Ambassador Wayne’s Remarks at the Automotive Logistics Mexico Conference

Buenas tardes a todos.   Es para mi un gran honor estar aquí el día de hoy en la Conferencia de Logística Automotriz México.  Estoy muy emocionado de poder estar aquí hoy con ustedes hablando de la dinámica y el rápido crecimiento de la industria automotriz en México.  Y del la importancia de la logística en el éxito continuo de esta industria.  Me gustaría dar las gracias a la Cámara de Comercio  México-Estados Unidos por patrocinar este evento y a todos los patrocinadores y participantes de la industria que están contribuyendo hoy con su presencia y presentaciones. Desde que no hay traducciones simultanea, voy a continuar en ingles para aquellos que no entien español.

The automotive industry in Mexico is certainly a success story and a great example of the benefits of free trade.  The huge expansion of auto production in Mexico owes much to NAFTA.  From 1993, the year before the start of NAFTA, to 2014, the annual revenue from Mexico’s vehicle exports to the United States has grown 10-fold.

Last year, Mexico’s auto industry grew output by 9.8% and surpassed Brazil to become the 7th largest producer of autos in the world.  Mexico is producing approximately 8,000 vehicles per day or one every 40 seconds. Remarkably, 8 out of 10 autos produced in Mexico are exported. With its 2.6 million exported vehicles, Mexico is the fourth largest exporter on a worldwide basis, and it is the largest exporter of autos to the United States.  Last year, Mexico grew its market share in the United States  from 10.6% to 11.41% by taking share from Japanese and German producers.   Mexico is also the 5th largest auto parts producer.  These are no small achievements, and the Mexican auto industry should be justly proud of its accomplishments.

But this is not just a story about Mexico.  There is no national champion auto producer in Mexico who enjoys special privileges or who is bolstered by government support.

The producers of automobiles in Mexico and the participants in the supplier and logistics sides of the business are a very diversified group of Mexican, U.S., European and Asian companies who have invested here to take advantage of the favorable market conditions and the great access to global markets provided through Mexico’s many free trade agreements.

Clearly, the North American market is very important for Mexico.  In 2014, 71% of automobile exports went to the United States, 10% went to Canada while another 9.4% went to the Latin American market.  Thanks to the solid growth of the U.S. economy in 2014, total U.S. auto sales climbed 5.9%.  In a show of strength, Mexico’s exports to the United States outperformed this level and climbed by 13.9%.  And these numbers do not include the large amount of Mexican exported automotive parts that go into the production of autos in the United States and Canada.

The NAFTA area including Mexico accounts for 85% of Mexican production, but Mexico is attractive as a base of operations for automotive companies not only because it provides access to North America but because they can access other markets thanks to the 45 free trade agreements that Mexico has signed with other countries.  This is an opportunity for future growth.

In 2015, we hope to complete the Trans-Pacific Partnership and with Mexico join in an ambitious 21st century trade agreement that would include 12 countries and further expand trade opportunities for the integrated automotive industry in the United States and Mexico.

Given the complexity of Mexico’s highly international, export- focused auto industry, world class logistics enterprises are absolutely essential to continued growth and development. Many of you are directly involved in providing these essential services, and the overall achievements of the industry are your achievements as well.

But great businesses and business leaders alone will not ensure the continued growth of the automotive sector in Mexico.  Indeed, the future prosperity and growth of your industry and the entire economy of Mexico will depend on the overall climate for business in this country, which includes much more than free trade agreements.  Improved security for the Mexican people and the companies that invest here for example, will help ensure that the progress of the Mexican economy.

Toward this end, the United States and Mexico are committed to disrupting and dismantling criminal organizations affecting cross border trade.  I have met with business leaders on both sides of the border and know this is a serious concern for many companies – and for good reason.

Not only does it threaten the security of their workers, it also endangers the safety of their supply chain.  So, companies in both the United States and Mexico are spending an untold amount of money to fortify their operations and supply chains.  At the end of the day, these are dollars and pesos that could be invested more productively.  Working shoulder to shoulder with our Mexican colleagues, the United States is committed to confronting these challenges head-on to improve the security environment in which you operate.

In this vein, we have delivered $1.3 billion worth of security equipment, training, and technical assistance through the Merida Initiative since 2008.  Under the Merida Initiative, the United States and Mexico are employing a comprehensive approach to rein in criminal organizations.   Without question, our shared commitment to enhancing Mexico’s law enforcement capabilities is a vital part of our effort.

But this only captures part of what we’re doing.  Merida Initiative programs also aim to advance justice sector reform, strengthen human rights protection mechanisms, and address social problems emerging from the violence across parts of Mexico.

Cooperation between our law enforcement and justice organizations, including a two-way exchange of information, is essential to our broad efforts to dismantle these organizations and their infrastructure, reducing violence and strengthening rule of law.

At their January meeting in Washington D.C., President’s Obama and Peña Nieto underscored the strategic nature of the U.S.-Mexican relationship and discussed ways to deepen the our economic and commercial cooperation.

The auto industry is a great example of how our two countries are working together to create prosperity and enhance the well-being of our citizens.  With our partnership to create a strong environment for growth, our nations will lay the groundwork for continued joint successes going forward.

Nuevamente les agradezco a ustedes su amable invitación para hablar en la Conferencia de Logística Automotriz de México el día de hoy y para compartir el exito de su industria.  Me daría mucho gusto tomar algunas preguntas.