beyondbrics

To visit Volkswagen’s plant in Puebla, a couple of hours south-east of Mexico City, is to witness the country’s export-led economic recovery. The plant, which can produce 2,100 vehicles a day at full capacity, expects this year to churn out 420,000 units – markedly up on last year’s 320,000.

An incredible 80 per cent of the factory’s total production goes abroad, half of that to the US market, where stronger demand is helping Mexico dig itself out from its worst economic recession last year in more than 70 years. About 900 train carriages loaded with VW cars depart from the Puebla plant every day, carrying the new Beatle and other models to destinations all over the world.

All this helped Mexico’s vehicle exports in June grow 109 per cent compared with 12 months earlier, according to the Mexican Association of the Automobile Industry or Amia for short. In absolute numbers, that is 177,575 vehicles exported in June compared with 84,934 during the same month last year.

But the most impressive part of this mega factory is the new production line, inaugurated this month, which produces the new VW Jetta. It is from these long grey buildings, not too far from North America’s second-tallest active volcano, that every single Jetta in the world will emerge.

Thanks to a $1bn investment in civil infrastructure, equipment and product design, the new plant within the plant will be able to produce 100,000 Jettas a year. Inside building N80, 18-ton moulds descend on steel sheets imported from Asia, crimping them into the various panels that will eventually make up the body of every Jetta.

The assembly job is carried out by 215 orange-armed robots that swing and then unite the various panels with alarming speed. The finished bodies then pass down a production line where just a handful of workers oversee the fitting of one of 1,500 possible combinations of dashboard for each vehicle and, finally, the “marriage” as VW staff call it, of body with chassis.

Seeing all of this, it is not too hard to imagine what Mexico’s future role in the global car industry could be: home to North America’s production of small and compact cars.

The reason is that as consumers in North America shift from large and expensive vehicles to relatively cheap and compact ones, the pressure on manufacturers to lower production costs grows considerably.

And Mexico’s cheap labour costs, skilled and experienced workforce, geographical proximity and free-trade association via the North American Free Trade Agreement make the country not only the obvious venue for manufacturing them, but probably the necessary one, too.