Auto Parts: The ‘Extraordinary Moment’ the Mexican Industry Sees in Guatemala

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By LatAm Reports Staff Writers

Francisco González, executive director of the National Auto Parts Industry, Mexico, knows Guatemala well when operating the extinct investment agency ProMexico.In addition to referring to national companies that already work in partnership with Mexican manufacturers, their main advice is to define clear roadmaps that identify the existing capacities and infrastructure conditions necessary for the evolution of the auto parts sector.In Mexico, for example, artisanal development allowed a smooth transition to detailed products in the automotive industry. Similarly, in Dresden, Germany, the clockwork tradition facilitated the development of microchips when AMD was established there.Gonzalez reflects on how Guatemala should use the “triple propeller,” as a strategy for the academy, government and private sector to design the plan that could boost employment and foreign exchange in this sector, connected to North America. What would be the first steps and recommendations for Guatemala to develop a competitive auto parts sector?I think this is an extraordinary moment for Guatemala. We are advancing in technologies, and when we want to venture into an already established technology, it is necessary to start from scratch, as was the case with Mexico with internal combustion engines. At the moment, the advice for Guatemala would be to adopt one of the emerging technologies, whether batteries and electric or hybrid vehicles, or new technologies such as hydrogen.I think it is a time when government support should be sought, as well as that of the triple propeller, which includes the government, private initiative and academia, in some sector where it is not necessary to start from scratch or from an unfavourable position in some technologies. This is the right time for Guatemala to seize these new technological opportunities, allowing significant progress without having to follow a traditional development path. We are entering a new era, and it is time for Guatemala to take these new opportunities in emerging technologies.What specific opportunities do you see for Guatemala to integrate as a component supplier to Mexico?Indeed, there are already companies that are settling in Guatemala in sectors such as electronics, harnesses and textiles, which shows that this process is already under way. It is not that the first Guatemalan company begins to provide for Mexico, but that there are already several that are doing so.Therefore, the recommendation is to approach directly, as the certification chain is delicate. It’s not necessarily complicated, but it does require time, care and dedication. The automotive industry, in particular, has a number of very important rules that need to be followed. In addition to quality standards, there are a number of situations that must be met. It must be understood that these products and contracts are usually long-term.It is important to note that, unlike the fashion industry, where textiles and clothing change every season, in the automotive industry, textiles and interiors of cars require years of development. They are therefore different approaches that need to be clearly understood, as well as the necessary certifications. I know Guatemala and I know it can complement these efforts and, in fact, there are already several companies that are collaborating with Mexican suppliers today.What action in the area of governments urgently needs to accelerate for more alliances and turnover?They can be summarized in three main points:

  • Route maps. It is essential that Guatemala develop clear road maps that specifically indicate which areas should be developed and the steps to be taken. This includes identifying with whom to establish closer relationships, whether countries, companies, people or the government itself.It is essential to have well-defined public-private or public institutions. One example is ProMexico, which, although no longer in operation, served as a guide and source of funding. Similarly, Bancomex not only provides guidance, but also funding. These institutions are vital to supporting economic development.And there is a need for a clear consensus among the business sector that it is essential to work with universities, technical institutes and the government. In addition, the government must understand that only by working hand in hand with these sectors can significant progress be made.

  • What are the main factors that have allowed Mexico to position itself as a benchmark in the auto parts industry?The historical reference is extensive. We began with the automotive decree of the 1960s, which laid the foundation for the start of the automotive industry in Mexico. For the growth of the auto parts industry, it is important to have the manufacturing sector nearby, which led to the formation of companies and the need for first, second and third level suppliers (Tier 1, 2 and 3).In the following decades, the industry grew at a remarkable rate, diversifying the materials used beyond steel, glass, rubber and fabrics, thus consolidating the auto parts sector. In 2000, after the Free Trade Agreement with the United States in 1994, the automotive industry in North America was consolidated. Mexico, with nearly 50 years of experience, attracted experts and talent, developing all the pieces necessary for the automotive industry, from defense to defense (“bumper to bumper”).The treaty was of great help, as was the collaboration with the academy, since without the right talent the industry could not have been developed. In addition, Mexico’s strategic location, with access to Europe, North America and South America, facilitated this growth.

    This article was translated after appearing in Prensa Libre