| VIEW FROM THE TOP
USMCA RATIFICATION WILL LEAD TO INVESTMENT CERTAINTY, GROWTH ÓSCAR ALBIN Executive President of INA
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Q: How can Mexico maintain its position as the fifth-largest
Another aspect that limits growth is job security. The new
supplier of automotive components worldwide?
Federal Labor Law establishes significant changes in the
A: Mexico has several characteristics that make it attractive
employer-employee relationship and both sides need to
for the production of automotive components. One is its
learn how to best work together. This change is necessary
geographic proximity to the US and Canada. We are the
and mandatory, not only because of USMCA but also
only low-cost country in the North American region, so
because of Mexico’s commitment to the International
the 17 million vehicles produced in the NAFTA region have
Labor Organization.
Mexican auto parts. The strength of the US market has given us the opportunity to grow in past years. We are the most
Q: Now that USMCA is almost enforced, how are INA and
important supplier of auto parts to the US and Canada.
its members working to comply with new local content
Another advantage is the renegotiation of NAFTA, now
standards?
USMCA. Its successful renegotiation provided guarantees
A: These new standards will benefit auto parts producers
to investors and companies in Mexico to continue producing
across North America. Companies that use components
for the NAFTA market.
that are imported from outside the region will have to find a way to buy them or produce them locally. This will
The automotive and auto parts industry in Mexico is
surely lead to investments in all three countries. It will be
very dynamic. Domestic consumption is decreasing but
a gradual process and Mexico could use it to attract more
export activity is robust. Brazil is also helping exports
FDI. Still, we need political and investment security and a
grow. Since the Brazilian economy is expanding, we are
robust implementation of USMCA.
exporting more to the country. Moreover, in March 2019, Mexico and Brazil launched a free trade agreement, which
Q: How is INA supporting smaller suppliers to help them
boosted our commercial relationship. Although demand
comply with quality standards and speed up the process
from Brazil will not equal that in the US, it will help us
of complying with local content requirements?
boost our exports.
A: Rather than helping them to develop manufacturing and quality standards, we are helping smaller players to
Q: What main threats could hamper the growth of the
connect with Tier 1s through opportunity identification
Mexican auto parts industry?
programs. If they do not see a business opportunity,
A: A main risk is the availability of qualified labor, which
companies will hardly invest in new machinery and quality
includes blue-collar workers, technicians and engineers.
processes. We have developed a supplier development
Some parts of the country are practically saturated but
program, with SE’s support, through which we visit
other areas have no space to continue growing. Migration
around 150 suppliers, audit them and link them with
toward industrial areas is not ideal because it generates
potential clients.
social problems. The ideal solution would be for the industry to move toward cities with workforce availability. This is
Q: How on track is Mexico to reach fourth place among
something the government needs to promote through
the largest automotive component manufacturers in
federal policies.
the world? A: We are very well on track to reach Germany’s production volume. As a consequence of the commercial
The National Auto Parts Industry (INA) is the organization
war between the US and China, North America will have
that represents auto parts companies established in Mexico.
the opportunity to attract more Chinese investment
It promotes the growth and development of its member-
for auto parts production and we will surely see some
companies in the original equipment and aftermarket segments
Chinese companies arrive to Mexico.
