Honda de Mexico, S.A. de C.V. has begun construction of a new plant in Central Mexico – making the Japanese maker just the latest to take advantage of Mexico’s low wages and strategic location.
The new plant will begin operation in 2014 with production of the Honda Fit subcompact model, said Takanobu Ito, president & CEO of Honda Motor Co., Ltd.
Honda’s announcement comes barely two months after Nissan revealed plans for a massive, $2 billion assembly complex in Aguas Calientes, in Central Mexico – with Mercedes-Benz also considering construction of a new plant not far from the Nissan site.
With this new facility in Mexico, Honda continues to advance its commitment to invest in and grow its operations in North America, Ito said. With growing demand for fuel-efficient vehicles, the new plant will increase Honda’s ability to meet customer needs for subcompact vehicles from within North America.
Expected to employ approximately 3,200 associates at its full annual capacity of 200,000 units, the new Honda de Mexico plant in Celaya will produce the Honda Fit subcompact model both for the Mexican market and for the U.S. and Canadian markets, as well as other regions.
“Considering the needs of the Mexican market, which is expecting continued growth in the future, and also serving as a global production base for the North American region and beyond, we decided to make the Fit the first product to be produced here,” Ito said.
“Also, we will create a highly efficient production system that allows us to provide high-quality products at an affordable price, both by expanding the use of local parts and by utilizing global parts sourcing,” he said.
The new plant will occupy 5.66 million-square meters near Celaya, Guanajuato, about 210 miles east of two existing HDM plants in El Salto, Jalisco, which build automobiles, motorcycles and auto parts.
The Celaya plant will apply Honda’s advanced and highly efficient manufacturing system to produce vehicles and engines, Ito said.
Mexico has one of the fastest growing automotive production bases in the world having churned out more than 1.6 million units last year. Mexican production is expected to increase by at least 10% this year, even before the opening of the new plants now under construction.
Relatively low wages have clearly been a draw for makers like Honda and Nissan but Mexico’s auto industry also benefits from the relative ease of exporting vehicles northwards to the US and Canada and to the south to Central and South America.
The Mexican success has created some hard feelings, however, both in the U.S., where the low wages in Mexican factories threaten unionized auto plants, and in Brazil, which has recently accused Mexico of talking advantage of an auto trade pact negotiated years ago.