The motor industry is getting swept up in the tide of manufacturers heading to China, which is threatening to shift some of the Mexican jobs provided by US parts maker Delphi Corporation, a company official said, according to Dow Jones.
The news agency said that Delphi, the world’s biggest automotive parts maker, employs more than 70,000 in Mexico, making it the country’s largest private-sector employer, and spent $US1.64 billion in Mexico last year, more than half of which went toward wages and benefits.
But that investment could be in danger, as China is attracting more manufacturers, Dow Jones said.
“Our China operations are very competitive now, and quote against our own plants in North America,” Sean Kelly, executive director for Delphi in Mexico, told the news agency.
Dow Jones noted that Delphi employs 5,000 people in Asia, a small fraction of the company’s nearly 200,000 workers around the globe, but that figure is expected to grow as demand for cars rises in China, and car makers request more Chinese-made parts to satisfy the country’s manufacturing requirements.
“When we quote, they (car makers) say we need you to have x amount of product from China for us to grow here. That kind of thing is happening all the time,” Kelly told Dow Jones.
Meanwhile, the news agency added, Delphi says Mexico needs to work on its incentives for manufacturers – apart from low wages, China offers generous corporate tax breaks, cheaper energy and logistics support.
“In my view, we can be very competitive in Mexico with the wage levels. It’s the structure around them that has to be leaned out,” Kelly told Dow Jones.
Not all products heading to North America are best made in China, either, the news agency noted, adding that Kelly said that any part that might need an engineering change, for example, shouldn’t be stuck on the water for six weeks.
Dow Jones said that Delphi currently is making few parts in China and doesn’t want to abandon or damage its 25 year presence in Mexico, but recognises that China is a growing force, and has had operations there for 11 years.
“The less urgency there is to improve things (within the Mexican government), the more quotes go the other way,” Kelly told Dow Jones.