Foreign Direct Investment in Latin America and the Caribbean 2017

Foreign Direct Investment in Latin America and the Caribbean • 2017
Chapter III
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• The crisis in 2008 affected Chrysler significantly and led to major changes in the
company’s ownership structure. Towards mid 2009 the firm finalized its partnership
with Fiat, thus breathing new life into the company and its Mexico operations.
In 2010, the new partnership announced an investment of US$ 550 million in
the Chrysler plant in Toluca to begin production of the Fiat 500 model (América
Economía, 2010). Also, US$ 1.085 billion were invested in the construction of
a new plant in Saltillo to manufacture a new light commercial vehicle, the Ram
ProMaster, and additional outlays of US$ 164 million were allocated for a new
production line in one of the company’s engine plants in Saltillo (Vanguardia, 2013).
Volkswagen and Nissan arrived in Mexico in the 1960s as the first non-United
States manufacturers, and although they were initially attracted by the domestic
market, they began exporting towards the end of the 1980s. Mexico’s accession to
NAFTA and the adoption of regulations related to subregional content in products led
these companies to make large efforts and investments to develop networks of local
suppliers with a view to access the United States market. At the same time, other large
Japanese manufacturers channelled their investments towards the southern region of
the United States instead. However, in the mid 1990s, Honda established its first plant
in Mexico, followed by Toyota 10 years later. Both firms were looking to address specific
market niches with limited levels of production. Japanese companies in North America
sought to counter the strategy of United States and European companies by relocating
their more technologically intensive production processes to increase productivity
and cut costs in a bid to focus on higher quality vehicles. The commissioning of new
plants in Mexico by Nissan, Honda, Toyota and Mazda, together with new investment
announcements, was a clear example of the global reorganization process in which
North America played a pivotal role (Álvarez, 2016).
• In 1966, Nissan opened a plant in the Industrial City of the Valley of Cuernavaca
(CIVAC) in Jiutepec, State of Morelos, the first built by the company outside
Japan. A second plant in Aguascalientes followed in 1982. Known as A1, it was
modernized in the mid 2000s thanks to a US$ 1.3 billion investment. With a
first-stage investment of some US$ 2 billion (Nissan, 2013), the company opened a
third plant in 2013, also in Aguascalientes (A2), which is now considered among the
best and largest in North America. Towards mid 2014, the Nissan-Renault Alliance
and Daimler AG announced the construction of a new plant in Aguascalientes
(known as the Cooperation Manufacturing Plant Aguascalientes project, or
COMPAS) through an investment of US$ 1 billion for the production of the
new generation of high-end Mercedes-Benz and Infiniti compact vehicles. This
is Daimler’s first North American light vehicle production plant with production
based on its modular front architecture (MFA) platform. 3 Production of Infiniti
models is set to begin in 2017, while roll-out of Mercedes-Benz vehicles is
earmarked for 2018 (Nissan, 2015). Nissan is currently the largest manufacturer
in North America, after overtaking historical leaders General Motors and Ford.
• Volkswagen’s Mexican operations are located mainly in Puebla. After a series
of expansions, the Puebla plant has become one of the industry’s largest
complexes in North America. In 2011 the German automaker began building a
new engine plant in Silao, State of Guanajuato, and early in 2014 it announced
the construction of an Audi brand SUV plant. Shortly after, it also announced
plans to build a new version of the Tiguan model, with market launch penned
for 2017, which would require an investment of close to US$ 1billion to expand
3
The MFA platform allows changing the location of different components in the interior of vehicles, such as seats or ceilings. It is
also designed to adapt to different propulsion systems: batteries, fuel cells, hydrogen tanks and even gas tanks. Early in 2018,
Daimler AG aims to file a patent for its MFA technology and begin developing a vehicle powered by gasoline, gas, electricity
and hydrogen.