Coahuila automotive industry faces serious challenges

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Upon reaching 40 years of existence, the automotive industry in Coahuila, which has long become the engine of the regional economy, provides direct and indirect employment to some 135 thousand people, which multiplied by three dependents per worker, has an impact on the lives of around 540 thousand individuals, that is, more than 50 percent of the total population of the state capital Saltillo metropolitan area; hence its strategic character.

The sector is currently experiencing a key moment, since worldwide migration to electric vehicles has fully entered, leaving behind those powered by fossil fuels. An indicator of this change, we have it when observing that the market value of Tesla, exceeds that of the set of the seven largest car producers in the world. The vehicle assembly companies in this region are General Motors, Fiat-Chrysler, and Daimler, located in Ramos Arizpe and Derramadero, Coahuila.

The decisions made by these corporations will have a direct influence on the auto parts sector, where Coahuila recently contributed 19.2 percent of the total value of national production. What strategies are contemplated for the manufacture of electric vehicles in our region? Let’s see the plans that are based on the information available.

General Motors, in alliance with Honda, it plans to produce the “Cruise Origin” model in Ramos Arizpe by 2023, using “Ultium” battery technology, and it is possible to redesign its plant in 2024 for the assembly of electric cars. This is gaining momentum after the Japanese company announced that as of April 1st, an engineer who has promoted the conversion to electric cars will take over as CEO. What will happen to the “Chevrolet Blazer” and “Equinox” models that are assembled here, and to the engines and the transmission plant, all adapted to gasoline?

Fiat-Chrysler (Stellantis). The corporation has plans to convert its successful RAM 150 pickup but does not have a date to do so or an assembly location. It could be Derramadero, but there is no certainty about it. This complex is the most important in the regional automotive industry, since in addition to the RAM 150, the Van “Promaster” is assembled there, and there is a stamping plant and an engine plant.

Including the Ramos Arizpe motor plant, the direct employment generated by this company amounts to about 11 thousand workers and employees; the highest number in the region for the automotive industry.

Daimler. The “Freightliner” truck has been assembled at its Derramadero plant since 2009, having received several awards for the quality of the product assembled in this place. The corporation announced that to face competition from Tesla, Volvo AB and Navistar, it will begin production of an electric version this year at its North Carolina plant. The information available for the Saltillo factory indicates that the reconversion will be carried out in the “near future,” without informing about a precise date.

In addition to the aforementioned migration, the regional automotive industry must face the conditions stipulated in the USMCA (T-MEC as it is known in Mexico), among which stand out that 40 percent of the added value of a light vehicle, and 45 percent of a heavy vehicle will have to be manufactured in areas with wages not less than $ 16 an hour.

Another important point has to do with the use of steel produced in the North American region in the assembly of vehicles, which must be a minimum of 70 percent, and what could be an opportunity for Altos Hornos de México S.A AHMSA.

Can our southeast region be integrated into this dynamic? What will Fiat-Chrysler and Daimler decide on assembly activities at Derramadero? How will these decisions affect the auto parts industry established in this part of Coahuila? Will the state government have the capacity to influence these strategies?

The economic future of the southeastern region of Coahuila depends on the answers to these questions, as there are already hot spots in the Central and Carboniferous regions and no one wants another to be lit here. We hope that the transition process from gasoline to electricity does not short circuit.

Source: Vanguardia

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