Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Factory employees are seen working in the plant of General Motors in the city of Silao, in the state of Guanajuato, Mexico in this November 25, 2008 file photo.

HENRY ROMERO/Reuters

Mexico has won new auto investments worth $2.4-billion (U.S.) in one week, just $800-million less than the $3.2-billion invested by auto makers in Canada since 2010.

BMW AG said Thursday it will spend $1-billion to build a new plant in Mexico, on the heels of an announcement last week by Daimler AG and Nissan Motor Co. Ltd. that they will invest $1.4-billion to build luxury cars.

The two new plants, which are scheduled to come on stream later this decade, underline how Canada is being eclipsed by Mexico when it comes to new auto investment.

Story continues below advertisement

"Mexico simply wants jobs and economic growth more than Canada," and recognizes that assembly plants with thousands of direct jobs and thousands more spin-off jobs are one way to generate employment and growth, one senior industry executive said Thursday.

Mexico has already knocked Canada into third place when it comes to vehicle production in North America and output will expand again in 2014 with new Honda Motor Co. Ltd. and Mazda Motor Corp., plants that began turning out vehicles earlier this year.

Audi AG said late last year it will build an assembly plant in Mexico. With the announcements by BMW and Daimler, three of the largest and fastest-growing luxury manufacturers in the world will be building vehicles in that country.

When it comes to winning such investments, Canada is battling against a country with formidable advantages.

In addition to significantly lower labour costs than both Canada and the United States, Mexico is also an export powerhouse, boasting free-trade agreements with more than 40 countries and ports on both the Atlantic and Pacific oceans that operate year-round.

"The large number of international free trade agreements – within the NAFTA area, with the European Union and the MERCOSUR member states, for example – was a decisive factor in the choice of location," BMW said in a statement announcing the investment.

Mexico's foreign investment agency, ProMexico, is aggressively courting auto investments and offers generous incentives, industry sources have said.

Story continues below advertisement

"When Mexico goes on to the world stage, they go as a national player, not provincial, not municipal, not regional," said former Ontario economic development minister Sandra Pupatello, who now is chief executive officer of the WindsorEssex Economic Development Corp.

"ProMexico is streamlined, it's one door, it makes a difference. [Companies] only have to talk to one person," Ms. Pupatello said.

The federal and Ontario governments offer incentives to auto makers to locate in Canada. But a report issued last year by the Canadian Automotive Partnership Council, an industry-union group set up to advise the governments on the auto sector, complained about the way the Canadian funds are administered.

"In Mexico, for example, rarely will one see repayable contributions or restrictive covenants that can claw back co-investment programs," the report said. "Through ProMexico, companies can secure cash grants with no strings attached."

The report described Mexico as a preferred location for auto investment, although car companies always consider the United States first because it is the largest market.

"However, what has changed is that their second choice is now Mexico, not Canada," it concluded.

Story continues below advertisement

BMW already has an assembly plant in North America. Its factory in Spartanburg, S.C., is in the midst of a $1-billion expansion that will boost production to 450,000 vehicles by the end of 2016.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies