Nearshoring and Beyond: Hot Topics for Automotive Companies Operating in MexicoMay 3, 2023
“Any company now operating or considering operating in Mexico should evaluate the pros and cons of manufacturing in Mexico and be aware of the key developments highlighted in this article. The authors of this article … have extensive experience assisting clients in developing the best strategy for doing business, while tailoring any nearshoring solution to meet the specific needs of each company.”
So surmises a recent National Law Review article discussing several recent Mexican labor regulations automotive-industry suppliers must understand, as well as the most recent interpretation of the United States-Mexico-Canada Agreement´s (USMCA) Automotive Rules of Origin, and new requirements concerning transparency of ownership.
Up for discussion: increase of labor benefits. The Lopez-Obrador administration has pushed for increasing labor benefits to employees in Mexico, which investors in Mexican manufacturing must account for when developing budgets and economic projections. These new benefits include an increase in the number of vacation days; the recently enacted 20-percent increase in minimum wage; a progressive increase in mandatory contributions to employee pension funds that grows from 3.15 percent of salary in 2023 to 11.87 percent by 2030; and the May 1, 2023, maturity date for all existing collective-bargaining agreements across Mexico to be legitimized through the express support of a majority of the workers covered by the relevant agreement. “It is expected that 80 to 90 percent of current collective labor contracts will not meet the legitimization threshold and, consequently, will be automatically terminated,” the article notes.
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