Leo Torres, Ford of Mexico’s Purchasing Directorechnology rules the present By Graeme Stewart
Leo Torres, Ford Motor Company of Mexico’s Director of Purchasing and Supplier Technical Assistance, has warned the Mexico automotive industry that it is imperative to improve the quality of workmanship in the country if Mexico is to continue to compete in the global market.
He also told MEXICONOW’s “Mexico Auto Industry Summit” 700 executive participants that Mexican suppliers made a big mistake in the past by competing with low labor costs worldwide.
He said: "If you do that, there will always be someone in the world who can compete more cheaply than you. For example, I now bring in harnesses from Honduras, Nicaragua and the Philippines.”
“Ford uses about 315 suppliers in Mexico and ships parts to 44 Ford plants around the world. So the major suppliers are in Mexico but they are mainly arms of overseas international companies and they are importing vast quantities of parts from outside the country.”
He warned that the requisition and retention of human talent would be essential in the future for auto companies established in Mexico.
He said: “The cost of manufacturing, the open economy and Mexico’s location on the doorstep of the largest market in the world, the U.S. are the main reasons why Mexico has become more competitive than other countries in the sector.”
“So we have to concentrate not only on the quality of the labor force but also in engineering for producing and designing the products ourselves. The maquila model is not a bad thing but it cannot continue indefinitely. You must always plan to improve the quality of your labor force.”
On Ford’s performance in Mexico during 2014, Mr. Torres told MEXICONOW: “During 2014 we went through a slow and complicated first half of the year. The structural changes the country went through, joined to the expectations the Government had generated, impacted the industry in a way that made it evolve at a slow pace.”
“Nevertheless, the second half presented an improved landscape and we had months with good growth. The year’s final results depend on December but it seems to have been a good month, which leads us to believe the national industry will close 2014 with a 5% growth over the previous year.
“Additionally, during 2014 we introduced into the Mexican market outstanding and iconic vehicles that have been warmly welcomed by the consumer. We began the year by celebrating the 50th anniversary of the Mustang and welcoming its new generation, which has had great acceptance among our customers.”
“Next we launched a completely new vehicle, the Lincoln MKC. This SUV opens a new segment for our luxury brand and has had a considerable amount of sales. And last, but definitely not least, we launched the renovated F-150, which has impressed customers and competitors thanks to its 300 Kilograms weight loss, a new performance milestone among the pick-up market.”
On the challenges facing Ford, Mr. Torres said: “Nationally, the demand base is not in its best moment. The Mexican consumer’s economy has been affected by the new fiscal reform, especially those from the middle class. As a consequence, the market’s growth has been significantly affected.”
“The macroeconomic factors have affected the Mexican automotive industry’s behavior. The economy is not strong enough to make us believe the industry can grow significantly.”
“Globally, our strategy has prioritized the quality of our products, as well as vehicle fuel efficiency, over sales volume and market share. As a result, we have now reached a more sophisticated consumer that has a better purchasing power. We are currently focused on having a return of investments and sales that agree to our long-term expectations instead of short-term.”
Mr. Torres took a moment to reflect on the growth of the auto industry in the Bajio, the plateau in Central Mexico that includes Guanajuato and Queretaro States, and said he had no doubt Guanajuato could become the State with the biggest automotive production presence in Mexico.
He said: "The automotive industry in Mexico has become a very dynamic and profitable business due to the arrival of many assembly plants".
He predicted the arrival of a strong automotive cluster to Queretaro and Guanajuato within the next five years and added that once Mazda and Honda arrived in Guanajuato, it would become a major presence within the auto industry.