Category Archives: Automotive

The Automotive Industry Has Identified Mexico As Its New Mecca: Tella Tool Looks At This Interesting Development

When we think cars, we think Detroit! Or Japan if the international scene is involved. But over the past two years, a seemingly innocuous player has blazed its way across the automotive horizon of the world and that is Mexico. A clutch of stalwart companies including Ford, Toyota, Nissan and BMW have already pledged investments exceeding $5 billion to bump production in the country by 54% and open up an estimated 20,000 new jobs.

So what has caused this sudden exodus to the South? The developments have been gradual and this propitious boost is the result of the conjunction of a number of reasons.

WHY MEXICO?

The impetus of production has always been closely tied to labor costs. It is a recurring investment and can overshadow conveniences of logistics and sophistication of equipment. Mexico however has also grown to be a hub of well qualified white collar workers who are technically competent and can manipulate the latest machines and navigate the advancements in robotics almost as well as (or even better than) than their US counterparts. And this has fuelled the urgency to transfer a part of manufacturing to its shores.

The Center for Automotive Research has found that auto assembly plant employees are happy with an hourly rate of $5.64 compared to $27.78 charged by North American workers. The scenario is repeated where the pay of part suppliers is concerned. Mexico is content with $2.47 an hour where US natives must have $19.65.

Last but not the least; Mexico has made giant strides in the field of Free Trade Agreements. It has spent the better part of a decade pushing FTAs with more than 40 countries and thanks to its strategic location where it has easy access to both the Pacific and the Atlantic coastlines, cities like Chihuahua and Guadalajara can lay claim to the sobriquet of automotive trade hubs of the western world.

WHAT THE FUTURE SHOWS:

Mexico still has a long way to go before it can catch up with the US in terms of substantial automotive investments. The lion’s share is still grabbed by the Stars & Stripes nation that has already secured $10 billion for the coming year.

However Canada has bitten dust with a paltry $800 million. And this says a lot. Mexico’s triumph lies in the fact that the endeavors initiated on its soil do not concern re-tooling or improvements. They are hard-core factory units pumping much needed GDP into the veins of the country.

Tella Tool & Manufacturing looks forward to the future and has high hopes for the Mexican auto industry boom.

 

The Auto Industry in 2015

The automotive industry in the United States has seen a great rebound after the massive hit it took during the Great Recession. 2014 saw the industry have its best year for new car sales, and 2015 looks to build even more on this success. With new models hitting the market and older models getting facelifts, there seem to be more different vehicles available now than ever before. That’s great for Tella Tool – the automotive industry is one of our biggest customers. So what will continue to drive the growth of the automotive industry in the coming year?

  • The Growth of the Tiny SUV – The car-based compact and subcompact SUVs, targeted at urbanites who might want to go out and hit the dirt, continue to see more and more takers. They will continue to be an upgrade for folks coming from the compact sedan segment.
  • Heavyweight Battle – The pickup truck segment continues to increase, and it isn’t just the Big Three U.S. automakers who are pushing the growth, as Toyota and Nissan continue to launch high-quality pickups. Both full-size and compact trucks will see growth, as their fuel economy improves and buyers continue to seek out versatile vehicles.
  • High-Wired – In-car infotainment systems are becoming almost standard now, and are moving by leaps and bounds. Companies who were leaders even three years ago are now having to redesign their systems to cope with technological advances and consumer wants – and 2015 will see more redesigned systems.
  • The Return of High Performance – As gas prices level out, we’ll see the return of the high-performance automobile. Acura is bringing back its legendary NSX this year, and the Cadillac CTS-V is expected to see a resurgence. Add a redesigned Mustang, and the return of the Buick Grand National on the horizon, and you could see a muscle car revival.
  • Forget the Pump – The race to reduce fuel usage will never slow down, even as gas prices come back down. Hybrids, fully-electric vehicles and fuel-cell vehicles continue to grow in number, with Honda, Toyota, and Chevrolet all expected to introduce new models this year.

Tella Tool will be right here, stamping parts for use in the automotive industry, and contributing jobs to the Illinois economy. Our precision metal work meets the needs of our customers on time, every time, which is why the automotive industry relies on us.