Wednesday, May 2, 2012

Nissan: Thoughts on the Creation of Shared Value in Aguascalientes

Creating shared value between corporations and countries is no more evident than in developing countries like Mexico.  I recently read about the role a Nissan factory plays in the development of the Aguascalientes  city located in the central state of Mexico.  Coined "Nissan Town" the city enjoys the benefits of the factory and its 32,000 employees. By the end of the year, Nissan hopes to manufacture 1 million vehicles after it opens its second plant in the city.  


The Japanese company has not sat idle as it seeks to instill the Nissan value of constant improvement into the cultural fabric of the town.  In order to fuel the purchase of its vehicles, Nissan plans on opening a financing center in the capital in a market which otherwise is not receptive to financing and other forms of credit.  Nissan thinks that it will be able to develop a mostly untapped market (outside of employees who receive preference) in an area where capital is difficult to secure.  Mexico's middle class is estimated to be about 53% of its population and is moving the country's population towards a majority as other manufacturers such as GM, Volkswagon, and Chrysler have moved to Mexico for its cheaper labor and lack regulation in comparison to the US.  The 1994 North American Free Trade Agreement (NAFTA) eased restrictions between the US, Mexico, and Canada.


Nissan continues to be a leader by integrating green practices into its operations (it currently uses 1.6 cubic liters of water down from 17 in its car production) and recycles 100% of this facility's waste.  With a 1% turnover rate, it has one of the best safety records among its Nissan peers.  Nissan moved into an untapped labor market, developed a service for an unmet community need, and now is poised to have a lasting impact in the lives of the entire community.  As the article discussed, loyalty to the Nissan way is strong among the residents and there is little indication that this is going to change in the future.  When the return on shared value for both Nissan and Aguascalientes reaches full potential, how will Nissan continue to develop this strategy and create new opportunities for growth in this region?

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