Mexican Suppliers Gain Ground in Global Manufacturing
Borderlands is a weekly summary of developments in the world of trucking and cross-border trade between the United States and Mexico. This week: Mexico-based suppliers gain traction in global manufacturing; John Deere transfers some US operations to Mexico; Texas officials have established a joint operations center on the Gulf Coast; and a trucker is accused of attempting to smuggle $18 million worth of methamphetamine.
Mexican Suppliers Gain Ground in Global Manufacturing
As China and other Asian countries remain an important component of the global supply chain, tenders to Mexican suppliers are increasing, said Jim Bureau, CEO of Jaggaera US-based technology provider of cloud-based enterprise automation software.
“In the United States, we saw from 2020 to 2021 a decline in supply in Asia Pacific of about 30% and an increase in Latin America of about 150%, which is quite significant,” Office said. at FreightWaves.
Based in North Carolina, Jaggaer provides automated procurement solutions to 1,700 global customers, including manufacturers like Siemens and Hitachi.
Bureau said Jaggaer’s manufacturing customers weren’t necessarily abandoning Asian suppliers altogether, but were adding more Mexico-based suppliers to their customer base to diversify their supply chains.
“What our customers do is they add suppliers to the mix, which complicates things a little bit because then you end up with managing a larger supply base,” said Desk. “But if you look at how these people are handling things now, there are so many moving parts in the supply chain. Companies are also trying to manage responsible sourcing and close relocation to avoid disruption.
German company Siemens recently announced plans to build a $35 million electrical component factory in Nuevo León, Mexico. The products will be exported to Siemens customers in North America and Europe. Nuevo León is just outside of Monterrey, Mexico, approximately 139 miles from the US-Mexico border.
Siemens has facilities in more than 200 countries, including 10 in Mexico. Its customers include aerospace manufacturer Raytheon and truck manufacturer Navistar, which recently opened a major plant in San Antonio.
Bureau said the decision to seek more suppliers in Mexico was caused by higher shipping costs from Asia, as well as longer wait times for goods. Several COVID-related lockdowns in China in recent months have resulted in more global delays and route adjustments.
“Even once you’ve purchased the goods, you need to be able to get them from point A to point B,” Bureau said. “It costs me twice as much and takes twice as long to get it from Asia-Pacific right now.”
On Friday, the cost to move a loaded container from China to the West Coast of the United States (FBXD.CNAW) had a spot rate of $9,573.72, a 55% year-over-year increase from the same period in 2021, according to the Freightos Baltic Index (FBXD.CNAW). Asia-West Coast freight rates have fallen dramatically since May 3, when spot rates were $16,365.74.
With manufacturers diversifying their supply chains with suppliers in Asia and Latin America, maintaining quality control, inventory management and risk control can become more difficult, Bureau said.
“The reason you have one or two key suppliers is so you can have real-time supplier-managed inventory, you can have quality assurance programs – duplicating that with suppliers in more than one country doesn’t is not an easy task,” Office said. .
“So what Jaggaer does is a big picture, we connect buyers and sellers through what we call a self-guided B2B commerce model, and through self-guided, which we try to do where we can, it is to put in place parameters that allow automatic learning. or artificial intelligence to increase supply events, to increase purchases and inventory managed by suppliers.
John Deere transfers certain American activities to Mexico
John Deere will move its tractor cab assembly from Waterloo, Iowa, to Ramos Arizpe, Mexico, by 2024, the company recently announced.
The decision to move operations was driven by labor market costs, John Deere officials said.
“John Deere’s plan to bring new product programs to our operations in Waterloo, Iowa, makes it necessary to consolidate cab manufacturing [Waterloo] at [Ramos Arizpe]. The decision to move cabin production ensures the company can balance labor needs within a tight labor market, while also ensuring Waterloo can open up floor space to manufacture new products,” the company said in a statement emailed to media.
The Waterloo plant employs approximately 1,500 people, including 1,100 production workers. It is unclear how many jobs will be affected by moving the production line to Mexico.
Production workers at the Waterloo plant can earn about $22 to $33 an hour, according to United Auto Workers Local 838, which represents about 3,000 workers in the Waterloo region.
John Deere, based in Moline, Illinois (NYSE: OF) is a global manufacturer of agricultural and construction equipment. The company has more than 100 factories around the world in 30 countries.
Texas officials establish joint operations center on Gulf Coast
Texas officials recently announced the creation of the Joint Intelligence and Operations Coordination Center (JIOCC) in Houston aimed at creating unified responses to disasters and crime prevention initiatives along the Gulf Coast.
The JIOCC will be a joint control center coordinating operations between the US Coast Guard Sector Houston-Galveston; Houston Homeland Security Investigations (HSI), US Customs and Border Protection; and the Houston and Transportation Security Administration (TSA).
“By bringing together and leveraging each agency’s unique strengths, authorities, and capabilities, we are better positioned to protect the ports and waterways of southeast Texas and southwest Louisiana,” said Coast Guard Capt. Jason Smith in a statement.
The center will be staffed with Coast Guard, HSI, CBP and TSA personnel. JIOCC staff will include a full-time Texas National Guard Drug Analyst whose focus will be to provide analytical support to HSI components.
The JIOCC will also serve as the event’s command post in the event of a natural disaster or other emergency.
Trucker charged with trying to smuggle $18 million worth of meth
A 33-year-old truck driver has been charged with allegedly attempting to import more than 881 pounds of methamphetamine, according to Texas authorities.
A federal grand jury in Laredo, Texas, recently indicted Luis Alberto Garza Cisneros on two counts, according to a Release from the U.S. Attorney’s Office for the Southern District of Texas.
Authorities said Cisneros, a Mexican national, attempted to enter the United States from Mexico driving a tractor-trailer carrying stainless steel scrap on May 6. Agents from the Laredo World Trade Bridge reportedly discovered methamphetamine in 24 5-gallon buckets inside the tractor’s diesel tanks.
The drugs have an estimated street value of $18 million, officials said.
If convicted, Cisneros faces life in prison and a maximum fine of $10 million. No trial date has been set.
Watch: FreightWaves Carrier Update for June 10.
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