MEXICO CITY: Car manufacturers from Nissan to Mazda are churning out record numbers of vehicles in Mexico destined for consumers abroad. Yet some executives are worried that the factory hum will slow in coming years as exports get bogged down by congestion at the nation’s ports.
The government has targeted 70-billion pesos ($4.6bn) for port infrastructure through 2018, including building four new terminals in Veracruz.
Some manufacturers are sceptical that the goal will be met or will be enough to handle the more than 5-million vehicles Mexico expects to produce annually by 2020, a 56% increase of the country’s output last year.
In the past two-and-a-half years, car manufacturers including Toyota and Daimler have invested or promised $22.6bn for vehicle and parts plants, according to the government. That success story, which made the sector the largest source of foreign cash in the country, may be imperilled if the government does not speed up plans for infrastructure improvements.
“Up until now, Mexico has succeeded in attracting more investments,” said Carlos Serrano, chief economist for BBVA Bancomer, Mexico’s biggest bank by loans outstanding. “But there’s going to come a point, when if infrastructure doesn’t get better, it’s going to put Mexico’s continued advance at risk.”
For Nissan, bottlenecks on the docks could delay a quarter of its planned maritime shipments to the US, Europe and the Middle East in five years, said Horacio Saldivar, the company’s local purchasing head. Last year, Mexico became the world’s biggest exporter of Nissan vehicles, according to the vehicle manufacturer’s website.
“After 2020 we could have capacity limits” at the Gulf port of Veracruz and the Pacific port of Lazaro Cardenas, Mr Saldivar said. That could be true even following the completion of existing expansion plans. “We need to work with governments on how to expand.”
President Enrique Pena Nieto has made investing in the country’s infrastructure a priority. His administration was boosting operating capacity at ports by 50% through 2018 and did not foresee any bottlenecks at docks as new plants came online, Guillermo Ruiz de Teresa, the communications and transportation ministry’s ports co-ordinator, said.
While the Veracruz port’s operating capacity had stagnated in the past three years, it would more than triple by 2024, Mr Ruiz said.
Mazda increased its reliance on the Gulf port of Veracruz after facing “capacity issues” on Mexico’s railways, according to Keishi Egawa, CEO of the producer’s local unit. He hopes the country will expand its railways in addition to boosting port infrastructure.
