Wednesday, July 29, 2020

When will the auto industry in Mexico reopen? This is what we know

There is confusion about when this sector will restart operations due to the different positions made by the Government of Mexico. Mexico sowed confusion over the time it will take for the auto industry to resume operations in the country, with two officials making separate announcements. Hugo López-Gatell, undersecretary of Health, said Wednesday night that companies in the automotive, construction and mining sectors can only resume operations after June 1.

That pronouncement came hours after the economy secretary, Graciela Márquez, announced that the three industries mentioned would be considered essential as of May 18 as part of a broader plan to reopen the economy. Some automakers have already begun to slowly restart production in the United States, although the expansion will likely require Mexico’s parts supply chain to get back up and running again. Companies like General Motors and Fiat Chrysler also have major vehicle factories south of the US border. López-Gatell noted that industries will be able to work at full capacity in June, as long as health and safety standards are implemented. He added that companies will be notified of the new requirements on Monday.

“It is very important that this situation be clarified so that suppliers and automakers can plan their production accordingly,” said Sig Huber, a consultant. by Conway Mackenzie. “If, in fact, suppliers cannot return until June 1, that will impact their operating capacity and that of original equipment manufacturers in the United States as well.” The confusion is the latest drawback between the two countries, after US companies complained last month that Mexico’s stricter definition of essential business had disrupted their supply chains. A spokesperson for the Mexican Association of the Automotive Industry (AMIA) commented that the group was in the process of obtaining clarification from the Government. GM, which expected to start producing vehicles in Mexico next week, is still evaluating the government directive, spokesman Dan Flores said. The company sticks to plans to restart most of its plants in the United States and Canada on May 18, he added.

Source: El Financiero


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