New rules of origin will speed up automation, analysts say

New rules of origin will speed up automation, analysts say

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Changes to rules of origin in North America will require for automotive suppliers to automate certain processes and adjust their supply chain to raise salaries to US$16 per hour, according to a report from El Universal that collects the views of different experts.

The preliminary agreement between Mexico and the U.S. demands that 40% of the components of a vehicle must come from areas with wages of at least US$16 per hour. In Mexico, workers in the auto industry earn, on average, US$3.41 an hour in auto parts plants and US$7.34 an hour in assembly plants.

Argenis Bauza, adviser to the Supply Chain and Strategic Resources of KPMG, believes that, in order to raise salaries, suppliers will have to automate low added value tasks such as reconciling invoices, accounts receivable and administrative tasks, so that the best paid workers are those dedicated to knowledge, strategies or design. “Differentiated things, not repetitive processes,” he said.

Bauza added that the possibility of lowering taxes such as VAT for auto parts manufacturers is also being considered in order to compensate for the increase in salaries.

Meanwhile, Manuel Guevara, general manager of a Brose plant in Queretaro, said the new rule of origin is an opportunity to demonstrate that the country has talent and automation must be done to comply with the new NAFTA, but also for concerns of speed or safety.



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