DONNA, RGV – A $1 billion Kia Motors auto assembly plant being built on the outskirts of Monterrey is already having a positive impact on Reynosa.
Rafael Ángel Ortiz Salazar, an undersecretary in the Tamaulipas department of economic development and tourism, says two Kia suppliers from South Korea have already moved to Reynosa and another four could possibly join them.
“We are working to attract Kia suppliers to Reynosa. We have set up two in Reynosa and we are working to set up four more in the near term,” Ortiz Salazar told the Rio Grande Guardian.
“We have been to Korea four times in the last two years, twice with the city of Reynosa, once with Matamoros and once with Nuevo Laredo. We believe our border cities will benefit tremendously from the Kia plant.”
Ortiz Salazar made his remarks after speaking at a business development forum hosted by the Donna-Rio Bravo International Alliance. The event was held at Victoria Palms in Donna.
The Kia plant in Monterrey is expected to specialize in production of small cars, with 80 percent of production aimed at the export market, including the United States. Kia’s vice president for global strategy, Hyung-Kun Lee, has said the new plant will have state-of-the-art technology and capacity to make 300,000 vehicles a year. It is slated to open next year.
Asked why Reynosa would be attractive to a Kia supplier, Ortiz Salazar said: “Experience. Reynosa has over 45 years of experience in manufacturing. Second, location. Being on the border, the suppliers will be closer to the Kia plant in Alabama. Third, we have the infrastructure. Fourth, we have the human resources and offer the attraction to the executives of these firms of living on either side of border.”
Ortiz Salazar said one Kia supplier from Korea was in Reynosa last week, looking at potential sites. “We are in the moment. The cities the suppliers to Kia are looking at include Monterrey, Saltillo, Reynosa, and Laredo. We are in the mix.”
Tamaulipas’ population is 3.5 million, of which about one million live in Reynosa. Ortiz said having Kia supply firms in Tamaulipas can only boost an already thriving manufacturing base. “We are in the middle of the most important time for job growth in Tamaulipas’ history. Right now we have about 215,000 jobs in manufacturing. Before the big recession, in 2007-2008, we had 190,000. Expansions, new companies, everything is happening.”
Mexico is the world’s eighth largest auto producer, and fourth largest auto exporter. Around the same time Kia announced it was building a plant near Monterrey, BMW said it would be installing a $1 billion plant in San Luis Potosi. The plant will have the capacity to produce 150,000 vehicles a year. Around the same time, Renault and Mercedes-Benz announced plans to co-produce up to 300,000 compact cars a year in Aguascalientes. The project involves a $1.35 billion investment.
McAllen Economic Development Corporation President Keith Patridge said it would not surprise him to see a trend of auto manufacturers looking to build plants in northern Mexico in the future.
“The automotive sector holds a lot of promise for all of Mexico but I particularly see an opportunity for this area. About 30 to 35 percent of our maquilas are automotive-related. In other words, they supply the automotive industry. Having auto manufacturing suppliers here can enhance and grow the companies already here,” Patridge said. “Why are the companies moving north? Labor availability and more specifically, skill-set availability.”
Patridge said when people think of an auto assembly line they might envision hundreds of people sitting on a production line with air wrenches in their hands, putting pieces of vehicle together. “That is not the case anymore. It is all robotics and automation. All they do is guide a machine or an automated robot into place and it puts the part of the car together. Everything is perfect for consistency. You have to someone who is smart, who knows how to run and program and maintain computerized equipment.”
Patridge said Mexico has a great pool of direct labor but not so many technicians. “All of a sudden you see all these car plants coming into the same area over a two to two and half year period. What we are being told by people in the industry is, on average every automotive assembly plant will have 4,000 to 5,000 employees that are directly related to the plant. But when you start looking at the businesses they support, the supplier companies, box suppliers, packaging suppliers, paint suppliers, they will basically chew up about 15,000 jobs for each automotive assembly plant.
“Right now there are about ten automotive plants either under construction or have just opened in Mexico. Ten times 15,000 is 150,000 jobs, of which I am going say, conservatively, 90 percent are technical, college-degree required or requiring a substantial amount of technical training. All of them are opening within a few months of one another. They are not going to find those kinds of people so they will start to look north.”