The global auto industry is back, with big players like Mexico seeing resurgence in investment. That means an increased need for more sophisticated, technologically savvy workers. As more time passes, it also means spin-offs will be seen in other industries, with longer-term investments in intellectual capital setting the stage for a more diverse economy.
“If the fall was spectacular, the rebound has been sensational,” writes Luis Lozano Soto in the recent PwC report, Doing Business in Mexico: Automotive Industry, adding that for the Mexican Automotive Industry (MAI) the “recovery continues apace at Formula One speed.”
The automotive supply chain is now the Mexican economy’s main driver. Experts say one of the keys to its success is a sophisticated workforce.
”A skilled labor force, as well as computing, is very important since competition all around the world is increasing,” Alejandro Diaz Lopez, an Argentina-based Automotive & Transportation research analyst with international consultancy Frost & Sullivan, tells Global Delivery Report. “If you are not efficient and cost effective, you are out of the market.”
Full Speed Ahead for Investment
These observations reflect a slew of data suggesting that Mexico’s automotive sector is back in high gear. For example, Bloomberg has reported that the Center for Automotive Research expects near-term automaker investment in Mexico of $7.8 billion, with consultancy IHS Automotive seeing central Mexico as “the hottest growth area with respect to North American vehicle production this decade.”
The industry is an anchor for high-tech expertise and investment. The sector represents 509,000 formal jobs, with many of the employees highly trained and technologically adept. The feed-in from production chains supports other advanced industries, because computing skills are a must.
“Software programming, as well as design and development of technological solutions, are becoming increasingly important in the automotive industry,” says Diaz Lopez from Frost & Sullivan. “Car manufacturers are researching new technologies and solutions that imply software development and progressively more utilization of computers.”
Clearly, the MAI is about a lot more than a low-paid workforce pushing metal down a line.
“It attracts highly qualified technical and professional personnel,” writes Lozano Soto, noting that there is a “spillover of technological capabilities applicable to other similar or related industries, such as electronics and aerospace.”
The PwC report notes that Mexico has a long industrial tradition, with the MIA space now represented by “manufacturing plants operating at the highest quality and productivity levels in the world.” That means advanced robotics, software and processing capabilities – as well as the people to design and operate these systems.
Mexico has 13 large clusters of automotive suppliers and services representing significant year-over-year experience in sophisticated, world-class production environments. This has been helped along by Prodiat (Mexico’s “Program for the Development of High-Technology Industries”), which has assisted in skills development in core technology areas, helping to make the automotive sector the country’s principal generator of foreign currency. That’s big news that is bolstered by the PwC report.
“The importance of the MAI for the Mexican economy is beyond question,” writes Lozano Soto. “It accounts for 3.6 percent of the gross national product (GNP) and 20.3 percent of the GNP of the manufacturing industry.”
The industry is supported by over 20 design and technology centers focusing on value-added services. To stay relevant, they must remain on the cutting edge of technological innovation. One example is drive-by-wire technology, still in development, which replaces traditional mechanical components with electronic ones.
Some experts believe that in the future automobiles will be entirely controlled by electronic systems – with cars driven by push buttons and joysticks. To stay relevant in this market, players like Mexico must bring the right technological expertise to the table.
“In this sense, computing is becoming more and more important in the car designing and manufacturing process,” says Diaz Lopez. “And it is boosting the skilled labor force demand related to computing.”
Timothy Wilson is a Canadian journalist based in Guadalajara, Mexico. He covers business and technology, as well as cultural and political news. Aside from Global Delivery Report, he freelances for the Canadian Broadcasting Corporation and the Globe & Mail, among other outlets. His blog, “La politica es la politica” covers breaking stories from Mexico and Central America. Follow him on Twitter @TimothyEWilson.