The Toyota Motor Corp. plant in San Antonio can’t build trucks fast enough, operating at full throttle six days a week with new Tundras and Tacomas rolling off its production line every 60 seconds.

“We’re pegged out. We can’t run any faster,” said Toyota Motor Manufacturing Texas spokesman Mario Lozoya.

The company is trying to relieve some of the pressure on its assembly line here by upping production at its facility east of Tijuana, in Mexico’s Baja California state. Toyota is investing $150 million in the Baja California plant to increase its production of Tacomas by 60,000 a year by 2018, adding roughly 400 jobs in Mexico.

The Mexico investment comes despite a slowdown in overall truck sales. Toyota has sold 177,055 Tacoma and Tundra pickups through August — 304 less than the same time period in 2015. The drop is due to lagging Tundra sales, which are down 8.5 percent year-over-year through August. Tacoma sales are up 5.5 percent during the same time period.

Ford Motor Co. Chief Executive Mark Fields said Wednesday the car maker will shift the production of its small cars from the U.S. to Mexico, a move aimed at “reinventing” Ford’s small vehicle business and cutting costs to help boost profitability.

“Within the next two to three years, a majority of our small vehicles will be built in low-cost areas,” Fields said at the company’s investor day, according to the archived audio provided by FactSet. “And for example, here in North America, we will have migrated all of our small car production to Mexico and out of the U.S.”

In August, Ford Chief Financial Officer Robert Shanks said the company was seeing “sort of [a] car recession,” according to a transcript of a conference call with analysts provided by FactSet.

A spokeswoman for Ford F, -1.94% said Fields’ comments weren’t new news as Ford indicated last year it would stop making the Ford Focus and the C-Max small cars at the its Michigan assembly plant by 2018.

Weak growth, low oil prices and difficulties in making promised spending cuts all threaten Mexico’s push for a budget surplus next year as credit rating agencies consider downgrading its debt.

After running primary budget deficits since 2009, Mexico last Thursday pledged to turn a projected primary deficit of 0.4 percent of gross domestic product into a surplus of 0.4 percent of GDP next year.

Standard & Poor’s and Moody’s put Mexico’s credit outlook on negative this year, flagging concerns that weak growth could keep pushing up debt after a collapse in oil prices hit Mexico’s income from crude sales.

Jaime Reusche, Moody’s senior analyst on Mexico, said higher-than-expected income from tax reform passed in 2013 had helped offset the decline in oil income. But if tax revenue doesn’t hold up, the government may not meet its targets.

“The budget continues to signal consolidation and that may indeed be favorable for maintaining the rating where it is, but the proof is in the pudding,” he said on Friday.

Mexico’s austere 2017 budget lays out deep cuts that fall heaviest on the education, communications and transportation and agriculture ministries. The government proposed cuts worth nearly 240 billion pesos, or about 1.2 percent of GDP, compared to the 2016 budget.

Moody’s and S&P are concerned that debt as a proportion of GDP could keep rising in the coming years.

But Luis Madrazo, the finance ministry’s chief economist, said the government has already made deep budget cuts in 2016 to stabilize the trajectory of debt to GDP. “We need to make sure the cuts are permanent,” he said on Sunday.

Meeting the goal may be tough. Last year, when sinking oil prices sent the peso into free fall, Mexico announced spending cuts of 124.3 billion pesos, nearly 3 percent of the budget.

While the government made some cuts, total spending still overshot its original budget by more than 4 percent, or 197 billion pesos last year.

The finance ministry said in a statement to Reuters that discretionary spending without financial investments, such as absorbing part of state oil company’s Pemex’s pension liabilities, was only 1.5 percent above budget.

Reaching a surplus “is not going to be easy, the pressure is enormous,” said Ernesto Cordero, a senator in the opposition center-right National Action Party (PAN) and a former finance minister.

Mexico’s central bank last month warned that the country faced a “unpostponable” deadline to cut back its debt in order to maintain the confidence of foreign investors.

Spending last year rose nearly 5.9 percent in real terms, the biggest increase since 2008, according to a Reuters analysis of finance ministry reports to Congress.

The finance ministry said the increase was only 2.6 percent, when excluding financial investments and pension costs.

Mexico was still able to cut its total public sector borrowing requirements last year with the help of a one-off boost to its balance sheet from a surplus transfer from the central bank.

“Even if Mexico does hit the target, the quality of the adjustment is always important, not to have too many one-off items in there,” said Pramol Dhawan, an emerging markets fund manager at Pimco.

Helped by better-than-expected tax revenue, Mexico was able to map out big spending cuts at Pemex this year, easing concerns the state oil company could require a major bailout.

But spending by the federal government has been harder to rein in. One measure of discretionary spending, known as current structural outlays, rose 3.7 percent last year in real terms, shooting past the 2 percent ceiling set by the Finance Ministry in its own austerity rule approved in late 2013.

The law allows the government to exceed the limit since its recent tax reform lifted government income, according to the finance ministry.

Analysts said it would also be hard for the government to contain expenditures ahead of state elections next year after President Enrique Pena Nieto’s Institutional Revolutionary Party (PRI) lost seven gubernatorial races in 2016.

(By Michael O’Boyle and Alexandra Alper. Additional reporting by Dave Graham; Editing by Simon Gardner and Jeffrey Benkoe)

Written by: Reuters

MEXICO CITY (AP) — One of President Enrique Pena Nieto’s closest advisers and confidants, Finance Secretary Luis Videgaray, resigned Wednesday in a move seen as linked to the unpopular decision to invite Republican presidential candidate Donald Trump to visit Mexico.

Pena Nieto has taken responsibility for inviting Trump, but a former government official familiar with the workings of the administration said Videgaray would have played a preponderant role in the decision. Newspaper columnists in Mexico have reported Videgaray was behind last week’s visit, after which Pena Nieto was criticized for not being forceful enough in rejecting Trump’s proposals and comments about Mexico.

Videgaray “was the architect” of Trump’s visit, because he was the adviser that Pena Nieto had “the most reliance on, and was closest to,” said columnist and political analyst Raymundo Riva Palacio.

Even Trump himself said Videgaray’s resignation was related to his visit. Trump told a televised U.S. national security forum Wednesday night that “the people that arranged the trip in Mexico have been forced out of government. That’s how well we did.”

Videgaray acted as Pena Nieto’s campaign manager during his 2012 election campaign and has been seen as the architect of many administration policies. He led Mexico’s Treasury Department and is sometimes referred to as treasury secretary or minister, but because he oversaw budgets and fiscal policies, his role was closer to that of a finance secretary.

He has shared both in the president’s triumphs and embarrassments. In 2014, Videgaray acknowledged he had bought a house from the same government contractor that sold a mansion to Pena Nieto’s wife, Angelica Rivera, in the administration’s deepest scandal.

Pena Nieto thanked Videgaray for leading financial reforms during a ceremony at which the president announced he was accepting the resignation. He did not announce a new post for Videgaray.

“He has been an official very committed to Mexico, and very loyal to the president,” Pena Nieto said.

Former finance secretary Jose Antonio Meade, who has since served as foreign relations secretary and social development secretary, will replace Videgaray. Luis Enrique Miranda Nava will take over the social development post.

Pena Nieto said Meade will be in charge of turning in a primary budget surplus for next year, meaning government spending will have to be less than revenues, not including interest payments on debt.

In comments to local media, Meade defended the president’s meeting with Trump, saying it had lowered the risk of confrontations and helped moderate some of Trump’s policy proposals, especially his vow to change the North American Free Trade Agreement. Pena Nieto has said the meeting was needed to build bridges in case Trump is elected.

But Pena Nieto was ridiculed for not confronting Trump more directly during the visit about him calling migrants from Mexico criminals, drug-runners and “rapists” and promising to build a border wall and force Mexico to pay for it. The wall proposal has been criticized widely and fiercely in Mexico.

Speaking at a town hall last Thursday where he fielded questions from young people, Pena Nieto sought to defend the decision to invite Trump to visit.

He said the easier path would have been to “cross my arms” and do nothing in response to Trump’s “affronts, insults and humiliations,” but he believed it necessary to open a “space for dialogue” to stress the importance of the U.S.-Mexico relationship.

“What is a fact is that in the face of candidate Trump’s postures and positions, which clearly represent a threat to the future of Mexico, it was necessary to talk,” Pena Nieto said hours after his annual state-of-the-nation report was delivered to congress. “It was necessary to make him feel and know why Mexico does not accept his positions.”

Pena Nieto acknowledged the “enormous indignation” among Mexicans over Trump’s presence in the country and repeated that he told the candidate in person that Mexico would in no way pay for the proposed border wall.

The president came under fire for not responding to Trump’s mention of the wall during a joint news conference after their meeting Aug. 31, something he has since sought to correct.

A day later, Trump tweeted that Mexico would pay for the wall. Pena Nieto fired back his own tweet saying that would “never” happen.

Democratic presidential candidate Hillary Clinton, also invited to visit by Pena Nieto, said this week that she won’t be coming to Mexico before Election Day. She called Trump’s quick stop in Mexico City “an embarrassing international incident.”

Several countries from around the world are interested in striking trade deals with Britainas it prepares to leave the European Union, new Prime Minister Theresa May said today.

“The leaders from India, Mexico, South Korea, and Singaporesaid that they would welcome talks on removing the barriers to trade between our countries,” May told reporters after a G20 summit in the Chinese city of Hangzhou.

“The Australian trade minister will visit the Ukthis week to take part in exploratory discussions on the shape of a UK-Australiatrade deal,” she added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

LEÓN, Mexico (Aug. 24, 2016) — Group Michelin has started construction in Mexico of its 21st factory in North America — eight years after the global economic crisis of 2008 forced it to postpone the project.

“I’m really excited because a few years ago, in 2008, I had to come to this country to postpone our investment because of the crisis,” Michelin CEO Jean-Dominique Senard told Tire Business Aug. 22.

“At the same time I was incredibly impressed by the way the Mexican authorities took the news. So coming back with the decision (to revive the project) is a joy.”

Mr. Senard had earlier hosted a groundbreaking ceremony at the 242-acre site in central Mexico where the French tire company is investing $510 million in what, according to one senior executive, will be Michelin’s first greenfield passenger tire plant in North America in three decades.

In a speech, Mr. Senard said the León investment is the tire maker’s largest investment anywhere in 2016.

“The last time we launched a greenfield passenger tire plant in North America was over 30 years ago,” Scott Clark, executive vice president and COO of Michelin North America, said in a separate interview with Tire Business.

“So this is not something we do every day. This is a big deal and this is exactly the right place to be and at the right time.”

The factory, which will employ 1,000 when finished in late 2018, will be within a three-hour drive of 18 car maker assembly plants, Mr. Clark said. It is located in a new industrial park called León-Bajio, which stands beside the León-Silao highway.

The facility will have an annual installed production capacity of between 4 million and 5 million Michelin-brand tires, mostly in 18-inch-plus sizes for North American original equipment and replacement markets.

The plant’s output will “reflect the tremendous growth in the SUV, CUV and pickup markets, followed closely by high-performance tires,” Mr. Clark said. Most of the replacement tires will go to the U.S. and Canada, he added.

The plant, which will cover 1.5 million square feet, will have its own rubber mixing capabilities, according to the executive — something which he said is “not completely unique in the Michelin group.”

Asked about possible expansion plans, he said: “We take it one step at a time. We have almost (240 acres), which is an enormous amount of space. The likelihood of the plant expanding is very high.”

“There’s no plan as we speak to expand (this plant). But it’s bound to expand one day,” Mr. Senard replied when asked the same question.

Michelin already employs 700 in Mexico, primarily at a plant in Querétaro, 107 miles southeast of Leon, which makes non-Michelin brand tires such as BFGoodrich, Uniroyal, Taurus and Tigar. The plant has an installed annual capacity of 2 million tires.

Pete Selleck, chairman and president, Michelin North America Inc., told Tire Business separately that Michelin has “figured out how to operate within Mexico’s labor laws, which has given us much more confidence in taking this huge step (in León).”

He said that “labor issues” forced the company to mothball the Querétaro facility between August 2000 and April 2002.

“We had a situation that was untenable. I was involved. We tried to resolve it.”

Closing the plant, he said, was “one of the most difficult decisions” as it meant several hundred jobs were lost.

Referring to the León project, known internally as MX2, he added: “I’ve been with the company for 34 years, and so for me it’s very gratifying to see us reach this point.”

Idelfonso Guajardo Villarreal, Mexico’s federal economy secretary, told the groundbreaking ceremony’s audience of several hundred that by year-end 2018 the Mexican tire industry’s annual installed production capacity will be 31 million, compared with 21 million today.

“The new Michelin investment in Mexico represents a vote of confidence that strengthens the positioning of Mexico as an investment destination, because it comes from a company with a long tradition in the industry and widely recognized for its commitment to innovation,” Mr. Guajardo Villarreal said.

Miguel Márquez Márquez, governor of the Estate of Guanajuato, Mexico, called Michelin’s arrival the “most important investment for León so far” and said the tire maker’s investment “will trigger social and economic development….”

León Mayor Héctor López Santillana said Michelin’s choice of León recognizes the strengths we have and our ability to become an international economic actor.

“With this new plant, León will provide greater dynamism to the expanding automotive sector in the Bajio region. We are confident that together, we will open a new era of opportunities and shared development.”

Bombardier is moving some of its operations away from Northern Ireland to cheaper countries including Mexico and Morocco, the Belfast Telegraph can reveal.

The plane maker, which employs around 5,000 staff in Belfast, confirmed the transfer of “certain activities” it said it was “unable to undertake competitively in Northern Ireland”.

It added while it had undertaken “major investment in Northern Ireland” over the years and will “continue to focus on high-value, high-complexity production”, it must balance its costs with sites in Mexico and Morocco to “help to optimise our manufacturing footprint and ensure the future success of our business overall”.

This week the Canadian-owned manufacturer said it was bringing forward 95 planned redundancies.

More than 700 staff are due to go this year, with 1,080 planned by 2017.

Bombardier in east Belfast, along with other sites, produces a range of aircraft parts including the wings and fuselage of the flagship CSeries passenger jet.

“It is absolutely critical that we continue to transfer work packages in which we are no longer competitive so we can safeguard the long-term future of our Northern Ireland operations,” the company said.

It’s not clear whether the move will mean additional redundancies at the firm.

One worker, who did not wish to be identified, said: “Internally, employees have been asked to work harder and smarter each year since I can remember.”

The company said it continued to brief staff and unions about changes to the workforce and supply chain.

“We regularly send working parties from Belfast to Morocco, Mexico and other Bombardier sites, as well as to China, and we also host reciprocal working parties here,” Bombardier said.

Just this summer it was reported the company was cutting around 200 jobs in Toronto and moving them to Mexico and China.

According to one staff member, some work has flowed from Belfast to Mexico, including the production of composite parts.

“At present it (the Mexico factory) can make almost any structure and will do so soon,” they said.

Another employee said that there “has been a lot of the really old legacy contract work moving to Morocco and Mexico due to cost”.

Bombardier has invested in its North African factory, which produces operational parts for the CSeries, QSeries and CRJ jets.

Aside from the announcement that more than 700 jobs will go this year, and 1,080 between now and 2017, the company earlier this year asked staff to accept a pay freeze amid a “serious financial crisis” at the plane maker.

However, the workforce in Belfast is taking on a bigger role with the CSeries.

Last year the workforce here produced between 15 and 20 fuselage mid-sections for the aircraft as work was transferred from the company’s manufacturing partner in China to the east Belfast plant.

But one Bombardier worker said: “I challenge our unions, who are frightened to rock the boat.

“I’m fed up with hearing, upon another pay-off announcement, that the unions are shocked and surprised.

“We are not. We expect it. We see a bigger picture.”

There are now fresh calls from both the Ulster Unionists and the SDLP for Stormont to introduce a dedicated manufacturing strategy in order to tackle job losses – something that was previously rejected by Economy Minister Simon Hamilton.

TransCanada Corp. is placing a bet on Mexico’s demand for fuels.

The Calgary-based pipeline owner is joining with the Mexican company Sierra Oil & Gas to build an $800 million marine terminal and pipeline in the Mexican port of Tuxpan, the companies said in a statement. The project will transport gasoline, diesel and jet fuel to central Mexico.
Mexico, the largest importer of U.S. fuel, gets an infrastructure boost. The nation relies on imports for 55 percent of its gasoline needs, according to June data from Petroleos Mexicanos, the state-owned oil company. Pemex has struggled to process enough crude at its six refineries and has said it’s seeking partners to help with operations and improvements.

“There are not that many markets in the world where you can build a refined products infrastructure project of this scale, and Mexico is one of them,” Ivan Sandrea, chief executive officer of Sierra, said in a telephone interview. “Mexico needs more import infrastructure to meet growing fuel demand; I cannot see the country moving forward without that.”

TransCanada, which announced in March that it would sell minority stakes in its $2 billion Mexican natural gas pipeline business to help fund the $10.2 billion purchase of Columbia Pipeline Group Inc., will have a 50 percent stake in the project. Sierra, which is backed by Riverstone Energy Ltd and which won oil blocks in the country’s first competitive oil auctions, will have 40 percent. The remainder is owned by Mexico City-based Grupo TMM SA, a Latin America-focused maritime transportation company.

”We are extremely excited for this project which represents an important expansion of our portfolio in Mexico,” said Robert Jones, TransCanada’s Mexico president, in an emailed statement. “TransCanada’s construction and operating experience will provide significant synergies to safely transport refined products in the central region of the country.”

S

AN LUIS POTOSI, Mexico – To reach productivity benchmarks at its Mexico factory, BMW AG will embrace a new and innovative supply chain and logistics plan.

The German luxury maker won’t simply transfer its supply base from its other North American factory, which opened 22 years ago in Spartanburg, S.C. And it won’t demand that suppliers serving the South Carolina plant set up shop in Mexico, says Oliver Zipse, BMW board member for production.

Instead, it will create a new North American supply base.

“We will see all the latest state of the art here,” Zipse promised.

Those innovations will include:

• Assembly of parts modules for sequential delivery by BMW employees, operating apart from the vehicle production line.

• A GPS-based logistics web “geo-fence” that will track components coming into the plant and alert BMW about delays or problems.

• A nearby supplier park that can ship products in sequence as they are needed.

The factory will begin production in 2019, making BMW’s best-selling car in the United States, the 3-series sedan. It will be capable of building any of the automaker’s rear-wheel-drive vehicles that use BMW’s new flexible Cluster Architecture on one line. At capacity, the plant will be able to produce 150,000 vehicles annually and has been designed for easy expansion, Zipse says. It will include body and paint shops and an assembly line, but not metal stamping. The press shop will be outsourced.

The Mexico factory also has been designed so components come in at one end of the plant — a logistics advantage over the Spartanburg layout. The South Carolina plant layout has evolved over the last 22 years as the plant expanded. It now has what the company calls “fingers” of activity protruding along three corridors for 80 percent just-in-time deliveries to the assembly line.

In Mexico, BMW has the luxury of making parts delivery more streamlined from the beginning.

“You will have a substantial amount of direct assembly, where trucks end up at the delivery line,” Zipse said.

The venture also will make BMW a bit chummier with General Motors. The 300-acre San Luis Potosi site is adjacent to an established industrial park where many suppliers make components to serve a nearby GM plant, in operation since 2009.

Spartanburg does not have an adjoining supplier park, or even one in the near vicinity. And when that plant started from scratch in 1994 making the 3-series sedan, it also did not have the luxury of taking advantage of a neighbor’s established local supply chain. Compared with Mexico in 2016, Spartanburg of 1994 was a remote spot on the North American automotive supply chain map.

BMW began the search for a second production site in 2011, when the German automaker foresaw the global car market expanding quickly. BMW has ridden the wave of that market growth since launching North American manufacturing. Spartanburg started with the capacity to build about 70,000 cars a year. It is now the company’s largest auto plant, with expectations to produce 450,000 crossovers this year.

By comparison, with an initial capacity of 150,000 vehicles a year, San Luis Potosi is beginning at more than twice the scale that Spartanburg had.