MEXICO CITY—Buoyed by a mushrooming automotive industry, record domestic vehicle sales and compliant unions, the tire industry has rarely had it so good in Mexico.
But the Trump factor and the influx of used tires into the country's price-driven market over the past decade continue to cause disquiet.
President Trump's public slamming of the North American Free Trade Agreement among the U.S., Canada and Mexico has prompted his administration to launch a review of the accord, implemented in January 1994.
Mexico's business community is hoping for a positive outcome, although uncertainty persists. For instance, Humberto Gomez, managing director of Yokohama Rubber Co. Ltd. subsidiary Yokohama Tire Mexico S. de R.L. de C.V. said in June 2016 that YRC, wanted to increase its production capacity in the NAFTA region.
A new factory would be built in either the U.S. or Mexico and he expected a decision on where by the end of 2016. A year later, Yokohama has still not made an announcement. Trump-related wariness? Maybe. Yokohama has not said.
Onward for Goodyear
Although the initial anger at Trump's antagonism toward Mexico, including his description of undocumented Mexican workers as rapists, drug dealers and murderers, appears to have faded, some regions are still counting the cost of his arrival in the White House.
In January, Ford Motor Co., which Trump regularly criticized during the presidential campaign for creating jobs outside the U.S., canceled the $1.6 billion light vehicle assembly plant it was constructing in San Luis Potosi in central Mexico. It had planned to make 350,000 small cars a year at the facility and insisted it would not bow to political pressure. Whether or not Trump influenced its decision is open to speculation.
"There is concern, especially in the automotive industry, and we have to watch the situation very carefully," Franco Herrera Sanchez, Guanajuato state's under-secretary of investment promotion, said, referring to Trump's election victory. Guanajuato has a large automotive industry cluster of several hundred companies.
However, Akron-based Goodyear, which broke ground on its first plant in the Americas for a quarter of a century (also in San Luis Potosi) in July 2015, has pressed on with plans.
Known internally as the "Americas Project," the $550 million facility is slated to be operational starting in July. In 2015 Goodyear said the plant would have an annual production capacity of 6 million high-value-added tires, such as the Eagle F1 and Wrangler All-Terrain Adventure with Kevlar.
Goodyear operated a plant in Mexico, in Tultitlan, a dozen or so miles outside Mexico City, for 60 years but shut it down in 2001 "because its high costs are incompatible with current economic conditions," the company said at the time.
Used tires a danger
Mexico's 2,400 or so tire dealers sold 39.4 million new tires in 2016, according to Elizabeth Ventura Rendon, president of their national association, Asociacion Nacional de Distribuidores de Llantas y Plantas Renovadoras AC (ANDELLAC).
However, the legal and, in some cases, illegal importation of up to 2 million used and low quality tires annually from China, South Korea and the U.S. has blurred the domestic replacement tire picture.
"There's no protection (for the national industry)," Ventura Rendon said in a 2016 interview, adding that the association was lobbying the federal government to try to get the imports stopped. However, it was still an issue in June this year, an ANDELLAC spokesman said. "Used tires are dangerous," she said.
"The authorized annual quota of imported used tires that are sold along Mexico's frontiers has been 840,000 units in recent years," a spokesman for national rubber industry chamber CNIH said.