Amid a sweeping reconfiguration of global supply chains, North America—and Mexico in particular—has emerged as a critical battleground for manufacturers caught between geopolitics and trade barriers. Yet for companies expanding into Mexico early, the reality on the ground is proving more complex than the strategic narrative suggests, shaped by cross-border management frictions, cultural divides, and policy uncertainty.
For auto parts supplier Hiroca, one of the early movers into Mexico, those tensions are now visible in both its operations and its demand outlook.
The appeal and limits of 'Made in Mexico'
As geopolitical tensions between the US and China persist, Chinese automakers and suppliers have accelerated their expansion into Mexico, viewing the country as a strategic bridge into the North American market.
Hiroca's Mexico operations have been established for years, and today account for more than 20% of its revenue. Its factories are running at a sustained utilization rate of roughly 80% to 90%.
The company's latest investment—three new coating lines in Mexico—is now in the final stages of debugging and acceptance testing. While the additional capacity is expected to temporarily dilute utilization rates as new orders ramp up, Hiroca anticipates a meaningful expansion in both production ceilings and output value by 2026.
Deferred demand and shifting geopolitical backdrop
Looking toward 2026 demand, Hiroca acknowledges that current performance is slightly below earlier expectations set at the beginning of the year. Several vehicle models have also seen production timelines delayed by one to two months.
The company attributes part of this softness to a temporary easing of trade tensions. In earlier phases of the US–China tariff confrontation, American customers pushed aggressively to relocate supply chains out of China and into Mexico. More recently, however, as tariff pressures have moderated and China's cost advantages remain intact, the urgency behind relocation has eased.
Still, Hiroca stresses that the structural shift toward Mexico remains intact. Most contracts have already been signed, locking in long-term supply chain migration trends even if short-term timing has softened.
Trade policy as political theater
On the policy front, renewed debate over the future of United States–Mexico–Canada Agreement continues to shape sentiment across the region.
With US President Donald Trump repeatedly advocating for "Made in America" manufacturing and signaling interest in renegotiating the agreement, Hiroca expects trade discussions to resurface as the framework comes up for review.
Yet the company argues that structural constraints limit how much production can realistically return to the United States. While high-value electronics components may be reshored, labor-intensive categories such as automotive exterior parts and traditional manufacturing are unlikely to move back in scale due to US wage levels and labor shortages.
In Hiroca's assessment, Mexico's role as a core hub in the North American automotive supply chain remains largely intact, with political rhetoric contributing more to short-term volatility than long-term disruption.
The operational reality: labor, regulation, and culture
Behind the strategic narrative, Hiroca also highlights the less visible challenges of operating in Mexico.
Labor costs have risen steadily in recent years alongside rapid economic development and significant minimum wage increases. At the same time, labor regulations are strict and highly prescriptive. For example, rules require hourly breaks for standing workers, and weekly overtime is tightly capped.
Workforce structure also differs markedly from Asian manufacturing environments. Blue-collar workers are typically paid weekly or biweekly, and cultural emphasis on family life often affects attendance consistency and production scheduling.
Hiroca acknowledges that when comparing cost structures across regions, customers and suppliers are well aware of a basic tradeoff: Mexico's role is driven less by efficiency or labor discipline than by its ability to help companies avoid tariff exposure.
Vertical integration: betting on upstream control in Taiwan
Against this backdrop of shifting trade dynamics, Hiroca is also accelerating its push into upstream integration to reduce costs and strengthen long-term competitiveness.
Alongside consolidation of its China operations and expansion in Mexico, the group is investing in a new facility in Hsinchu, Taiwan, focused on developing proprietary film-production technology.
Film materials are a core input in Hiroca's manufacturing process and were previously largely outsourced. The first phase of in-house processing was completed in 2025. A second phase is scheduled for completion by the end of 2026, with a third phase expected to enable full vertical integration—from raw plastic pellets to finished film.
The company believes this proprietary capability will not only deliver meaningful cost reductions but also serve as a strategic buffer amid ongoing geopolitical fragmentation and the restructuring of global automotive supply chains.
Article translated by Elaine Chen and edited by Jack Wu
