Despite recent declines in sales, the U.S. auto market continues to regain its pre-recession ground. According to the International Business Times, the U.S. auto market's third quarter of 2013 experienced a 9 percent boost in sales from the second quarter. With the market gaining momentum from low interest rates and consumers beginning to replace their aging vehicles, many manufacturers are looking to improve their light vehicle fuel economies. Yet investing in innovation can be costly for manufacturers if they keep their fabrication and assembly processes exclusively in the U.S. Manufacturing in Mexico allows businesses to commit more resources to automobile innovations, such as creating more light vehicles that are fuel economic.
Invest in innovations by offshoring to Mexico
According to a piece in Manufacturing Engineering by Jamie Price, president of metalworking tool supplier Sandvik Coromant, to continue strengthening North America's automotive industry, manufacturers need to invest in tackling the biggest challenges in the current market. Price wrote fuel economy is an ongoing obstacle many automakers struggle with. From using light materials to reduce weight-to-power ratios to cars with lower emissions output, better fuel economy requires a significant investment from manufacturers. According to Price, consumer needs are evolving, and automakers should ensure they serve those changing expectations.
However, automakers are often unable to invest in technological innovations, such as composite materials, digital navigation and fuel management, because of the ongoing focus to reduce operating costs.
"The same old technology will not satisfy the consumer," Price wrote. "At least in the U.S., engines and transmission have to evolve to get more lean and green. For automotive manufacturers to get there, innovation in machining current and future components is essential."
Offshoring to Mexico provides manufacturers with the opportunity to reduce their production costs. Workers in Mexico are highly qualified to fabricate auto parts, with many having experience in auto manufacturing and with a specialization in the industry. This makes them better able to run new innovative processes. According to IBT, automakers are raising their prices, yet expanding to Mexico may allow manufacturers to keep their prices steady while providing consumers with enhanced vehicles. For automakers in the U.S. to continue seeing strong sales, offshoring can help businesses offer lower prices because they have been able to experience cost-savings elsewhere. Expanding to Mexico gives U.S. automakers the opportunity to increase their competitiveness in the North American market.
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