Thursday, September 13, 2007

About 200 Mexican suppliers suspend operations

Stephen Downer
Automotive News
September 13, 2007 - 11:43 am EST

MEXICO CITY -- The head of Mexico’s auto suppliers association said today that 200 of his group’s 1,000 members have suspended production because of a lack of natural gas.

The attack on Monday, Sept. 10, by leftist rebels on crucial fuel pipelines also has caused six auto assembly plants here, including two owned by General Motors, to suspend production. Ford Motor Co., Honda Motor Co., Chrysler LLC and Volkswagen AG also have suspended production for the rest of the week.

The number of suppliers affected by the natural gas cutoff or by customers cutting production has doubled in the past two days. Delphi Corp. and Visteon Corp. are among suppliers that have shut down plants.

There have been no reports of parts deliveries being affected outside Mexico.

Ramon Suarez, president of the INA, Mexico’s national auto suppliers association, today urged the Mexican government and state energy monopoly Petroleos Mexicanos, or Pemex, to improve the energy infrastructure “so that we don’t have to rely on just one pipeline for our supplies of natural gas.”

“It is a grave situation, both from the point of view of economic losses and the reputation of Mexico,” he told Automotive News, when asked about the impact of the pipeline sabotage. “Two hundred companies have had to stop production.”

Pemex says it plans to resume natural gas deliveries between Sunday evening, Sept. 16, and early Monday, Sept. 17, but Suarez said “I have to investigate how long it will take for normal pressure to be reached.”

In the past five years, direct foreign investment in Mexico’s supplier industry has totaled $6.1 billion, and employment growth during that time has averaged 1.8 percent annually, Suarez said in an interview with Automotive News this summer.

He said in that interview that in 2006, about 1,000 auto suppliers employed 456,103 people. Suarez said the companies produced an unprecedented $26 billion worth of parts and components last year -- 11 percent more than in 2005.

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