Guido Vildozo, senior manager, Americas, for IHS Automotive in Lexington, Mass., notes that Detroit 3 vehicles that retail for more than $40,000 have been built in Mexico in the past for Cadillac, Lincoln and Saab.
“It’s not the first time Mexico has moved in that direction,” he said. “But this is the first time we will see a German premium build.
“Tier 1 suppliers are well-established,” he confirmed. “But we find a challenge in Tier 2s and Tier 3s. That is where we have holes.”
Armando Cortes Galicia, automotive industry coordinator for the Mexican trade agency ProMexico, says that since the BMW plant announcement in 2014, more than 40 new parts suppliers have arrived in the state of San Luis Potosi. Another 11 major suppliers have expanded there.
But one of their competitors may be BMW itself.
The new auto plant will rely on what Zipse calls “modular insourcing, not from the outside — for flexibility reasons.”
BMW will take over some components itself partly to guarantee a facet that is important to the BMW brand: the ability to have last-minute assembly flexibility. That is primarily so that a customer or dealer order can be changed up to 10 days before the vehicle is manufactured. BMW is striving to allow last-minute changes up to six days before the manufacture date.
Because the parts modules coming to the line will be large and have to arrive in production sequence, BMW chose to have them built by its employees.
That is a new element of vehicle assembly for BMW, Zipse says. And it is the sort of design consideration that impacts an automaker’s supply-chain decisions.
BMW wants its plant to be flexible enough to allow the brand to satisfy customers. But San Luis Potosi also must be a cost-efficient investment. Insourcing modules provides more production flexibility, but it triggers other plant costs.
By assembling modules on a lane that is off the vehicle production line, the plant will be a little less expensive to construct, he says. But insourcing modules will create storage needs for large components.
“You have to be careful your sequence costs do not become outrageous,” Zipse commented. “Your plant might look simpler but not be flexible. That is very expensive.”