US Auto Industry Relies Heavily on Mexico to Reboot

Many suppliers in Mexico remain shut down, causing a delay in restart for Detroit automotive factories.  Approximately 40% of imported auto parts come from Mexico, and parts manufactured in the US are often exported there for vehicle production.  Some of the strain is due to the Detroit Three, that have reportedly targeted a restart for their U.S. assembly plants in mid-May.  However, Mexico remains on lockdown, and auto parts are considered a nonessential business to the country.  Mexican plants are to remain closed through May 30th.

“This is the issue, I believe, the whole industry is struggling with,” said Joe Petrillo, director of business development and advanced engineering for Meridian Lightweight Technologies, a supplier of lightweight cast metal parts mostly for the auto industry.

The automotive industry like many others is interconnected to the global supply chain. The U.S. auto industry cannot build cars if government actions in other countries or states are not in sync with one another.

General Motors, Ford Motor Co. and Fiat Chrysler Automobiles idled their assembly plants stateside in March as the pandemic swept the nation. They have not declared a restart date yet, but they have reportedly eyed May 18 as a possibility. Toyota announced it plans to postpone it’s operations until May 11th.

There is still inventory in the supply pipeline to support a U.S. restart, but there’s also a larger gap in time between the U.S. restart and the Mexican restart. Many automakers still have hope that there could be some flexibility by the Mexican government that would allow the auto industry to start back up in support of a North American start up. On April 24, the Ministry of Economy in Mexico published a news release stating they are working with the U.S. and Canadian governments on a plan for the automotive industry to safely restart activities in the region.