POSCO Completes 2nd Galvanizing Line in Mexico

Production from 2CGL, in combination with the 400,000 annual tons from the 1CGL facility completed in 2009, will bring POSCO’s steel sheet production in Mexico to 900,000 tons annually. POSCO also operates four processing centers in Mexico.

Attending the completion ceremony on January 28 were representatives from major automaker clients Toyota, Honda, Nissan, and Volkswagen.

Open trade policy, lower wages and proximity to the US and Canada have made Mexico an attractive location for POSCO and for automakers. Auto production rose 1.7 percent in 2013 to 2.9 million vehicles according to data from the Mexican Auto Industry (AMIA) placing Mexico as the eighth largest automotive producer. Exports rose 2.9 percent to 2.4 million in 2013 putting Mexico in the fourth place slot for automotive exports.

Fuel economy regulations in the US have led to a growing number of compact vehicles like the Honda Fit being produced in Mexico, said Mike Jackson, Director, North American Vehicle Forecasting at IHS Automotive. The growing emphasis on compacts as a key product has energized the automotive industry in Mexico. Product demand along with a strong export record in Mexico has resulted in increased investment by auto manufacturers.

Mexico’s maturing industry is capable of producing ever increasing degrees of sophistication, said Jackson, adding that Audi’s new facility, that will produce the Q5 crossover SUV, is an endorsement of the Mexico’s strong export record. Another premium automaker, BMW, is currently in talks to build a $1.5 billion facility to manufacture the S1 and S3 models.

Substantial growth is expected in the Mexican auto industry for the next several years. “IHS forecasts Mexican automobile net production will grow by 1.6 million units this year to 4.5 million units by 2020,”said Jackson.