts manufacturer, is building a new manufacturing facility in Querétaro and will begin operations there in March, 2014. Queretaro is one of the hottest cities in Mexico right now due to its outstanding combination of desirability (a beautiful, cosmopolitan, highly cultural place to live) and economic opportunity. Add to that the fact that Querétaro is ground zero for Mexico’s burgeoning aviation/aerospace manufacturing industry, and it’s easy to see why the location is desirable.

Mitchell Plastics’ new operation in Querétaro, on completion, will have 155,000 square feet of space for injection molding and painting. They expect to create 350 new full-time positions there as well. Given that Mitchell Plastics is an automotive supplier, does their choice of Querétaro completely make sense?

For me, it’s a bit of a head scratcher. There is no doubt that auto suppliers and OEMs in and around Querétaro are seeing rising labor costs due to increasing competition from the aviation sector, one which generally pays better and sucks away a lot of skilled labor. Further, the Mexican government has demonstrated a solid commitment to doing all it can to keep leading aviation manufacturers like Bombardier in Mexico. The aerospace university in Querétaro is free to attend (if you are smart and dedicated enough to get in), so companies benefit from a steady supply of talented engineers who would prefer to stay in the Querétaro area and live in a beautiful city while taking advantage of solid economic opportunity.

But if I am an auto industry supplier, how does that wage competition benefit me? Could I leverage the same benefits of the region (automotive cluster, supply of skilled labor, competitive labor costs) in Zacatecas or Guanajuato – at lower cost and with fewer hassles of retaining staff, especially indirects? Maybe there is more to this move than meets the eye. I am curious to find out.

Source: Reuters

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