The Automotive Industry in the Bajio
Four Mexican states: Guanajuato, Queretaro, Aguascalientes, and Jalisco make up an area known as the Bajio. The automotive industry in the Bajio is host 50 percent of the country’s productive capacity in this well-developed manufacturing sector.
The automotive industry in the Bajio, and in the nation, began to reach its apogee in 2010. As of 2015 Mexico is the 7th largest manufacturer of automobiles in the entire world. Only China, the United States, Japan, Germany, India and South Korea produce more passenger vehicles annually.
The rise of the automotive industry in the Bajio, and, by extension, that of the country of Mexico began in earnest in 1994. At that time, 1,000,000 motor vehicles were churned out of the country’s factories. By the year 2014, Mexican production of passenger vehicles continued to climb, and the nation’s domestic industry manufactured above 3 million automobiles. Industry experts foresee that by the year 2020 vehicle production rise above five million. It is the consensus that the automotive industry in the Bajio will be the source of a 50% of the total national production by that year.
With the development of the passenger vehicle industry in the Bajio, Tier one, two, and three suppliers have followed to supply Original Equipment Manufacturers, also known by the acronym OEMs. In terms of the total number of the firms that are suppliers to the automotive industry in the Bajio, the state of Queretaro leads the rest. Not only does that state have the largest number of auto suppliers within its boundaries in the Bajio, the state leads all the Mexican Republic. As regards the expansion that Queretaro has experienced in this sector it is noteworthy to consider that in the 1970s there were only six auto parts manufacturers with a local presence. Today Queretaro is home to seventy-eight auto parts manufacturers that employ a total of at least 50,000 workers.
In addition to the automotive industry in the Bajio, the entire nation has become a preferred investment site for the manufacturing of auto parts. Major Tier 1 suppliers such as Lear, Delphi, Johnson Controls, Pirelli and Continental among many others have a sizeable presence in Mexico. Beyond well-known companies, Mexico also is host to two thousand small and medium-sized supplier firms that service the automotive industry in the Bajio, as well as auto parts manufacturers in other regions of the nation.
One of the critical positive elements for the automotive industry in the Bajio is its geographical position. The Bajio is completely level, which makes it an excellent place at which to build production facilities. Also, its position in Central Mexico ensures that it is a place with a sophisticated transportation network that is made up of rail and highways. It is easy to ship product to the nation’s northern border, as well as to move manufactured automobiles to Mexico’s seaports.
The most production in the automotive industry in the Bajio occurs in the Guanajuato state. In recent times the entity has been the recipient of an estimated US $12.4 billion dollars of investment capital in the sector. At a recent Automotive Industry Summit, the government reported that the Guanajuato state’s automotive industry manufactured just shy of 800,000 vehicles, and that production is projected to rise to almost one and one-half million. When manufacturing activities reach this level 1 out of every 4 passenger vehicles will be made in Guanajuato.
Among the most critical auto parts produced by suppliers in the automotive industry in the Bajio are engines. At present, just shy of one million engines are produced today in the Bajio. This number is expected to exceed the million-unit mark in the next several years. The region is also home to the significant production of passenger vehicle transmissions, tires, castings, machined parts, plastic components, cable and electronic assemblies, fiberglass components and stamped metal parts among other inputs.
Perhaps the most significant edge that benefits the automobile industry in the Bajio is the presence of a trained population of workers. In 2017 the Multilateral Fund partnered with the Inter-American Development Bank (IDB) and the Community Foundation of the Bajio to pool resources to promote the education and training of the region’s workforce. This effort has the backing of 20 of 74 firms located in the City of Irapuato, Guanajuato’s Castro del Rio Industrial. It is the goal of the Inter-American Development Bank and its partners to encourage and secure the participation of all the residents of the industrial complex by 2020. Other industrial parks that will take part in the initiative soon are in Silao and the municipality of San Vicente and Cardenas. Other entities that have taken on a key role in workforce training for the automotive industry in the Bajio include the National College of Technical Professional Education, CONALEP, the Virtual University of the State of Guanajuato and the Higher Technological Institute of Irapuato.
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