DEARBORN, MICH.-Stuart Austin still plans to set up a plant in Mexico, but the decision has become much more complicated. ``We're kind of like everybody else,'' he said. ``We're in a state of limbo.''
As president of Amco Manufacturing Co., a maker of convertible tops for cars, Austin hopes to begin production in August in a $1.5 million facility in Toluca, near Mexico City, to supply Chrysler Corp.
It is a big move for a small supplier like Adrian, Mich.-based Amco, with $23 million in sales last year. But Austin, like so many other executives at automotive supplier companies these days, doesn't see much choice. Automakers, who are increasingly procuring auto parts in a global competition, are telling suppliers to follow them into the world's developing countries if they want to keep doing business.
Amco is lucky. It has yet to make the bulk of its investment in Mexico, so it will benefit from the cheaper peso. Its production machinery will be purchased in the United States with dollars and shipped south. And, most importantly, Amco is supplying the soft vinyl cover and trim for a new model Chrysler will build for export to the United States, sidestepping the battered Mexican auto market.
Austin, who continues to watch the Mexican economic crisis unfold ``day by day,'' said he is committed to manufacturing in Toluca.
``If I was going down there for the short term, I would be far more concerned,'' he said. ``But this is not for us a one-shot deal.''
At a recent conference on the Mexican auto market in Dearborn and in follow-up interviews, auto executives and suppliers agreed that Mexico's promise as an emerging market and a manufacturing site was fundamentally intact despite the peso crisis.
Automakers, eager to boost the content of locally made parts for their Mexican-built cars, have been busily reassuring suppliers that manufacturing in Mexico remains a sound strategy.
Ford Motor Co., which has been doing business in Mexico for 70 years, expects the Mexican auto market to contract this year, said James O'Connor, executive director of automotive marketing. But suppliers, he said, should understand that Mexicois a ``very positive'' long-term market for Ford.
``We think that Mexico will be the right place to invest,'' O'Connor said.
Ford also is promising to do what it can to keep its Mexico-based suppliers up and running. ``We are talking to each one of our suppliers,'' said Victor Barreiro, chairman of Ford of Mexico. ``We're not letting anybody die. We're not letting anybody stop us from producing.''
Chrysler's suppliers remain committed to Mexico, said Thomas Stallkamp, the automaker's top purchasing executive.
Stallkamp also contends that suppliers may find better opportunities for investing in Mexico, now that the dollar has gained so much purchasing power against the peso. That view is endorsed by Andres Ochoa Bunsow, a Monterrey, Mexico-based lawyer who specializes in the automotive industry.
``There are a lot of bargains because a lot of companies in Mexico are in trouble and they need a partner to come into Mexico and infuse capital,'' Ochoa said.
Suppliers, despite the jolting effects of the peso crisis, need to take a long view on Mexico, said Michael Schmall, director of auto supplier forecasting for J.D. Power & Associates in Troy, Mich.
``Mexico is part of North America in the truest sense in the auto industry,'' he said. ``If you're going to be a serious player in the auto industry you have to produce in Mexico. I don't know why anyone would even blink an eye.''
Excel Industries Inc., the Elkhart, Ind., maker of encapsulated windows, is ``contemplating'' a new plant in Mexico, said James O. Futterknecht Jr., president and chief operating officer.
Although Mexico's economic crisis, on its own, would not be enough to shelve those plans, he concedes that Excel executives will have to make a stronger case with company directors for any new investment in Mexico.
``Everyone says they want to go forward,'' Futterknecht said. ``But the trip becomes a little more worrisome than it was.''
Whatever happens, Excel will not attempt to become a major player overnight, Futterknecht vows.
``You try to match your risk with the opportunity so it's a decent bet,'' he said.
At Geauga Co. in Chardon, Ohio, the peso crisis has led the company to put plans for its first Mexican plant on hold, said President Allen Hoffman. Nothing is likely to happen now before 1996.
``It's really caused us to push back our plans,'' he said. ``We will more than likely wait a little longer.''
Hoffman is not sure, however, how long Geauga, a maker of plastic and rubber auto parts, can stay out of Mexico. He concedes that a market where 1 million cars and trucks are manufactured ``is attractive to you.''