Giving Guadalajara Its Due as a Hotbed for Innovation

The need for world-class manufacturing and engineering talent in the automotive sector has reached a fever pitch as automakers, along with Tier 1 and 2 suppliers, gain velocity in delivering on the many promises of electrification. Success requires careful maneuvering around seemingly endless technology, supply chain and production speed bumps.

For that reason, among others, Molex recently opened a factory in Guadalajara, Mexico, to accelerate innovation on behalf of automotive, transportation and industrial customers in North America and globally. While the company’s manufacturing presence in Mexico has grown steadily for more than a half-century, this move is aimed at alleviating complex challenges in vehicle connectivity, electrification, battery management, functional safety and zonal architectures.

By doubling down on a new facility nearly twice as large as its existing Guadalajara footprint, Molex attains ready access to advanced manufacturing capabilities and a diversified pool of highly experienced engineers. This enables us to extend and complement our engineering resources throughout North America, Asia and Europe.

According to the International Trade Administration (ITA), Mexico produces approximately 3 million vehicles annually, with 76% destined for the United States. A long list of automakers has factories throughout the country, including Audi, BMW, Ford, General Motors, Honda, Hyundai, Kia, Mazda, Mercedes Benz, Nissan, Stellantis, Toyota and Volkswagen. Additionally, over 1,100 Tier 1 and several thousand Tier 2 and Tier 3 auto-parts manufacturers and suppliers have operations in Mexico.

Anyone prioritizing Mexico as a labor-arbitrage solution is missing the point. This country clearly has so much to offer. Mexico’s emphasis on STEM education is contributing to a rapid rise in engineering talent. In metro Guadalajara alone, more than 20 universities offer engineering programs focused on electronics, software, renewable-energy technologies and artificial intelligence.

Mexico also offers excellent opportunities for “nearshoring,” which relocates manufacturing closer to final delivery destinations. Trade agreements, such as the U.S.-Mexico-Canada Agreement (USMCA), provide incentives that can lower production costs while strengthening a company’s North American presence.

What stands out, however, is Mexico’s budding reputation as the “Silicon Valley of the South.” In particular, Guadalajara has become a hotbed for innovation, encouraging leading-edge product development and entrepreneurial thinking, along with increased foreign and venture-capital investments. According to Credit Suisse’s Mexico Nearshoring Tracker Second Edition released in October, Volkswagen, Flex Americas, Continental, Bosch and Molex contributed the most to the $2 billion invested during the quarter.

Molex’s decision to expand south of the U.S. border took place well before the pandemic and massive supply chain disruptions that caught many companies off guard. The company’s strategy to invest $130 million in a second factory in Guadalajara emerged from ongoing discussions about broadening supply chains, shortening lead times, localizing production and accessing specialized expertise to spur electrification.

These goals aligned with Molex’s plan to embrace factory-of-the-future capabilities, including production-line automation, advanced materials handling, robotics, cutting-edge molding and assembly, digital twins, artificial intelligence, predictive analytics, machine learning and other data-driven, digital technologies, tools and processes.

Expansion in Guadalajara also enabled the company to apply expertise from working with makers of sophisticated medical devices, high-speed networks and powerful data-center solutions — all critical to developing tomorrow’s electric vehicles, advanced driver-assistance systems (ADAS) and vehicle-to-everything (V2X) communications. We now can readily tap into a region rich with relevant customer experiences, proven engineering talent and overarching commitments to R&D.

Guadalajara has a strong foothold in electronics, medical devices and automotive manufacturing. The biggest EMS players — including Jabil, Flex and Sanmina, among others — have world-class factories here. Many tech titans in software, hardware and digital technologies also have a growing presence, which bodes well for the automotive industry because cars of the future will function more like data centers on wheels.

Equally important is the increase in on-site testing capabilities, such as the reliability and metrology lab Molex is implementing in Guadalajara. The goal is to empower local engineers to improve product designs and speed development cycles using testing, simulations and analyses that reduce rework costs and time. In collaboration with customers and colleagues, Molex is committed to Mexico for the long haul — and excited about discovering new and creative ways to continually add customer value.