Story by: Noi Mahoney  at Freightwaves

Factories in Mexico feeling effect from Coronavirus

Factories across Mexico have begun to feel disruptions in their supply chains caused by the coronavirus.

The coronavirus has already wreaked havoc in China. Now, Mexican auto parts and electronics factories that depend on materials from China have been affected as well, said industry experts.

“We have started to have some adjustments in our supply scheme because of this unfortunate situation, due to the widespread shutdown of operations of plants in China,” Luis Aguirre Lang, president of Mexico’s National Council of the Maquiladora Industry and Manufacturing Export (INDEX) said in news outlet Reforma.

Factories stretching from Ciudad Juarez to Chihuahua, Sonorra, San Luis Potosi and other locales have had to modify their production schedules due to the delay of imports from China.

Factories in the state of Chihuahua have experienced slower production, according to Federico Baeza, local chapter president of Employers’ Confederation of the Mexican Republic.

There are more than 500 factories throughout the state of Chihuahua — which borders Texas and New Mexico and includes the city of Juarez across the border from El Paso.

Factories across Chihuahua employ almost 400,000 people, according to INDEX Juarez. Companies with factories in Chihuahua include Fokker Aerospace, Alt Technologies, Aerospace Atlas and Foxconn.

Mexico’s Office for Economic Affairs published a report showing that the main products or materials imported by Mexico from China in 2019 included modular circuits used in computers and other machines ($3.8 billion), cell phones ($3.6 billion), medical machine parts and supplies ($2.6 billion), optical instruments ($1.9 billion), and computers ($1.7 billion).

However, the bigger effect of the coronavirus on U.S.-Mexico trade isn’t necessarily short-term manufacturing stoppages, according to Matt Silver, CEO and co-founder of Chicago-based Forager.

“[Stoppages] are happening, and we are seeing manufacturers who rely on Chinese parts feeling the strain, but that’s mostly temporary,” Silver told FreightWaves. “The real impact of the coronavirus is on the overall conversation around nearshoring. More and more industries are moving into Mexico.”

Forager is a freight tech company focusing on freight from Mexico and Canada. The company recently published a blog post titled “Outbreak: What the Coronavirus Means for Domestic Supply Chains.”

Silver said between increased tariffs on Chinese goods, the new United States-Mexico-Canada Agreement that encourages more North American manufacturing, and now the coronavirus, “there are a lot of compelling reasons for companies to reassess their supply chains.”

Read the full story and more HERE

Source and credits: freightwaves.com /  iTrucker  / Mario Pawlowski