By Jose Zozaya
The automotive industry was one of the business sectors that was most impacted by the implementation of emergency measures enacted to face the global COVID-19 pandemic due to the suspension of activities for more than two months until the manufacture of transportation equipment was deemed an essential activity.
We also had to adjust to altered work schedules and the implementation of strict sanitary protocols to safeguard the health and safety of each and every individual whose jobs support the automotive value chain.
Shortly afterward, another significant challenge arose. As production activities resumed and production rates accelerated to meet the growing demand in Mexico’s main export destination, the United States, the Mexican automotive industry faced shortages of certain components necessary for the production of light vehicles and trucks. Those components included semiconductors, components that are necessary not only for vehicle control systems such as speedometers, proximity sensors, reversing cameras or seat belts. Additionally, those components are also essential in the manufacture of video game consoles, cell phones and computers for which demand increased unexpectedly due to the pandemic.
As an industry, we expected this shortage to be over by the third quarter of 2021 and that the reactivation in the production and export of light vehicles would increase by around 12 percent compared to 2020. However, due to the July 2021 reports, it is possible that at the end of the current year, figures similar to those of 2020 will be recorded largely due to the increase in cases of COVID-19 globally, which has made it difficult to resupply chips to the automotive industry, which in turn has forced different assembly companies to implement technical stoppages due to the inability to comply with their production schedules.
Even though the situation is not the most favorable, the truth is that every moment of crisis becomes an opportunity to strengthen our work. In this sense, today, more than ever, it is essential that we take advantage of the U.S.-Mexico-Canada Agreement (USMCA) as a structure to work with Canada and the United States, our strategic trading partners. Let us not forget that the new rules of origin promote greater regional integration that forces us to implement new strategies with a more regional vision.
Commercial instruments such as the USMCA create an opportunity for us as a region to strengthen our markets and reduce our dependence on essential components from other regions. For example, there are new projects that have been announced in the United States to face the shortage of semiconductors, initiatives in which the challenge will be to complement the value chains with a regional vision that allows avoiding future disruptions such as the one we have faced for the past six months.
As an industry, we are fully committed to sustainability in order to hand over a healthy environment to future generations. One priority is that of electromobility, a challenge of the present, in which most of the companies have publicly stated their commitment to join the Sustainable Development Goals of the 2030 Agenda by announcing their plans to cease manufacturing gas-powered vehicles between 2030 and 2040.
U.S. President Joe Biden has also signed an executive order that establishes that by 2030, 50 percent of the vehicles sold in the United States will be electric or zero emissions; for this reason, it will be essential for Mexico and Canada to advance and promote the political will for the preservation of the environment.
We are on course to build a region that can be strengthened in the face of complex scenarios; however, I have no doubt that the automotive industry will take the necessary steps to bring about a brighter future.
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Jose Zozaya is executive president of the Mexican Association of the Automotive Industry and chairman of the USMCOC Binational Board. We are on course to build a region that can be strengthened in the face of complex scenarios; however, I have no doubt that the automotive industry will take the necessary steps to bring about a brighter future.
