Since the beginning of the 1980s Mexico has undergone an impressive process of economic openness, trade liberalization and macroeconomic stabilization thus averting extreme currency devaluation, two digits inflation and an acute fiscal deficit. However these changes reduced the dynamics of the domestic market while exports were unable to compensate for the decline. The economic growth has been unsatisfactory; it has failed to increase the standard of living of its population, create new jobs, and keep a solid currency. The 2009 economic crisis found a slow growing economy unable to overcome the situation and the Gross Domestic Product (GDP) decreased. Still the automotive industry in Mexico is linked to the economic growth of the United States, and this resulted in improved performance in the beginning of 2010.
In this work we study the effects of the world economic crisis on the Mexican automobile industry and focus on two analyses: First we describe the automotive industry evaluating its dimension and explaining the strategies developed to face the 2009 crisis and their results. In the second part we focus in a local case, analyzing the cluster located in Aguascalientes. The main focus of the study is on the perception that the auto-parts company managers have of the main problems they deal during their insertion into the automotive industry’s value chains.
The history of the Automotive Industry in Mexico is intrinsically linked to the government policy that promoted the economic and industrial development, and it can be clearly traced to the automotive decree of 1962. During the 25 years that followed, the government tried to keep and create a national automotive industry in which there were even Mexican automotive and OEM factories. With the coming to power of a new political class, new free trade agreements and decrees gave privileged terms to transnational companies some of this measures resulted in a foreign owned industry and the impossibility to shape an automotive industrial policy that was convenient to the country and their citizens.
Between 1994 an 2008 the development of the automotive industry, has been described both as a success and as a failure. First the industry achieved some level of competitiveness as an export platform, increasing its intra industry trade and integrating into the North American market. Under the NAFTA, the automotive industry increase production, received foreign direct investment, created employment, and also improved contribution to GDP and to regional development with the creation of automotive clusters. The automobile industry was regarded by some policy makers as the vertebral column of Mexico´s economy. However exports were not as strong contributors of economic growth as they thought: the productive chains and clusters did not substitute for imports, reliance on imported parts has meant that national suppliers could not be integrated into the value chain. The internal market was unattended; real wages in the industry decreased while productivity increased. University/ industry relationships are limited once there is low development of capacities in segments with more technological requirements and high added value.
The automobile sector represented in 2007, 3% of the GNP and 18.8% of the Manufacturers' GNP; 2008 kept 3.5 and 18.8% while 2009 decreased to 2.3 and 13.3% respectively. This is related with the achievement of the United States and Mexican economy which has a GNP of -7%
The vehicle manufacturing, which increased in 2007 to 2,146,959, 80% (i.e. 1,700,000) were for export, totaling $31.771 billion U.S. dollars. Export of OEM parts was around $15.291 billion U.S. dollars. The sum of these two is $47.062 billion U.S. dollars which is 25% higher than the crude oil sales in the same year (the oil revenue accounts for financing 35% of the national public expenses). During 2008 vehicle production grew by 4%, but not for the manufacturing and export of OEM parts, which fell by 11% representing $1.640 billion dollars. The last quarter of 2008 fell by 10% compared to the last quarter of the previous year. As a consequence all assembly and OEM plants initiated temporary layoffs and reduced the workforce.
Production in 2009 fell 28.3% or 596 thousand units compared to 2008, totaling 1,507,527 units, this implies that exports fell 26.8% during the year. Internal sales fell 26% compared to the previous year. The last quarter of the year has shown an important increase in production and sales of about 15%, leaving hopes for improvements in 2010 and the years that follow. Also, in 2009 there have been investments from VW and the three North American companies, which could be interpreted as a symptom that the worst of the crisis is left behind. The temporary layoffs increased and there were layoffs of about 15%.
The main export market has been the U.S. with over 70% of the total exports, followed by Germany with 15%. This fact clearly shows the potential growth of the so called "mexican auto industry" in the years that follow.