From June 13-16 2017, Temel Gaskets will once again exhibit at the Automechanika Mexico City INA PAACE in Mexico City, Mexico. We will be located at Booth # 2723. This is the second consecutive year in which Industria Nacional de Autopartes (INA) and Messe Frankfurt have partnered to host the automotive OEM and aftermarket event. We will be present to discuss new projects, and look forward to meeting with potential business partners.
The leading automakers have built a significant base with manufacturing plants in Mexico over the past five years. The automotive industry in Mexico is an engine of national economic growth. Currently, this activity represents 3.3% of its Gross Domestic Product (GDP) and contributes to 20% of the manufacturing industry. In addition, 10% of foreign direct investment (FDI) comes from the automotive industry which also accounts for almost 12% of total exports. Thanks to this, Mexico is ranked as the seventh largest producer of light vehicles worldwide and it is expected to be the fifth by 2020 (CNN Expansion).
But what makes Mexico a manufacturing hub for global automakers? Lower labor costs are just one of the many reasons. While the country’s lower wages have been the initial attraction, a major key advantage the country poses is that it has active trade agreements with 44 countries. These agreements give automakers access to half of the global car market tariff-free (Bloomberg). As Center for Automotive Research (CAR) analyst, Kristin Dziczek points out, “It’s pretty ironic that what makes Mexico successful is free trade”.
Because of free trade and proximity to the United States of America, Mexico has evolved in the last 30 years from an oil dependent to an industrialized export-oriented economy. This transformation has created a savvy technological workforce as well as clusters across states benefiting the auto industry and many others. It is important to mention that the vast majority of auto jobs in Mexico are devoted to making car parts, not building the autos themselves. Indeed, only 8% auto industry jobs in Mexico are devoted to assembling passenger cars and trucks (CNN Money). However, the manufacture of automobiles accounts for some 62.1% of the industry’s total production, with auto parts making up the remaining 37.9% (Promexico). Car manufacturing dominates total output with fewer workers because of the implementation of automated assembly lines. On the other hand, parts manufacturing is labor intensive and requires specialization in its process.
Auto parts manufacturing has been growing in the last decade and it employs around 730,000 workers in Mexico. Compared with the United States, it offered reductions of 12.3% in manufacturing costs of auto parts (Promexico). When it comes to quality control, Mexico suppliers meet the standards. In a previous blog post, Mexico’s Supply Chain and Production Capacity, Alba Pena mentioned, “When it comes to quality control, Mexico meet the standards”. This dynamism and maturity of the auto parts market creates a lot of opportunities for the aftermarket. According to a report published by ProMexico in 2016, more than 345 companies manufacture major and minor components. On the other side, 865 perform welding, forging and machining. OEMs have less activity in Mexico with only 13 of them focusing on light vehicle and 10 in heavy duty.
For all those who will join us in Mexico City, we recommend these tips to make your journey safer and easier.
If you are traveling to Mexico City by air, you will probably fly into the Mexico City-Benito Juarez International airport. At the end of the terminal, immediately before the exit, you will find booths for taxi companies. They operate with flat rates from the airport and the fee will be determined by distance of your destination. You will pay at the booth and receive a ticket to give to the driver. It will be useful to have your hotel address printed, so the driver can have a clear understanding of your destination.
During the show, taxis will be in front of the main complex at Centro Banamex. Right by the exit, there will be a desk. The person attending will help you figure out the fare for where you want to go and you’ll be provided with a ticket once again to pass to the driver. Aside from the airport and the show area, we strongly suggest taking taxis from your hotel and confirming the rate before you start the trip if you can. Your hotel staff will often be able to tell you the approximate fare so you can use that as reference. For your safety, we recommend taking taxis from a private site and not directly on the street. Also, Uber rideshare service already operates in Mexico City and you can use your mobile phone to access the app.
If you are visiting Mexico City from the USA or the UK it will not take long to realize that the distances are in kilometers. Also, traffic can be a problem for your appointments and commitments. Traffic is denser during the morning before 10 am and after 5. We suggest adding at the least 30 minutes to your estimates for travel time. Roundabouts work differently in Mexico City. If you are riding around one and notice that you might be going towards oncoming traffic, just remain calm and trust your driver to navigate the vehicle. Roundabout look like two rings that traffic flows around perfectly, as shown in the photo above.
In Mexico, it is necessary to establish physical contact to build a relationship of trust. It is difficult to establish a business relationship with strangers. We advise initiating the first contact via telephone or email. In the first personal meeting, businessmen will give a light handshake that lasts longer than in other countries. Once you have established a relationship of friendship, this greeting will be followed by a brief hug (Santander Trade). Many women tend to give a kiss on the cheek after shaking hands.
Do not be surprised if you receive a business card with the abbreviation “Lic.” or “Ing.” at the start. These abbreviations correspond to the education achieved on a field of study such as accounting or engineering. These titles are very important for business relations and they will follow three or more names. In Mexico, most people have one or two names, followed by their paternal and maternal surname respectively. When people introduce themselves orally, they usually use their first name and first last name
- Business Interactions
In Mexico, cordiality and informality blend together to create a favorable business climate. (Osorio). For this reason, it is important to talk briefly about family, current events in Mexico, and other issues before starting a business conversation. After the business conversation begins, you’ll notice very quickly that individuals you’ll do business in Mexico’s automotive and truck markets are experts in their topics. They are often family businesses with knowledge that has been passed on for generations.
- Drinking Bottled Water
In Mexico, tap water is not safe to drink. Although some facilities have filters, we recommend drinking bottled water to prevent any type of disease.
A New York Times article named Mexico City the best destination to visit in 2016, describes as “a metropolis that has it all”. If you have time to explore some areas of Mexico City and its surroundings, we recommend watching the video below to learn more about tourist sites, museums, restaurants, and entertainme
We wish you safe travels and best of luck in your business meetings. Please feel free to visit Temel Gaskets during INA PAACE Automechanika Mexico City 2017, located at booth # 2723
BBVA Research Mexico. Mexico Regional Sectorial. BBVA Research. September 2015. Web. 9 March 2016. https://www.bbvaresearch.com/wp-content/uploads/2015/09/150902_SRS_Mexico_2S15_Analisis.pdf
CNNExpansion. “Automotive, the crown jewel of Mexico 2015. CNNExpansion. 12 Dec. 2015. Web. March 9, 2016. <http://www.cnnexpansion.com/economia/2015/12/27/industria-automotriz-la-joya-de-la-corona-de-mexico-en-2015>
Export Enterprise SA. Mexico: Business Practice. Santander Trade. Jan. 2016. Web. March 9, 2016 <Https://es.santandertrade.com/establecerse-extranjero/mexico/practica-de-negocio>
INA PAACE Automechanika. “Welcome”. INA PAACE Automechanika. Web. 9 March 2016. <http://paace-automechanika-mexico.us.messefrankfurt.com/mexicocity/es/for_attendees/welcome.html>
New York Times. “52 Places to Go in 2016” .New York Times Travel. January 7, 2016. Web. March 9, 2016 <http://www.nytimes.com/interactive/2016/01/07/travel/places-to-visit.html>
Osorio, Mariana. “Label guide to doing business in Mexico.” America Economia. May 27, 2011. Web. 3 March 2016. http://mba.americaeconomia.com/articulos/reportajes/guia-de-etiqueta-para-hacer-negocios-en-mexico
Promexico. “The Mexican Automotive Industry: Current Situation, Challenges and Opportunities”. Ministry of Economy. October 2016. Web. May 30th, 2017 < http://www.promexico.mx/documentos/biblioteca/the-mexican-automotive-industry.pdf>
Welch, David and Merrill, Dave. “Why Trump Tariffs on Mexico Cars Probably Won’t Stop Job flight”. Bloomberg Research .January 4, 2017. Web. May 30, 2017 . < https://www.bloomberg.com/graphics/2017-trump-mexico-auto-jobs/>
photo credit: http://www.avisonyoung.com/sites/default/files/imagecache/office_main/IMG_1363.JPG