With about 40% of imported auto parts coming from south of the border, and parts made in the United States that are exported to Mexico for vehicle production there, the interdependency between the two countries cannot be overstated.
The challenge lies in the fact that the Detroit Three have reportedly targeted a restart for their U.S. assembly plants in mid-May. But Mexico is on lockdown, with nonessential businesses — which include auto parts — closed, and movement restrictions in place until May 30.
Martha Barcena, ambassador of Mexico to the U.S., traveled to Detroit in May 2019 to meet with elected officials and business leaders about trade. Detroit Free Press
This is the issue, I believe, the whole industry is struggling with,” said Joe Petrillo, director of business development and advanced engineering for Meridian Lightweight Technologies, a supplier of lightweight cast metal parts mostly for the auto industry.
Meridian is based in Plymouth with operations in Eaton Rapids, Canada, Mexico and Europe. Its Mexican operations remain idle, Petrillo said.
“Automotive, like many industries, is an interconnected global supply chain, in particular for the car manufacturers located in North America,” Petrillo said. “Portions of this chain through NAFTA (and continuing with USMCA), have welded key links of the chain together over the past several decades, such that they are no longer links on a chain but a rod that cannot be broken.”
Put simply, the U.S. auto industry cannot build cars if the government actions in one country, state or province that suppliers operate in are not in sync with the others.
Watch the gap
But the underlying buzz across the U.S. auto industry is that the Mexican government has indicated that if the U.S. and Canada are going to reopen, it will allow the automotive industry in Mexico to reopen. At least that’s what everyone believes will be the case, provided the coronavirus pandemic doesn’t worsen south of the border.
General Motors, Ford Motor Co. and Fiat Chrysler Automobiles idled their assembly plants stateside in March as the pandemic swept the nation. They have not declared a restart date yet, but they have reportedly eyed May 18 as a possibility.
On Wednesday, Toyota said after working with its supplier and logistics network, it would postpone its ramp-up of its North American manufacturing operations from the week of May 4 to the week of May 11.
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