In today’s world and within the automotive industry, we continually face constant challenges that often seem overwhelming. Every week, unexpected news shakes the foundations upon which our work is built. However, it is essential to understand that this is inherent in the modern world, or more precisely, in the VUCA World.
The VUCA World: Volatility, Uncertainty, Complexity, and Ambiguity
VUCA refers to an environment characterized by volatility, uncertainty, complexity, and ambiguity. Understanding that we are immersed in a landscape with these characteristics demands a different mindset capable of navigating the waves of constant change with determination.
The Strike in the U.S. Automotive Industry
The strike that has persisted for the past six weeks at the major automakers in the United States, such as FORD, GM, and Stellantis, represents one of the most recent challenges the industry and the supply chain must face. This strike was organized by the UAW union (United Auto Workers), and although its goal is to make a significant mark on the U.S. labor sector, due to its duration, it has already had a considerable impact on the Mexican supply chain, affecting Tier 1, Tier 2, and Tier 3.
Since September 15th, the UAW union has called for more than 45,000 workers to stop their activities. It is estimated that by the fifth week of the strike, the losses due to debt for the three significant automakers exceed $9.3 billion (source).
The Need for Adaptation Strategies
As a Tier 2 company with over 30 years of experience and a strong relationship with key players in the automotive industry, at AMN Quality Solutions, we have had to implement specific strategies to mitigate the impact of labor stoppages in the United States. These strategies have required close collaboration with key institutions, such as the Labor Department.
Impact on Industrial Zones in Mexico
Key industrial zones in Mexico, such as Silao, Ramos Arispe, and Chihuahua, have been particularly affected by the strike. Numerous companies have had to halt their operations, posing significant challenges for resilience, especially for SMEs, Tier 2, and Tier 3.
Industrial Diversification as a Key to Adaptation
In a VUCA world, industrial diversification becomes a vital strategy. Surrounding oneself with a diverse supply chain is the only way the Mexican industry can adapt effectively. Focusing exclusively on one automaker, country, or industry is no longer sustainable.
Resilience and Response Capabilities
Despite industrial diversity in certain regions, such as Querétaro, Ciudad Juárez, and Chihuahua, there is a tendency toward dependency on the automotive industry. In this volatile context, companies have two options: passively waiting for the impact or moving at the pace of the world.
For the Mexican industry, this is an opportune moment to explore partnerships with new automakers, new countries, and even new industries.
The Role of Adaptability in a VUCA World
The prolonged strike and the absence of a mediator have created a scenario where the big winners are not the automakers or the unions but companies like Tesla, which have demonstrated greater adaptability and efficiency.
External Factors and Preventive Planning
In a VUCA world, adaptation should not be limited to labor challenges; it should also consider geopolitical factors that can disrupt the production chain or increase inflation. Preventive planning is essential because, in such a volatile world, being reactive is ineffective.
The Way Forward: Improvement Plan and Cost Reduction
As an industry, we must develop an improvement plan and be willing to reduce costs. Resilience and response capacity are essential to weather the current storm and emerge stronger than ever. In a VUCA world, the supply chain must be willing to adapt, diversify, and be disruptive.
In a VUCA world, adaptability becomes an inescapable necessity. The strike in the automotive industry is just one example of the challenges we face today, and those who do not learn to navigate these turbulent waters may be at risk. Responsiveness and resilience are master keys in this changing scenario. Diversification, strategic collaboration, and preventive planning are essential tools to ensure that our supply chains and our companies thrive in this VUCA world. The question we must ask ourselves is:
Are we willing to adapt or be left behind? The choice is ours, and our future depends on it.