Nissan Will Invest $1 Billion to Expand Its Mexico Plant

Nissan Corp. has agreed to invest $1 billion during the next three years to expand its vehicle manufacturing operations in Aguascalientes, Mexican trade officials announced Tuesday.

The commitment represents the largest single foreign investment package in Mexico unveiled during 1989, said Gregory Leddy, a New York-based spokesman for the Mexican Secretariat of Trade and Industrial Development.

Earlier this year, Leddy noted, Ford Motor Co. announced a one-year, $300-million expansion of its plant in Hermosillo. Meantime, Nestle, the Swiss-based multinational giant, also revealed a fresh $300-million investment in its Mexico operations, Leddy said.

The Nissan announcement comes at a time when Mexican President Carlos Salinas de Gortari has been aggressively seeking to encourage foreign investment from Japan and other nations. In May, the Mexican government eased restrictions on overseas investors, allowing international investors to have 100% ownership of a wide range of manufacturing and service industry businesses.

In recent years, Mexico has been discarding its traditional suspicion of foreign investment. That suspicion was the product of intense nationalism here, but officials now say such attitudes are unrealistic if Mexico is to pull out of the economic crisis that has gripped the nation since prices for Mexican oil began falling in 1982.

In a statement released in Mexico City, Jaime Serra Puche, Mexico’s secretary of trade and development, called Nissan’s investment “a significant endorsement of the long-term potential of the Mexican economy.”

The trade secretary recently returned from a seven-day investment promotion visit to Japan, where he said officials of Nissan confirmed their decision to expand the plant in Aguascalientes. The city is about 300 miles northwest of the capital.

In Mexico, Nissan now produces about 100,000 vehicles annually, including cars, pickup trucks and vans, said Leddy, the spokesman for the Mexican trade ministry. Most are marketed in Mexico, but others are exported to two dozen nations, mostly in Latin America. It was unclear if the additional investment was designed to expand into other export markets, such as the United States and Japan.

Spokesmen for Nissan in Mexico could not be reached for comment. In September, however, Nissan announced in Tokyo a plan to reduce exports from Japan, increase overseas production and expand imports to Japan, including finished vehicles.

Nissan also plans to expand its plant in Smyrna, Tenn., which now builds both Sentra subcompacts and light trucks, in order to produce a second passenger car line there by 1992.

Through September, 1989, according to government figures, there was $26.08 billion in approved foreign investment in Mexico. More than 8,000 foreign firms have established operations here.

The Mexican government has expressed hopes that foreign investment will double to more than $50 billion in the next five years.

The United States accounts for the largest share of overseas investment, 62% of the total, according to government figures. It is followed by the United Kingdom (7.3%), West Germany (6.6%) and Japan (5.5 %). The Japanese investment is rising as quickly, however, reflecting that nation’s emergence as a national economic power.

There are 179 Mexican companies with direct Japanese investment, mostly in manufacturing, the government says. Among the other Japanese firms with operations in Mexico are Sony, Matsushita, Mitsubishi and Casio. A number of Japanese firms have established border plants as part of the joint U.S.-Mexican maquiladora program, which provides tariff breaks for material assembled or manufactured for the export market, usually the United States.

“I am confident that the level of Japanese investment in Mexico . . . will increase substantially in the very near future,” Serra Puche said.