What Can Suppliers Glean from Johnson Controls’ Site Selection in Mexico?

Commentary by John Paul McDaris

As reported by outlets like IndustryWeek, US-based Johnson Controls recently began production at its new manufacturing plant in Querétaro, Mexico, where they will produce molded polyurethane foam for automotive seats. The company supplies automotive seating, overhead systems, door and instrument panels, and interior supplies and electronics that go into more than 50 million automobiles per year.

The first thing that struck me about this announcement is the size. The Johnson Controls plant in Querétaro is 100,000 square feet, currently employing some 150 people. Staff growth is virtually assured as the facility reaches full production capacity over the next five years.

The choice of Querétaro is more noteworthy though. As my colleague Doug Donahue pointed out in the same IndustryWeek piece, many OEMs are insisting that key suppliers like Johnson Controls set up operations in central Mexico, near to locations where the OEMs themselves have already set up shop.

In other words, the requirement to be close to OEMs is driving this site selection – not the desire to set up shop in Querétaro, where labor costs are notably higher than in places like Zacatecas or San Luis Potosi. Setting up in Querétaro puts Johnson Controls within 1 hour and 45 minutes of Honda, GM and Mazda by truck. But it also means they will have to pay more for labor in this competitive area.

Finally, does this site selection give us any more insight into potential future locations for BMW and Toyota? What does Johnson Controls already know that we aren’t yet privy to? We will continue to watch this space…

Source: IndustryWeek

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