The potential employment impact of disruptive technologies in the automotive industry value chain: the case of Mexico

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The focus of this paper is on analyzing the potential risks and opportunities for the industrial clusters and value chains of the automotive industry in Mexico, specially in employment, that are brought by emerging technologies such as intelligent systems, internet of things and the Industry 4.0 approach.
There is evidence that exponential technological change offers extraordinary opportunities for countries such as Mexico to jump industrial and service stages, but it can also lead to serious socio-economic and political risks, which it is urgent to recognize and address. Regardless of the various forecasts of where technological change will lead us in 25 years or more, the serious challenge facing the world and, especially, developing countries such as Mexico, is to navigate the transition to stages of technological maturity, for the benefit of all the population (Cepal, 2017)
Recent research initiatives have shown that even after a reduction in employment derived from automation and process simplification that is expected, automotive industry clusters established in Mexico have diversified their production from cluster OEM with near supplier base into more broader types of cluster based on auto parts and automotive electronics, thus expanding their usual capabilities.
This research is based on the review of secondary sources (official databases), company visits, interviews with strategic social actors and a SWOT workshop. As well as previous studies conducted by the authors. This analysis is intended to help build recommendations to improve the combination of policy instruments that encourage industrial restructuring, taking advantage of the opportunities that exponential technologies offer to export manufacturing, while at the same time reducing their risks. In order to build these recommendations, we will define their absorption capacity, innovation and capacity requirements to be competitive in the new globalization.
A preliminary results shows that some activities such as metal-mechanics and combustion engines will decline in terms of growth while others, such as electronics, will increase their participation. Also a preliminary analysis of the impact on local suppliers is presented as a measure of the changes in the value chain that illustrates how traditional goods start playing a minor role in the cost structure, local knowledge intensive service suppliers are starting to have a larger participation in the value chain and still new areas of opportunity are emerging from the technology evolution perspective. These modes of change represent different facets of the upgrading process for the auto sector in Mexico. On the final section presented there is a synopsis on the roles of institutions and strategies being implemented to facilitate the assimilation of new technologies.