Mexican factory restart delays could scupper US automaker restarts

Following the news that the Mexican Government has pushed back the restart date for the Mexican auto sector to 1st June;

Calum MacRae, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“If enforced, this would have deep ramifications for vehicle assemblers in North America due to intertwined component trading that contributes to the final vehicle assembly.

“The two-week delay would rupture supply chains almost instantly just as the Detroit 3 plan to restart manufacture on Monday 18th May.

“However, it appears questionable as to whether Mexican parts manufacturers will comply with the government ruling.

“If it does come to pass that Mexico doesn’t restart until 1st June the US’s industry will be dealt a crippling blow. Around 40% of the parts required to assembly vehicles in the US are imported from Mexico.

“Mexico is used for a variety of auto parts but is especially dominant in labour-intensive components such as wiring harnesses and fabric parts such as seat covers.

“Switching supplies is not viable either. There’s not the capacity elsewhere to support. For example, in wiring harness production among the ~200 suppliers GlobalData tracks via its FactoryFinder database, there are 53 wiring harness plants in Mexico, just seven in the US and a single facility in Canada.

“This Mexican standoff illustrates once again how closely coupled supply chains are in the auto sector and the decoupling of any part of that chain has ramifications throughout.”

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