Either you are in Mexico today or you will be tomorrow. It is a location that is mission critical to the business of carmakers and logistics providers alike but at the moment it is a puzzle with many different pieces, each with its own challenge for the automotive industry.

So said Dennis Manns, vice president of Logistics at American Honda, at last week’s packed Finished Vehicle Logistics North America conference held at Newport Beach, California. Rail and port capacity are just two of those pieces, labour is another.

Mexico is a key region for growth and has doubled the production of vehicles since 2009 to become the eighth largest car producing country in the world accounting for more than 3.5% of global production. OEMs have invested $3.8 billion invested in facilities through to 2016 when vehicles will account for 6% of Mexico’s GDP.

It is the second largest maker of light vehicles for the US, which is its largest market. According to Bill Garrett, president and CEO of third party logistics provider Vascor, production topped 2.5m units in 2012, of which 2.4m were exported, of which around 1.5m vehicles went to the US.

The two leading modes for those export volumes are ocean, which accounts for 66% of vehicle exports, and rail, which accounts for 33%. On the ocean side Mexico’s significance as a vehicle export location is seen in the fact that the port of Veracruz is North America’s biggest autoport, moving 850,000 units last year, and growing. But that is causing concern, as John Felitto, president and CEO of WWL Vehicle Services America explained. He said that WWL were meeting the needs of  its customers but was concerned about what is going to happen in 2014/15 as new plants come online.

“We need more ports in Mexico that we can utilize. Veracruz is very full and land is very expensive if we want to grow,” he said. “We need ports with good infrastructure in order to grow and we are looking at that right now.”

Felitto used the FVL North America conference to announce that WWL will be starting a new service every 12 days from Veracruz to the East Coast of the US in September this year.

The company already services vehicles at Veracruz for regular shortsea shipments to Latin America, Mexico’s biggest export market, and at the port of Lazaro Cardenas for imports from Asia. It processes around 1.3m units in and out of Mexico and distributes around 700,000 vehicles within the country, with facilities at six plants already with Nissan’s plant at Aguascalientes making it seven when it starts production at the end of the year.

Honda is also concerned about port capacity and Manns said investment in port development by both government and businesses was critical because Veracruz and Lazaro Cardenas were already packed.

“Our facility at Guadalahara is doing around 65,000 units and we bring about 25,000 up here to the States,” said Mann. “Our new facility in Ceylaya [due to open in 2014] is a 200,000 unit production plant and I think around 150,000 will be coming up to the States.”

Honda also has a lot of rail development going on around the Ceylaya plant. Speaking for the carmakers setting up new plants in Mexico Manns said that the boost in volumes will mean new demands.

“Whether you are going to move it through rail or shortsea, or a combination, that is a lot of volume that is suddenly going to be shoved through this logistics pipeline, and you are going to need the support to make it happen.”

This growth of manufacturing and logistics functions is also raising concerns about labour. Garrett said that skills and education were improving but that more needed to be done.

Felitto picked up the point: “With all the new manufacturing there is going to be even greater demand on production labour and on the type of labour that we employ for releasing yard management and accessorisation. That is a concern for us – how we will be able to ramp up quickly and find labour in these locations around Mexico.”