Automakers to resume Mexican production after meeting safety protocols

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BMW Series 3 cars made in Mexico ready for export.

Meghan Reeder | CNBC

Automakers and suppliers will be allowed to resume production in Mexico as early as next week as long as safety protocols are implemented to protect workers from Covid-19, according to updated guidelines released Friday by the Mexican government.

The update is expected to end days of confusion around the reopening of Mexican auto plants. The guidelines have been changed at least three times this week, including Thursday when the government said production could not begin until June 1.

The updates add the safety protocol stipulation and say if companies are found to be putting their workers’ health at risk, the operations will be shut down. 

Safety protocols, according to the guidelines, are expected to include adjustment of workspaces and production processes, as well as establishment of entryways, sanitization and hygiene practices determined by the health ministry. All are similar to measures already being established in U.S. and Mexico factories by automakers. 

An email obtained by CNBC on Friday from the Original Equipment Suppliers Association, or OESA, to members of the U.S. auto suppliers trade group highlights and confirms the changes.

In a joint statement, leaders with OESA and its parent group, the Motor & Equipment Manufacturers Association, said they “appreciate the efforts” of Mexican President Andres Manuel Lopez Obrador “to address ramping up vehicle and parts production in Mexico.”

“Allowing motor vehicle parts manufacturing to take steps toward reopening is an integral part of the North American economic recovery,” said Ann Wilson, MEMA senior vice president of Government Affairs and Julie Fream, OESA president and CEO. “Our members are working closely with their Mexican operations to address the safety and health protocols as defined by the Mexican government.”

The Mexican government did not immediately respond to an email seeking confirmation of the changes.

Without Mexico production reopening, it was unclear whether U.S. production could successfully resume next week for General Motors, Ford Motor and Fiat Chrysler.

Despite President Donald Trump’s “America First” policies, the U.S. auto industry heavily relies on Mexico for parts and vehicle production.

At $93 billion, vehicles were the top import to the U.S. from Mexico in 2018, according to federal data. The Center for Automotive Research reports $60.8 billion, or 39% of auto parts used in the U.S., were imported from Mexico in 2019.

Vehicles imported to the U.S. from Mexico include pickup trucks by General Motors, Fiat Chrysler and Toyota Motor as well as luxury vehicles from BMW, Mercedes-Benz and Audi.

Spokespeople with GM, Ford, Fiat Chrysler and other automakers did not immediately respond for comment or declined to comment on their plans for restarting production in Mexico.

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