$23bn Mexico port venture faces snarls

Carmakers from Nissan Motor Co. to Mazda Motor Corp. are churning out record numbers of vehicles in Mexico destined for consumers abroad. Yet some executives are worried that the factory hum will slow in coming years as exports get bogged down by congestion at the nation’s ports.

The government has targeted 70 billion pesos ($4.6 billion) for port infrastructure through 2018, including building four new terminals in Veracruz. Some automakers are skeptical that the goal will be met or will be enough to handle the more than 5 million vehicles Mexico expects to produce annually by 2020, a 56 percent increase from the country’s 2014 output.

In the past two-and-a-half years, car manufacturers including Toyota Motor Corp. and Daimler AG, have invested or promised $22.6 billion for auto and parts plants, according to the government. That success story, which made the sector the largest source of foreign cash in the country, may be imperiled if the government doesn’t speed up plans for infrastructure improvements.

“Up until now, Mexico has succeeded in attracting more investments,” said Carlos Serrano, chief economist for BBVA Bancomer SA, Mexico’s biggest bank by loans outstanding. “But there’s going to come a point, when if infrastructure doesn’t get better, it’s going to put Mexico’s continued advance at risk.”

For Nissan, bottlenecks on the docks could delay a quarter of its planned maritime shipments to the U.S., Europe and the Middle East in five years, said Horacio Saldivar, the company’s local purchasing head. In 2014, Mexico became the world’s biggest exporter of Nissan vehicles, according to the automaker’s website.

“After 2020 we could have capacity limits” at the Gulf port of Veracruz and the Pacific port of Lazaro Cardenas, Saldivar said in a telephone interview. That could be true even following the completion of existing expansion plans. “We need to work with governments on how to expand.”

President Enrique Pena Nieto has made investing in the country’s infrastructure a priority.

His administration is boosting operating capacity at ports by 50 percent through 2018 and doesn’t foresee any bottlenecks at docks as new plants come online, Guillermo Ruiz de Teresa, the Communications and Transportation Ministry’s ports coordinator, said in a telephone interview.

“We are on time” to meet capacity needs for the growing auto industry, Ruiz told reporters May 13. “I’ve spoken with practically all of the auto producers, guaranteeing space at ports for them to grow.”

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