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Nissan to build $2 billion Mexico plant, sidestepping security concerns

MEXICO CITY — In a sign that global manufacturers are looking beyond Mexico's security woes, Nissan said Wednesday that it will invest $2 billion in a new auto plant in Aguascalientes, a central city that has seen problems with crime groups.

President Felipe Calderon, standing beside Nissan chief executive Carlos Ghosn at a World Economic Forum meeting in Switzerland, said the plant would solidify Mexico's position as the world's ninth-largest automaker and sixth-largest auto exporter.

"This is one of the biggest investments we've ever received from an automaker," Calderon said, "and of course it confirms Nissan's lead in Mexico."

The Yokohama, Japan-based automaker already has two plants in Mexico — one in Cuernavaca in Morelos state near the capital, and a second in Aguascalientes — and holds a quarter of the market as the nation's best-selling auto brand.

Calderon said Mexican auto plants produced 2.5 million units in 2011, exporting around 2.1 million of them, the second consecutive year of record production and exports.

In an initial phase, Ghosn said, the new plant would produce 175,000 units a year and create 3,000 direct jobs and 9,000 indirect jobs with parts suppliers.

The plant, which is to begin operations in late 2013, will produce compact and subcompact models like the Juke, Cube, NV200 and Versa hatchback, and will export around the Americas, Nissan said in a release.

By the time all construction is done in 2013, some 20,000 people will either work directly at the plant or at parts suppliers, Calderon said.

Nissan's two existing plants produce about 600,000 cars and light trucks a year, and the new Aguascalientes plant will boost production to 1 million units.

Calderon, who is in the final year of a six-year term, said Mexico faced competition for the plant from other countries, which he didn't name. But he said Mexico enjoys a skilled talent pool in manufacturing and graduates 100,000 engineers a year — more than Germany and Canada and more than twice the number of Brazil.

Existing factories in Aguascalientes, a fast-growing industrial city of about 1 million, make integrated circuits, other electronic components and autos. The city is located along key truck and rail lines leading to Pacific and Gulf of Mexico ports as well as to the U.S. border.

Los Zetas, the most brutal and perhaps largest crime group in Mexico, has established a foothold in the city, and gangsters routinely extort businesses.

In mid-January, shootouts between convoys of Zeta gangsters and federal police left eight people dead in the surrounding state. To cut off police pursuing them, the gangsters hijacked trucks and set up at least four blockades along highways.

Driven by the strength of the Japanese yen, Nissan is boosting production in low-wage countries like Mexico. The company said its sales in the Americas climbed 17 percent last year, giving it an overall market share of 7.5 percent in the region.

Other global manufacturers, finding that low wages here can offset security costs, also are moving production from Asia back to Mexico.


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