SOUTHFIELD, MICH. (March 5, 11:30 a.m. ET) — The auto industry is eyeing Mexico hungrily as a source of more low-cost vehicle parts and materials. But there's a problem.
Mexico's small and medium-sized suppliers are not operating at the same level of sophistication with regard to quality as American, European and Asian suppliers, says a leading U.S. supplier executive who specializes in quality issues.
“There is growing pressure on Mexican suppliers to step up and support automakers,” says J. Scot Sharland, executive director of the Southfield-based Automotive Industry Action Group, a nonprofit supply-chain trade group. “And many of them are not up for the challenge yet.”
So Mexico's federal government has retained AIAG to begin working with companies there on technical practices that U.S. companies have been wrestling with for decades, such as statistical process control, ISO quality certification and environmental compliance record keeping.
AIAG expects to take about 125 Mexican suppliers through training programs this year and service 150 firms next year, Sharland says.
Funding for the weeklong training is coming from the Mexican government and AIAG's automaker members, which include General Motors, Ford Motor Co., Chrysler Group, Nissan Motor Co. and Honda Motor Co.
ProMexico, the federal agency involved, wants to bring more Mexican suppliers up to world-class quality standards to make them viable exporters.
“Two things are driving this,” Sharland says. “First is the new industry investment that's going into Mexico.” Nissan, Honda and Mazda Motors Corp. have recently announced large vehicle assembly projects in Mexico, where they intend to use a lot of local content.
“Second is the need for more North American production capacity,” Sharland says. “The U.S. supplier industry reduced its footprint during the economic crisis. Now that the market is coming back, there's a rising demand for supplier capacity.”
He says automakers are turning to companies in Mexico that, in many cases, have never had to compete at these levels.