My car (a Fiat 500e) was built in Mexico. Chances are yours may have been as well.
Image courtesy: Norbert Aepli, Switzerland (User:Noebu)
In one month alone -- August 2015 -- automakers produced in Mexico nearly 300,000 vehicles, exporting 80% of them. This production level is 7.7% higher than in August 2014. In fact, 30% of Mexico's exports are automobile, according to the Mexican Automotive Industry Association (AMIA).
Auto growth drives electronics manufacturing in Mexico
For the electronics manufacturing services (EMS) sector in Mexico, these market statistics get even more attractive -- given that the share of autos' electronics is increasing faster than the overall value of auto content.
Specifically, Central Mexico -- more so than the USA-Mexico border region -- is attracting nearly every auto manufacturer and Tier-1 supplier you can name.
According to a Technology Forecasters Inc. (TFI) study completed this month (December 2015), two-thirds of EMS executives and managers interviewed reported that their companies are building and/or enlarging facilities in Central Mexico -- in large part to keep up with Tier-1 automotive suppliers' demand for high-reliability electronics manufacturing there.
Examples of Tier-1s using EMS suppliers in Central Mexico include Valeo (making engine controls), Magneti Marelli (LED lighting), Actia (lighting, entertainment, reverse-drive sensors), Johnson Controls (car-seat motion control, airbags), and Faurecia (motion control for window/door/sunroof; and sensors).
Flex vice president of corporate, social, and environmental responsibility Bruce Klafter told TFI, "Auto electronics will grow. Cars are getting 'smarter' with sensors, full connectivity, and self-driving. We'll be at the leading edge of all this."
The Tier-1 executives and managers whom TFI interviewed require that their EMS suppliers meet strict quality standards; maintain certifications in automotive and Lean Manufacturing standards; maintain inventory and Just-in-Time delivery; meet short lead times on new designs; manage bills of material (providing advance notice about end-of-life components); minimize shipping and logistics costs while ensuring adequate safety during transport and delivery; and meet environmental and safety requirements.
Whereas the report covers each of these industry requirements, in this blog post I focus on the environmental, health, and safety requirements, as well as environmental sustainability.
Car production & EHS rise in Mexico
Traditionally, the Environment, Health, and Safety (EHS) standards at Mexican companies have not been considered among the world's best. However, EHS practices are improving at Mexican automotive electronics (and other automotive parts) facilities for numerous reasons:
- World-class automotive-manufacturing companies audit the responsible EHS practices of their suppliers in Mexico (and elsewhere). One EMS was found to be applying conformal coating in the middle of the production floor with only a cardboard box for "protection" -- subjecting workers to fumes and overspray. Thanks to the USA company auditing the facility, the EMS built a conformal coating room to California's high EHS standards. TFI interviewed a Mexico-based manager at Tier-1 Supplier Denso, who said, "There is always the concern of safety; we place emphasis in maintaining our people's safety in work."
- Multinational EMS companies with facilities in Mexico are increasingly holding their Mexican facilities to the high standards of their headquarters locations. In September (2015), Plexus' EMS facility in Guadalajara, Mexico, achieved ISO 14001 certification. This certification "not only supports our customers across our market sectors, but also aligns with Plexus' values," said Jose Coelho, Plexus vice president of operations, Latin America. In 2013, Sanmina's Guadalajara operations received two of Mexico's prestigious corporate social responsibility awards, including the Mexican Center for Philanthropy Socially Responsible Business Distinction Award.