27 C
Saturday, March 11, 2023

Automakers in slow recovery, despite unemployment falling 60%

Must read

Declan Foster
Declan Foster
I'm Declan Foster, and I write about information technology and politics. I'm certified in cybersecurity and networks.
- Advertisement -

The Mexican automotive industry has not been able to “accelerate” more than two and a half years after the pandemic economic crisis forced it to “break down.”

The largest industry in the country -which generates about 3% of the Gross Domestic Product (GDP)- collapsed the first year of the pandemic (-) 20.2% below its production in 2019, mainly derived from the sanitary closures during the second quarter of the year, which was followed by a rapid recovery process that was stopped again by a new pandemic in the sector: the semiconductor crisis.

The shortage of microchips, mainly of Taiwanese origin, once again dropped production even (-) 2% below the pandemic year as it suffered a series of widespread technical stoppages in most of the country’s assemblers, blow after blow after blow of which the industry has yet to recover.

In September, 273 thousand 329 vehicles were produced, a figure 31.4% higher than last year but (-) 14.3% lower than that of September 2019 -before the pandemic- according to the National Institute of Statistics and Geography (Inegi), through the Administrative Registry of the Automotive Industry of Light Vehicles (RAIAVL).

And that, despite its drastic reduction, the technical stoppages in the country’s automotive industry continue to occur more than 22 months after the production of an assembly plant was stopped for the first time.

During the first quarter of this year, the main affected by the shortage was the German Volkswagen, closely followed by the Japanese competitor Nissan.

Unlike last year’s stoppages, on most occasions, these have been partial, this being the case of the staggered stoppages in the last two weeks of January. The stoppages of the German automaker have been concentrated in the first half of the year and have responded entirely to the lack of chips.

General Motors, the main producer in the country, had no stoppages during practically the entire first quarter but quickly caught up with its German rival by stopping production for 40 days – not counting five days of Easter – from March 26 to May 16, due to the line reconversion process at its plant in Ramos Arizpe, Coahuila, which had the second period of reconversion stoppages in July.

Unlike last year, when GM was the most affected, accumulating 166 days of unemployment, in the days elapsed this year until October, not even half of the days of the previous year have been counted, and two-thirds of them were those scheduled for an update of the Coahuila plant for the production of electric vehicles.

The Japanese Nissan has not been immune to stoppages either. Although 24 stoppages ( and 11 announced for this month ) are below GM and VW, the performance of one of the big brands that produce in the country has been the worst of all, being the only one that registers negative production figures in the accumulated January-September.

Another of the longest stoppages so far this year has been that of the Audi plant, located in the municipality of San José Chiapa, between June 22 and August 24, without considering the vacation week already scheduled by the company.

Like its German sister, the stoppages have also been due to the shortage of chips, mainly in July, although with everything, the plant has stopped many fewer days than in 2021.

The rest of the brands have practically not stopped throughout the year, except for Mazda and Toyota, compared to 2021, when 10 of 12 brands produced in the country stopped at least one day.

Recovery will not come until at least 2024

However, with only one quarter left to finish the year, the 183 stoppages registered in some Mexican plants are not even close to reaching the 442 stoppages registered in 2021. However, the recovery of the sector is still far away.

In the year, the accumulated production of light vehicles was 2 million 511 thousand 482 units, 10% above 2021, but still with a deficit of 419 thousand 844 units less, (-) 14.3%, than in 2019, before the pandemic.

Although there has been an improvement in the sector since there was no natural gas crisis this year and the prices of industrial metals -such as steel and aluminum- have returned to pre-pandemic levels, the semiconductors continue to be the main limitation for assemblers.

The strikes, which to date are not limited to Mexico but to the entire value chain of the TMEC, have led the US authorities to seek strategies to prevent a crisis of this size from happening again, including the start of historic investments to create an industrial structure for the production of semiconductors between Mexico and the United States.

Last month, Anthony Blinken, US Secretary of State, attended the Second Annual Meeting of the High-Level Economic Dialogue, where he met with President Andrés Manuel López Obrador and Foreign Minister Marcelo Ebrard to try to promote a project in that sense.

They have already approved an about $50 billion initiative and encourage us to participate. “After the meeting, which also included Gina Raimondo, the US Secretary of Commerce, the foreign minister made a statement.

The problem, said the president of the National Chamber of the Transformation Industry (Canacintra) of Torreón, Carlos González, is that this strategy will not solve the problem in the short term since the opening of the chip plants will take time.

The semiconductor crisis was initially thought to be resolved by the middle of this year and was forecast to end in 2023. Still, the most recent estimates of the Mexican Association of the Automotive Industry expect that the key industry of the Mexican automotive economy will manage to return to the previous course by 2024.

- Advertisement -

More articles


Comments are closed.

- Advertisement -
- Advertisement -

Latest article