| VIEW FROM THE TOP
AUTOMOTIVE CLUSTERS PROTECTING SUPPLIERS AMID COVID-19 MANUEL MONTOYA President of the Mexican Automotive Cluster Network
22
Q: What spurred the creation of an automotive
parts of the industry continued working but in most places
cluster network?
the industry ceased operations.
A: The Mexican Automotive Cluster Network has its precedent in the Automotive Cluster of Nuevo Leon (CLAUT), which was
In North America, sales in March plunged 40 percent. People
created in 2007 as a civil association following a model from
are not buying cars, which is also affecting the supply chain.
the Basque country. After consolidating our operations, we
The main issue is that plants have suspended operations.
helped other emerging clusters like Guanajuato, Queretaro,
Some states in the US have not yet granted OEMs permission
the State of Mexico, Puebla and San Luis Potosi. After that,
to operate and the Mexican government itself has not openly
presidents of the clusters started getting together informally
granted the industry permission to operate. We are working
from time to time, at the events organized by AMIA, for
in that regard but disruptions to supply chains between
example. About three years ago, we started formally sharing
Mexico and the US, which are greatly co-dependent, will
our experiences and information on what was happening
not allow the industry to operate properly. Today, it seems
in every state. We started implementing strategic planning
there is no coordinated effort, not only between the US and
in December 2018, which is when we realized we needed
Mexico but also among US states. Supply chains must be
an inclusive entity for all clusters in the country. Finally, on
synchronized, otherwise it will be impossible to operate.
July 28, we formally constituted the Mexican Automotive Cluster Network.Â
To restart formal operations, the industry needs government approval, which we expect might come soon. Some OEMs are
We agreed to create a management board to help us
expecting to resume operations on May 18 but we have yet
ground the ideas that come up in meetings, just like we do
to receive an official government announcement. Whether
in every cluster. Companies come together because there
it is on May 18 or not, the fact is that the industry needs
are common issues that need a solution, so the cluster tries
to restart operations. Mexico itself needs the automotive
to manage those ideas objectively.
industry. Out of the four pillars of the Mexican economy, only one, the automotive sector, is somehow still standing.
Q: How has COVID-19 disrupted automotive supply chains
Remittances are declining, while tourism and oil remain at a
in North America?
standstill. Which sector will able to reignite the economy? It
A: Since it started in China, there was concern about the
is the automotive industry. In fact, the Mexican government
effects of COVID-19 on the automotive supply chain. Plants
shares this view and has used the sector as a pilot to start
started to stop operations in China and some suppliers
implementing health measures at different plants so that
in North America might have faced some difficulties that
people can resume work safely. Other industries will follow
were eventually solved. When COVID-19 arrived to Italy,
but the automotive industry remains a model sector.
again some suppliers faced some issues but they were handled. The worst impact from COVID-19 began in North
Q: What strategies have been implemented to protect Tier
America when OEMs chose to stop operations at the
2 and Tier 3 companies in Mexico?
behest of several governments. In Mexico, the automotive
A: Local suppliers and smaller companies have the least
industry was not considered essential. In the US, some
resources. There have been companies, as I can tell from the Nuevo Leon Automotive Cluster’s experience, that have indeed taken care of their supplier base. Some have
The Mexican Automotive Cluster Network was established in
advanced their payments, while others have designed billing
July 2019 and includes the clusters of Chihuahua, Coahuila, the
strategies to maintain cash flow. Tier 2 companies have also
State of Mexico, Guanajuato, Laguna, Nuevo Leon, Queretaro, San
taken care of their own suppliers. Overcoming this situation
Luis Potosi, Puebla and Tlaxcala
is a joint effort.
