Photo credit: Honda Civic 1,8 Type-S iShift by Dirk Vorderstraße

One of Mexico’s most strategic economic allies is Japan, and thanks to new rounds of talks and agreements, Japanese companies will be investing heavily in Mexico in the coming months. According to Ildefonso Guajardo, the Mexican Minister of Economy, who met with the Japanese Minister of Foreign Affairs, Japan is especially interested in investing in Mexico’s automotive sector.

“There are several Japanese companies analyzing new projects. Mazda is one of them and recently made an announcement; in addition several other companies in the auto parts industry join the assemblers to invest. Investment dynamics in Mexico is extraordinary”, Guajardo said in an earlier interview.

Guajardo also pointed out that trade exchange between the two nations grew by almost 40% in the past seven years, at a rate of 7% a year since 2005.  Due to President Enrique Peña Nieto’s recent visit to Japan, the trade relationship has been re-launched, with Honda being one of the major companies to announce a major investment.

Honda, which was one of the first Japanese auto manufacturers to make cars in the United States decades ago, announced that it will be initially investing $470 million dollars to build a brand new transmission factory in Celaya.  Honda also very recently invested in a brand new automobile manufacturing plant in the same city, and cars should be coming off the assembly line as early as 2014.

The transmission facility, the third in North America, will be operating by the second half of 2015, and should produce an average of 700,000 continuously variable transmissions per year.  There will be approximately 1,500 people hired to work in the factory, as well.

“This will establish an efficient production structure that will maximize our Mexican and North American content,Honda Executive Vice President Tetsuo Iwamura said at a press conference in Mexico City earlier this month with Guajuardo.

He further stated: “This will be Honda’s third transmission plant in North America and production will increase to 2 million transmissions per year, to support production capacity of 1.92 million automobiles in the region”.  The transmissions made at the plant will therefore not only be for the cars manufactured in the adjacent factory; many will be exported to Honda’s other plants in North America and overseas.

Honda’s Celaya $800 million auto plant had been announced in 2011 and as mentioned above, production on the Fit subcompact models will start in 2014.  Other major Japanese auto makers who’ve recently made large investments in Mexico include Mazda who is building a $650 million factory and Nissan who is building a $2 billion plant alongside their existing manufacturing facilities.

Honda and Japanese auto manufacturers aren’t the only foreign car firms looking to start or increase production in Mexico.  Audi announced back in 2012 that it will be building its first North American plant in Mexico with an investment of approximately $2 billion.   Volkswagen, which has long been established in Mexico, will also be investing a further $1 billion over the next three years.

It’s no secret that automakers like Mexico; there’s a hard-working, highly skilled labor force, an astounding lack of red tape, a business-friendly government, plenty of free-trade agreements with dozens of countries and trading blocs, and great transportation infrastructure to get products to market quickly and effectively.  Japan’s interest in investing in Mexico shows absolutely no signs of slowing down and is only expected to grow for a long time to come.

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