Auto industry's $23 billion investment in Mexico may face snarls at ports

MEXICO CITY (Bloomberg) -- Car companies from Nissan Motor Co. to Mazda Motor Corp. are churning out record amounts of automobiles in Mexico destined for customers overseas.
However, many execs are worried the factory hum will slow in forthcoming years as exports get bogged down by congestion in the country's ports.
The the federal government has focused 70 billion pesos ($4.6 billion) for port infrastructure through 2018, including constructing four new terminals in Veracruz. Some car companies are suspicious the target is going to be fulfilled or is going to be enough to take care of the over 5 5 million automobiles Mexico expects to make per annum by 20 20 -- a 56% boost in the state's 2014 production.
Before two-and-a-half years, automakers including Toyota Motor Corp. and Daimler AG have invested or guaranteed $22.6 billion for vehicle and components plants, according to the authorities. That achievement story, which created the sector the biggest source of overseas money in the united states, could be imperiled in the event the authorities does not pace up strategies for infrastructure developments.
"Up so far, Mexico has succeeded in bringing more investments," stated Carlos Serrano, chief economist for BBVA Bancomer SA, Mexico's largest bank by loans owed. "But there is likely to come a stage, when if infrastructure does not progress, it is heading to place Mexico's continuing advance at risk."
Piers bottlenecks
For Nissan, bottlenecks on the piers could delay 1 / 4 of its planned marine shipping to the US, Europe and the Middle-East in five years, mentioned Horacio Saldivar, the firm's neighborhood buying head. In 2014, Mexico became the world's largest exporter of Nissan automobiles, in accordance with the automaker's web site.
"After 20 20 we could have capability limitations" in the Gulf port of Veracruz as well as the Pacific port of Lazaro Cardenas, Saldivar stated in a phone interview. That might be true even after the end of present growth strategies. "We should work with authorities on the best way to enlarge."
President Enrique Pena Nieto has created investing in the nation's infrastructure important.
His government is fostering using capacity at ports by 50 per cent through 2018 and does not foresee any bottlenecks at piers as new crops come online, Guillermo Ruiz de Teresa, the Communications and Transportation Ministry's ports co-ordinator, said in a phone interview.
"We're on time" to satisfy capacity requirements for the expanding auto-industry, Ruiz informed reporters May 13. "I have talked with almost all the vehicle companies, ensuring space at ports to allow them to grow."
'Capability problems'
While the Veracruz port's working capability has stagnated before three years, it'll more than triple by 2024, Ruiz stated.
Mazda, Nissan and Honda Motor Co. are encountering substantial jumps in the amount of automobiles exported from Mexico. Nissan sent a record 538,972 automobiles last year, twenty per cent more than in 2013, according to the business and information from the trade association AMIA.
Mazda, which started a $770 million factory in early 2014 that is slated to end up being the largest foreign facility for Japan company, exported 16,017 automobiles in April, triple the sum a year before. Honda sent 14,880 automobiles and light trucks out of the state last month, more than double the amount a year before.
More investment
"The problem is going to be heightened as a growing number of investment adopts Mexico over the following five years," said Bill Rinna, a senior supervisor of Us outlooks for LMC Automotive near Detroit.
"If it is an issue for Nissan, who is making and exporting vehicles to get several years in Mexico, it needs to be an issue for many other producers who have and can set up shop there."
Toyota in April announced it would commit about $1-billion in its first automobile factory in Mexico, together with the ability to to put together about 200,000 Corolla compact vehicles a year.
Mazda raised its reliance on the Gulf port of Veracruz after confronting "capacity problems" on Mexico's rail road lines, in accordance with Keishi Egawa, Chief Executive Officer of the auto-maker neighborhood device. He expects the state will enlarge its rail road lines as well as improving port infrastructure.
"At this minute it is okay, but we're concerned with the the ability of the Port of Veracruz in-coming years," Egawa stated in a interview.
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26.05.2015
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