Mexico revs up car industry from Monday, along with mining
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MEXICO CITY — Mexico could begin opening some automotive factories from May 18 under a government plan unveiled on Wednesday that loosens coronavirus restrictions and paves the way for U.S. car giants to ramp up output dependent on parts made south of the border.
Under a roadmap presented at a regular government news conference, the mining and construction industries, as well as manufacturers of transport equipment, will from Monday be considered essential activities in a May 18-31 starting phase.
“We now have the light which tells us we’re going to get out of the tunnel,” President Andres Manuel Lopez Obrador told a reporters at the conference alongside top officials. For now though, Mexico was “still inside” the tunnel, he added.
The plan presented some apparent ambiguities and it was not clear whether automotive plants would definitely begin opening next week or if they might wait until the start of June.
The economy ministry did not immediately respond to requests to clarify the matter, and, unusually, Lopez Obrador cut short the news conference without taking questions.
Other more general economic and social activities will be restarted gradually under a “traffic light” system to determine which areas of the country are at lower risk of outbreaks of infection, Economy Minister Graciela Marquez said.
The U.S. government and automotive companies has called on Mexico to reopen factories serving the U.S. market, even though the Latin American nation is still dealing with a rising number of infections from the coronavirus pandemic. Mexico on Tuesday registered 353 coronavirus deaths, its most lethal day yet.
Mexico sends 80% of its exports to the United States and became its biggest trade partner last year, with bilateral commerce worth over $600 billion. Mexican auto output all but evaporated in April, falling by 99%.
The reopening of the North American automotive industry is likely to be gradual, said Phil Annese, a senior director at Pilot Freight Services, which moves car parts for Ford, GM and FCA from Mexico to U.S. factories.
The assembly plants “are going to start out at a 25% to 40% production rate, they’re going to go as slow as they can to not create snags in the supply chain,” Annese said.
“If they get that supply chain stuck, that’s more trouble than anything they can have. Starting and stopping lines, that’s where the cost comes in,” he added.
Mexico has been studying other countries emerging from lockdowns and believes highly mechanized factories offer better conditions to control the risk of contagion, officials say.
Lopez Obrador is trying to strike a balance between limiting economic damage and saving lives, but some lawmakers are worried at the speed that Mexico is moving to reopen businesses.
They include Benjamin Carrera, a lawmaker from Lopez Obrador’s ruling MORENA party in the state congress of Chihuahua, home to the northern industrial hub of Ciudad Juarez.
He has urged authorities not to allow manufacturers to open before June 1 in Ciudad Juarez, a border city where many maquiladoras, including auto parts makers, are located and 146 people have died of the coronavirus, including factory workers.
“Juarez couldn’t survive without the factories. But right now, the life of a worker is much more important than a job,” he said. “A job can be recovered. People’s lives can no longer be.” (Reporting by Dave Graham, Daina Beth Solomon, Anthony Esposito and Sharay Angulo in Mexico City; Additional reporting by Nick Carey in Detroit; Writing by Frank Jack Daniel Editing by Nick Zieminski and Alistair Bell)
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