AURORA, Ont. — Auto parts marker Magna International Inc. (TSX:MG) is adding to its presence in Mexico by spending US$100 million to build a new plant to produce stamped and welded assemblies for several automakers.
“The strategic decision to expand operations in Mexico is part of our long-term global strategy of developing in key growth markets,” said Magna CEO Don Walker.
Magna announced the new plant after discussions between Walker and Mexican President Felipe Calderon at the World Economic Forum in Davos, Switzerland.
The plant in San Luis Potosi, in central Mexico some 400 kilometres from Mexico City, is slated to open in June 2012 and is expected to create about 700 jobs when fully operational. It will be run by Magna’s international subsidiary, Cosma International.
Magna, which is receiving support from the Mexican government, already has 29 manufacturing plants and about 15,900 employees in Mexico.
San Luis Potosi is considered strategically located to supply original equipment manufacturers in the centre and north of the country, said Magna spokeswoman Tracy Fuerst.
For example, Magna customer General Motors Co. recently announced a capacity expansion at an assembly plant in the region, where it manufactures the Chevrolet Aveo.
Mexico also close to the large U.S. auto market, which makes for efficient shipments by rail, while production costs, including labour, are cheaper than in Canada or the United States.
Magna has been also been expanding rapidly into the South American market, Fuerst said.
“The economy is becoming stronger there. The auto industry is starting to become a real big player and we see lots of opportunity in South America so that is definitely a region we are focused on.”
Carlos Guzman, CEO of the Mexican trade and investment agency ProMexico, said the government will focus on supporting Magna so that it can take advantage of the business opportunities in his country.
“Our government’s interest is to make sure that investment in Mexico, from global leaders such as Magna International, are a success,” Guzman said.
Magna sells auto parts to original equipment manufacturers of cars and light trucks in North America, Europe, Asia, South America and Africa. It has more than 92,000 employees in 25 countries.
Magna shares were up $2.53, or more than four per cent, at $60.75 in afternoon trading Thursday on the Toronto Stock Exchange.