Bulletin 402 - Friday, January 2, 2009
Takata in technical stoppage
Monclova, Mexico, -
Takata, a company which manufactures air bags for the automotive industry started a technical stoppage this weekend and up to January 5 with more than 800 workers who will not receive their salaries during such term.
The Company's officers would not provide official information on the technical stoppage, but it was confirmed by workers themselves; also, there have been no guards at the building since last Sunday, due to a drop in production.
Takata manufactures air bags for automobiles safety systems and is supplier for assemblers such as Toyota, Honda, Ford, Nissan, Chrysler and General Motors.
By suspending activities, Takata joins Nemak, manufacturer of engine mono-blocks for the automotive industry, which currently has special labor journeys reduced to just one six-hour shift.
Other companies that have scheduled technical stoppages for this month are Lear Corporation and Alleris, which will affect close to 300 workers, according to Mario Dante Galindo, Legal Counselor for the Mexican Workers Union CTM.
Source: El norte
Four new companies expected in Ramos Arizpe
Ramos Arizpe, Coahuila,-
At least four new investments are expected in Ramos Arizpe next year,some of them completely unrelated to automotive industry, because indicators are not very encouraging for said sector.
After acknowledging that there is out-of-the-record information about several layoffs in companies located here, City Mayor Ricardo Aguirre Gutierrez said that conditions are expected to improve for the production sector and avoid losing jobs.
"We have information about three to four companies that might arrive in 2009 and some that will start operating in January have already started recruitment, such as Lennox and Bic; these investments are not related to automotive industry, which guarantees there will be employment.
He said they do not know yet the number of people who lost their jobs due to the crisis in automobiles assemblers, which implemented technical stoppages that keep more than 30 thousand idle workers, receiving 50% of their salaries.
Kemet will close their 4 plants in Mexico
Due to a drop in PO's from their customers and bankruptcy by automobiles assemblers, Kemet decided to temporarily close their 4 plants in Mexico; two in Tamaulipas, (one of them in Victoria) and two in Monterrey.
Kemet's workers pointed-out that the global crisis has affected automobiles assemblers, which are among Kemet's main customers; this caused the temporary closing of Victoria plant for almost 20 days.
In an interview, they said that Delphi's closing in Victoria, one of the main industries there and customer of Kemet's, caused the temporary closing.
"Kemet has been affected by several issues this year, first the world crisis which has affected assemblers, and in addition the recession in the US market".
Considering the economic debacle in the world, Kemet decided to stop activities as of last Friday, December 19 to go back to work next January 5.
Kemet Victoria is therefore joining Nieng Hsin, which closed one of their plants here and laid off at least 800 workers and Delphi, which has been forced to reduce shifts to face the economic crisis in the world.
Source: El Financiero
Seven percent growth in Zacatecas in jobs generation
The State of Zacatecas is currently a pole that attracts foreign investment, according to the Foreign Investment Registry, Registro Nacional de Inversiones Extranjeras (RNIE) from the Ministry of the Economy.
Zacatecas had a 7% annual growth in jobs generation, above the average 1.7% in all of Mexico, which keeps the State in the first position in direct job rate growth, Nicolas Castañeda Tejeda, Minister of Economic Development, declared.
Mr. Castañeda said that this information is supported by data recently issued by the Mexican Social Security Institute (IMSS), showing that from January to October nine thousand 367 direct jobs were generated.
However, he acknowledged that even if the State is growing at historical rates in attracting investment and generating employment, efforts must be doubled by looking for larger competitiveness and investment, and therefore the State has a historic budget for next year to be used in benefit of its people.
He said that the State is currently a pole to attract foreign investment, for the Mexican Foreign Investment Registry, Registro Nacional de Inversiones Extranjeras (RNIE) from the Ministry of the Economy last September ranked Zacatecas as the second State in Mexico in investment made by international companies, amounting to US$1.464 million; this means an 84% year-to-year growth; the previous year Zacatecas had also ranked second with US$794.5 million.
Source: El Sol de Zacatecas
Committed investments stay for aerospace sector
ProMexico trusts that investments for at least US$300 million will be confirmed in 2009 in the aerospace sector, and between 10 and 15 projects will consolidate this industry in Mexico.
There have been no cancellations of committed capital in the sector, ProMexico informed in a press release, and pointed out that there are negotiations underway to increase the amount of Foreign Direct Investment.
Mario Juarez, Head of Institutional Relations Unit, informed that 2008 was a very rewarding year for companies in aerospace sector in Mexico, its number went from 45 to 190, created more than 20 thousand jobs and had sales for US$3.4 billion.
Investments in this sector were made in 2008; due to their importance he highlighted Bombardier's and Hawcker Beechcraft's projects to manufacture fuselage parts and plans to expand their activities to other branches.
In electric parts there were investments in Siemens, Aeroelectronica Internacional and Eaton Controls; in parts for turbines he talked about exports by companies such as Frisa, ITR, Chromalloy and Teleflex; while Hydra Technologies announced they will work on exporting unmanned airplanes.
Investment in automotive industry in Mexico could be stopped due to US rescue
- The crisis that has taken automotive industry to the verge of. collapse has spread to Mexico, where the financial aid package approved by Washington will have no effect whatsoever.
Detroit's large automobile factories, seduced by low labor costs, have transferred several assembly plants to Mexico. Mexican Automotive Industry now accounts for 3% of gross national production and 20% of exports. 13 factories from Ford, Chrysler and GM account for more than 50% of Mexican automotive production.
General Motors, which employs around 12 thousand 700 people in Mexico, laid off more than 600 when they suspended Suburban production in their Silao premises this year. Chrysler, which has around 5 thousand employees, laid off 800. Both companies announced the temporary closing of several facilities in Mexico in order to cut down costs and adjust inventories to poor demand.
The Mexican Automotive Association asked a US$3 billion loan from the Mexican Government in order to reactivate credit both for dealers and for consumers, in order to foster sales, which in November dropped 20%, more than exports.
Source: EL Diario
MEXICO'S WEEKLY HEADLINES
- -- Asticks crisis to the electrical sector
- -- Rounds up private investment in Guadalajara
- -- Industrial investment goes out of Jalisco
- -- Pemex will invest in Coahuila 600 million during 2009
- -- Canacintra: The industry will grow only 0.1 % in 2009
A MEXICAN'S VIEWPOINT: Automotive Industry Rescue
As we all know, the US Congress recently granted to the 3 main US assemblers (Chrysler, Ford and General Motors) a credit line for a little under US$20 billion to help them out of the crisis in the sector. Canadian authorities also granted a credit, though for a smaller amount, to US assemblers established in Canada. It would be interesting to analyze a very broad radiography of what the automotive sector represents to Mexico and which could be the alternatives States – and obviously the Federal Government – could implement to support this so important sector.
US Automotive Industry is experiencing its worst crisis ever. It is no secret that Mexico will be directly affected by said economic crisis. In Mexico, after petroleum, automotive industry is the second exporting product and generates 17.6% of Gross Domestic Product by manufacturing sector and 3.6% of total GDP. As a reference and additional comparison, Nuevo Leon's economy contributes with 7.4% of GDP, second only after the Federal District (Mexico City). This means that automotive sector's contribution equals around 50% of that of the second economy in Mexico. Per information provided by State of Nuevo Leon Automotive Cluster, around one million people are directly employed by this sector in Mexico. Only in our region, the State of Coahuila represents a little under 10% of auto parts companies in Mexico, the State of Nuevo Leon concentrates 24% of these companies, in spite of not having an automotive assembly plant, and the other state with the largest concentration of auto parts companies is the State of Mexico, with 25%. This means that one third of auto parts companies are in the States of Coahuila and Nuevo Leon, therefore creating a certain dependence, so due to the current crisis their economy will be unfortunately affected; especially Coahuila's, in Saltillo-Ramos Arizpe Region, where there is a strong and high dependence on said sector. This has also generated, and will continue generating in 2009, strong unemployment in the sector. Mexican Auto Motor System (Sistema Automotor Mexicano), recently announced that auto parts sector had laid off more than 15,600 workers up to the last quarter of 2008, due to the strong crisis the automotive sector is experiencing.
The crisis in the automotive industry will have a double impact on our country's economy. As we are aware, almost all of the automobiles produced in Mexico are exported, mainly to the US and Canada. Also, auto parts sector in Mexico is one of the main sources of supply for the American automotive sector, not only for the plants located in Mexico, but also for those in the USA and Canada. Only in the last 6 years, from 2001 to 2008, automobiles production in the United States dropped from 17 million to a little over 11 million vehicles, making auto parts demand fall. Even if the recent devaluation for a little over 30% brought larger impulse and competitiveness to exporting companies, low vehicles production also brought the regretful consequence of a decrease in credit available from banks.
On the other hand, in the United States light vehicles sales are in their lowest levels in recent times; such levels are similar to those in 1982. Also, according to JP Morgan, vehicles sales per person equal those in 1946, after World War II. In addition, spending to purchase vehicles is the lowest ever; it does not even reach 2.5% of current GDP in the USA.
Authorities of our trade partners in the United States and Canada have already taken steps, with limitations and conditions, to fight the crisis the automotive sector is facing. Mexico is far from being able to contribute with an amount of cash similar to that contributed by our north neighbors, neither in credit nor to a fund for this important sector. However, some states in Mexico, within their limitations, are implementing aid mechanisms that will help attenuate the consequences of this crisis. The objective we pursue as economic development promoters is preserving jobs, having new products produced in Mexico and the transference of some production lines to Mexico. In 2009 most of our efforts will be focused on preserving jobs and obviously fostering the arrival of more companies to Mexico. Economic limitations practically force us to reduce taxes, mainly Payroll Tax charged by states, and to contribute with money to pay some federal taxes, if we cannot reach an agreement for a reduction, resorting to state contributions to reduce taxes, such as IT or Social Security quotas paid by union members and/or technicians and blue collar workers, which are not necessarily taxes. Requests made by the sector are many and diverse, but it is time for the State, as a ruling institution, to intervene to offset market failures and low purchasing power to solve these problems. This is one example of Neo-liberalism extremes, being left to markets; the State must intervene to some extent and, together with the private sector, fight the problems being faced. It is time to team-up against the problems in the automotive sector.
By: Samuel Peña Guzman