German automaker BMW AG on Thursday officially opened a $1 billion plant in the central Mexican state of San Luis Potosi.
"The new plant in San Luis Potosi is an important pillar of the BMW Group's global production strategy. We aim to achieve a balance in our production and sales in the different world regions. We want to strengthen our footprint in important and growing markets," Oliver Zipse, member of the board of management of BMW AG responsible for production, said in a statement.
The plant is opening at a time when Mexico is facing the threat of possible tariffs from the United States, the country's No. 1 trading partner, the Efe news reported.
"Plant San Luis Potosi will significantly boost our regional production flexibility in the Americas. From here, we are delivering our locally produced BMW 3 Series Sedan to customers worldwide," Zipse said.
The plant in San Luis Potosi, the capital of the like-named state, is the German automaker's first in Mexico.
Zipse was joined at the plant opening ceremony by a number of Mexican dignitaries, including presidential chief of staff Alfonso Romo and San Luis Potosi Gov. Juan Manuel Carreras.
"Mexico has a key geographical position, situated between North and South America, the Atlantic and the Pacific," Zipse said.
The plant has a vocational training centre in which new employees and trainees will be taught BMW's latest production processes and introduced to the automaker's technology.
Plant management is working with four technical institutes in the area and has already trained 250 people in technical specialties.
Andreas Wendt, member of the board of management of BMW AG responsible for purchasing and supplier network, said the automaker had established strong relationships with Mexican suppliers.
"We have a strong supplier base we can build on in Mexico, having sourced high-quality, technologically sophisticated and innovative products from here for more than 10 years. Every BMW Group vehicle today already contains at least one part from one of our 220 Mexican suppliers. Our new plant will benefit from short supply routes and the high level of flexibility this gives our supply chain," Wendt said.
BMW said its purchases in Mexico totalled $2.5 billion last year.
The plant is opening at a time when Washington is threatening to impose tariffs on Mexico unless President Andres Manuel Lopez Obrador's administration takes action to stem the flow of migrants into the United States.
On May 30, Trump said his administration would impose escalating tariffs on Mexico over the issue of illegal immigration.
Trump said in a Twitter post that he would slap a 5 per cent tariff starting June 10 on all Mexican imports unless the neighbouring country halted the northward flow of US-bound migrants.
Trump said the US government would raise the tariffs on Mexican goods each month until the rate hit 25 per cent in October unless the Lopez Obrador administration took action to stop the flow of migrants, the majority of them from Central America, to the US.
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