Nissan's operations in Mexico face significant challenges as the company gears up for restructuring after failed merger talks with Honda. The automaker's CEO Makoto Uchida announced plans to expedite its global restructuring strategy, which includes substantial job cuts and operational modifications.
During a press conference from Yokohama, Japan, Uchida explained the plan to cut 9,000 jobs globally starting with the 2025 fiscal year, which begins on April 1. Of these cuts, approximately 6,500 positions will be eliminated from their manufacturing sector, which includes assembly and engine plants. The initial phase will see 5,300 jobs cut within the coming fiscal year, followed by 1,200 more layoffs planned for 2026.
The reorganization aims for a 20% reduction in Nissan's global production capacity, decreasing vehicle output from five million to four million annually by 2026. Japan will see about half of this reduction, impacting their production sites, with one confirmed closure already announced for Thailand. Uchida has noted the potential impact of US tariffs on the production of certain models, with concerns about financial ramifications looming as the company eyes alternatives.
Despite these challenges, Nissan recorded its highest production numbers globally from its Mexican facilities last year, producing 669,941 vehicles—a figure surpassing even its outputs from China and Japan. Notably, 300,000 units were exported to the United States from the Aguascalientes plant. Still, Uchida mentioned possibilities of relocating some production back to Japan if tariffs are imposed, evidencing the precarious nature of international trade relations.
Recent insights from BBVA Research reveal mixed signals for the manufacturing sector within Mexico. The latest report indicates the BBVA Multidimensional Manufacturing Indicator (MMI) suffered a decrease of 4.8% year-over-year as of January, marking the tenth consecutive month of decline since April. This slump is coupled with data from the Institut National de Statistique et de Geographie (INEGI), which recorded a 2.4% YOY contraction as of December—reflecting the challenges facing many industrious segments.
The report highlighted sluggish recovery forecasts for the manufacturing sector, with fifteen out of twenty-one subsectors still underutilizing their capacities as of December. Though automobile sales showed promising signs of growth—averaging 4.4% real YOY between November and January—analysts urge caution. Predictions of increased production levels hinge largely on impending automotive sales growth reflecting broader economic factors.
BBVA Research has also identified the tariff imposition on imports as a significant risk factor, though they assess the likelihood of this occurring to be low due to the negative impact it would have on the US automotive sector. This aspect of the economic dynamic highlights the intertwined fates of both countries as they navigate manufacturing adaptation and trade policies.
The combined outlook for Nissan and the broader manufacturing industry suggests recovery may be gradual and fraught with uncertainty. With the push from Nissan for efficiency via job cuts standing against the backdrop of industrial output trends, the future remains complicated. Observers of the sector will watch closely as key indicators evolve, impacting not just corporate strategies but the workforce and economic health of Mexico.
With Nissan's pull from certain markets and the global shift toward precautionary measures, the manufacturing sector is at the crossroads between necessary evolution and uncertain demands. It remains to be seen how Mexican manufacturing will adapt and overcome these challenges, aiming for recovery within this unsteady terrain.