U.S. supply chains’ future could be tied to Mexico and USMCA
Mexican President Andres Manuel Lopez Obrador recently said border factories that are considered key to United States supply chains could open in the next few weeks.
“We are aware of the interrelation that exists with production and trade with the United States; Mexico is the main commercial partner of the United States,” López Obrador said during his daily press briefing on Tuesday. “In the auto industry we have been asked to consider opening auto parts companies early.”
Obrador has not committed to any specific date yet, but said factories across Mexico could open sometime in early June.
That’s welcome news to U.S. officials who have been pressuring Mexico to reopen hundreds of automotive and aerospace factories that have been closed since Obrador declared a national health emergency on March 30.
U.S. automakers – including General Motors, Ford Motor Co. and Fiat Chrysler – have discussed plans to reopen their factories around May 18, potentially putting as many as 150,000 people back to work.
Toyota Motor Corp. and Honda are targeting May 11 to open their U.S. factories.
Audi, BMW, Fiat Chrysler, Ford, General Motors, Honda, Mazda, Nissan, Toyota and Volkswagen have factories in Mexico. Heavy duty truck makers Freightliner and Navistar also have Mexican factories.
David Henry, regional manager for Mexico at GlobalTranz, said many U.S. auto factories need parts from Mexico.
“U.S. industries and North American supply chains are highly dependent on Mexican parts. Some of these plant openings are not going to be able to take place in a very big way if they’re not able to get 40% or more of the supplies that they typically get from Mexico,” Henry said. “I think now more than ever, people have realized how important Mexico is to the U.S. economy.”