Mexico’s Booming Automotive Electronics Industry Necessitates a Parallel Boom in EHS & Sustainability
By Pamela J. Gordon, TFI CEO
Dec 31, 2015
In one month alone — August 2015 — automakers produced nearly 300,000 vehicles in Mexico, exporting 80% of them. This production level is 7.7% higher than in August 2014. In fact, 30% of Mexico’s exports are automobiles. (Source: AMIA, Mexican Automotive Industry Association)
For the electronics manufacturing services (EMS) sector in Mexico, these market statistics get even more attractive — given that the share of autos’ electronics is increasing faster than the overall value of auto content. But are Mexico’s Environment, Health, Safety (EHS) and Sustainability practices keeping up with its impressive automotive electronics growth?
“Mexican companies are big users of fossil fuels, generate significant air pollution, and have not yet widely adopted good practices to counter these environmental impacts,” says Ernesto Sanchez, CEO, Seerauber (Jalisco, Mexico). “There’s still a lot to do in Mexico: Responsible disposal of garbage, cleaning up water pollution in rivers and lakes, and more. It’s not that expensive to curb this pollution, but it’s not yet a corporate / national priority.”
Read more in EBN about TFI’s study on the growing automotive-electronics industry in Central Mexico and about EHS and Sustainability challenges and progress.
Not Only Car Production, but Also EHS & Sustainability are on the Rise in Mexico
Traditionally, the EHS standards at Mexican companies have not been considered among the world’s best. However, EHS practices are improving at Mexican automotive electronics (and other automotive parts) facilities for numerous reasons:
(1) World-class automotive-manufacturing companies audit the responsible EHS practices of their suppliers in Mexico (and elsewhere).
(2) Multinational EMS companies with facilities in Mexico are increasingly holding their Mexican facilities to the high standards of their headquarters locations.
(3) Fierce competition to attract and retain excellent workers in the Mexican electronics industry prompts companies there to take extra measures for employees’ health, safety, satisfaction, and feeling of “family.”
(4) The Mexican Government is enacting increasingly stringent EHS standards, such as NOM-018-STPS-2015: Harmonized System for the Identification and Communication of Hazards and Risks of Hazardous Chemicals in the Workplace.
However, for the swiftly growing automotive and electronics manufacturing industry in Mexico, reasons 1 through 3 above may be responsible for the steepest EHS improvement curve. One study participant told TFI, “With the corruption in Mexico, some companies can get away without implementing the right safety equipment for their employees. But these days it’s getting harder for Mexican companies to avoid the rules, now that Government corruption is declining, and American and European companies do their own audits — which are taken more seriously than are the Mexican Government’s requirements.”
Challenges and Solutions for Ramping Up Mexican Automotive / Electronics EHS & Sustainability Practices
Training: Though more and more safety gear is now provided for workers at EMS facilities in Mexico, the workers need to actually use the gear to be effective.
Culture: Mexican employees devote more to their employers than to their own health, explains TFI Analyst Mariana Via. “Many Mexican workers take on risky jobs without caring about their personal safety — such as window washers sitting on wooden planks without safety cables.”
National Priority: Beyond individual companies and their workers, Mexico’s national priorities can be further aligned with EHS and environmental sustainability in general. With the Paris Climate Conference (COP21) in full swing at publication time, it’s encouraging that Mexico recently pledged to unconditionally reduce its Greenhouse Gas and black carbon emissions.
Overall Recommendations to EMS Executives with Mexican Operations
The growth in Central Mexico’s auto industry and especially the electronics portion is compelling, and most Tier-1 automotive companies do prefer to have EMS suppliers nearby. But also in this region are corporate customers demanding the highest in quality, environment, health, and safety; increasing competition for well-trained, high-performing employees; and new commitment by the Mexican Government for reducing Climate Change.
To be successful, electronics suppliers in Mexico — especially for the automotive industry — need to perform at world-class EHS standards, provide employees with a warm “family” work environment with career advancement opportunities, and be part of the increasing Mexican movement toward environmental sustainability.