What was suppose to be a party around the opening of Kia’s new assembly plant in Mexico ended with some tension and awkwardness. The festivity, that was around the three-billion-dollar plant, where local officials and Kia reps gathered to celebrate new jobs, new opportunity, and the new money this plant will bring, was dampened by Pesqueria’s mayor, Miguel Angel Lozano.
The new Kia plant covers about 1,200 acres in Lozano’s small town of Pesqueria, and with the state governor on hand, as well as Kia’s CEO, and Hyundai’s Chairman looking on, the Mayor thanked the officials for the investment, but also took the opportunity to state his concerns over the economic benefit.
Lozano stated that in spite of the ‘world-class’ plant in the town, there was very little investment around infrastructure to support it. He then pleaded with Mexico’s federal government and state officials to assist with emergency funding for the town. As he noted, his municipality is not equipped with installations for public safety, a municipal council, civil protection, fire fighters, sustainable highways, or even traffic lights.
This isn’t the first time tensions have risen on Kia’s road into Mexico, and Lorenzo’s statement highlighted the downsides of expanding in areas where global auto manufacturers search for cost-effective labor on the North American platform.
Kia’s new Mexican assembly plant was announced in 2014, and hit some issues in the fall of 2015 when Nuevo Leon’s state governor, new to the position, took a hard stance on anti-corruption. In fact, Gov. Jaime Rodriguez Calderon, often referred to as ‘El Bronco’ fought against the incentive package that a previous governor (Rodrigo Medina de la Cruz) had laid out to entice Kia to bring the plant to the area the first place. El Bronco actually filed charges of fraud against Medina and some in his office, for their part in the Kia deal.
Auto News reported that Rodriguez was able to ensure some terms that were more favorable to Nuevo Leon, and Kia then worked out a new deal with the state. Both signed a memorandum of understanding this summer, however the deal has not been disclosed nor finalized, as per a statement made by Kia. These details should be announced in the coming weeks.
Rodriguez addressed the concerns of the mayor, promising to help when it comes to resolving these issues that Pesqueria is facing. He also added that ‘he knows’ Kia will help as well.
The ribbon-cutting ceremony was simply a formality, as the work at the new plant started in May of this year – where the 2017 Kia Forte hatchback and sedan models started production. Kia plans to build about 100,000 vehicles at the plant this year, with 400,000 annually.