Mexico’s growing middle class is making its presence known at the cash register. Canadian Dale Wishewan noticed that Mexico City mall lobbies were filled with people dressed in Abercrombie and Fitch while eating at McDonald’s and Starbucks. Today more than 60% of Mexicans are considered middle class,… making between $6,000 and $25,000 per year.
“There is this middle class that wants North American brands,” says Wishewan, chief executive of Booster Juice, a juice and smoothie company. He quickly made a deal with a local investor. Today, there are five Booster Juice locations in Mexico and another five are scheduled to open in the next two years.
The 50 peso ($3.70) price of smoothies from Booster Juice would have been out of reach for most Mexicans a few years ago. However, as the economy recovers from the 2008 recession, more Mexicans are turning to more expensive North American brands.
Until recently, Mexico was mostly relying on trade with the United States. This trade skyrocketed after the signing of the North American Free Trade Agreement in 1994. By 2008, 88% most Mexican exports were sent to the United States. After the recession, Mexico had to decrease US exports by 6.1%.
Since 2009, Mexico has been working on rebranding efforts to establish a trade relationship with Latin America, Asia, and Europe. The economy grew 5.5% in 2010 and Mexican exports to Latin America grew 56%.
Mexico also takes security very seriously as gang violence is a concern of many foreigners.
“We could have kept a low profile and lurked in the bushes but we went the other way,” says Bradford Cooke, a Canadian mining executive. “All our trucks are branded, they usually go two at a time, and our drivers are all wearing our maroon and blue uniforms. Our stance is we are members of the local business community and we belong there, not the organized criminals.”
As one of the largest food and beverage companies worldwide, PepsiCo operates in more than 200 countries – with its largest international operations in Mexico and the United Kingdom. …
According to a recent Seeking Alpha article, the company has historically delivered healthy returns to its shareholders. For example, in 2011, the company’s dividend increased for the 39th consecutive year, from $1.89 to $2.06. This represented a 9 percent increase. Despite struggling global economies, PepsiCo reported solid results for the third quarter of 2011 – with revenue jumping up 13 percent, and operating profits up 7 percent.
PepsiCo makes more than just the popular beverage; its product portfolio now consists of many different brands, including Tropicana Juice, Gatorade, Lay’s Potato Chips, Diet Pepsi, Doritos, and Mountain Dew.
According to "The Evolving Workforce" survey conducted by Dell and Intel, Mexico, China and other developing economies are shifting to server virtualisation faster than the United States and the United Kingdom.
"The virtualisation rates are lowest where there are the highest legacy systems," said Bryan Jones, director of European marketing at Dell. He continued, saying that developing countries find it easier to be innovative by creating new systems, because there are no legacy systems in place.
As such, the U.K. is falling behind when it comes to technological innovations, due to restrictions on what employees can download, and what types of software they can use.
According to the survey, 83 percent of Mexicans and 76 percent of Brazilians believe that it’s good when "technology and the Internet to allow [them] to do business in different ways," compared with 43 percent of U.K. workers and 46 percent of U.S. workers.
Regarding technology in developing economies, Bryan Jones commented, "Organisations that provide technology freedoms and flexibility will not only be seen as desirable places to work, but at a competitive advantage."
Reynosa, Tamaulipas is often overlooked as a city for booming business and shopping in Mexico. New buildings, shopping centers, and factories seem to be popping up every week in this city over 1 million people. …
One of the most recent additions to Reynosa, Tamaulipas, is a WalMart that held its grand opening on Black Friday of this year. The new store is located at the intersection of Boulevard Hidalgo and Avenida El Pasito. This location is ideal as it is between Plaza Real and Plaza Perferico, two of the city’s busiest places from shopping in Mexico. The WalMart is also located near the Anzalduas International Bridge that only just recently started to appear on Google Maps. This will help both locals and tourists find the location. It is also expected to provide jobs for over 250 people.
WalMart did not start doing business in Mexico until the early 1990s and did not operate under their brand name until February 2000. Today, there are seven WalMart stores in the state of Tamaulipas. Even though this store is very close to the American boarder, sales should not be affected.
Mexico has the lowest tax burden among the most developed economies in the world, according to a recent report from the Organization for Economic Cooperation and Development (OECD). In its annual report, OECD detailed the tax burdens in place during 2010. The report shows that Mexico has the lowest tax to GDP ratio at 18.7%. …
The majority of OECD governments have stabilized the tax burden in place with the tax to GDP ratio. It has increased from 33.8% in 2009 to 33.9% in 2010, according to the OECD data from the annual Revenue Statistics publication. However, these numbers are still down from 2008 and 2007 when the ratios were 34.6% and 35.2%, respectively.
The OECD stressed that the findings show that changes in tax revenues reflect both changes in economic activity and policy measures.
“In those European countries most affected by the financial crisis and subsequent recession there was an initial sharp fall in tax revenues, but then a small recovery in the tax to GDP ratio in 2010,” the OECD stated.
“The data collected also shows that in a period when all levels of government have seen pressure on expenditure and revenues, the average tax ratio for state, regional and local governments has remained steady since 2007 while that for central government has declined,” the OECD explained.
TRW Automotive Holdings is scheduled to open a new 150,000 square foot plant in Queretaro, Mexico. The company specializes in brake manufacturing, as well as steering and safety systems. TRW hopes to manufacture advanced brake systems and brake actuation units, including boosters and master cylinders in the new… facility.
Hydraulic control units will be constructed for a variety of electronic stability control systems. This will include the company’s control boost system, which will play an integral part of the regenerative breaking system in hybrid and electric vehicles.
The facility will begin construction at the end of the first quarter in 2012. Once the plant reaches full production, it will employ 450 people.
"The plant will be geared to aluminum machining and clean room assembly environments to meet the stringent cleanliness requirements of hydraulic valve assembly," says TRW Automotive Holdings global vice president of braking operations, Doug DelGrosso. He believes the new facility will complement the current brake manufacturing facility in Queretaro. Both facilities will continue to represent a significant investment in braking manufacturing technology investments.
Mexico is an established and fiscally attractive destination for investment in the automotive sector. For Mexico the automotive sector is a 72.6 billion dollar industry that accounts for over 1 million jobs. Because Mexico is a strategic supplier to the North and Latin American automotive markets,… the world’s largest auto companies have placed their confidence in the production platform that the country is able to provide.
Mexico offers one of the best platforms to meet the growing export demand for smaller cars by consumers worldwide. Eight of the world’s largest manufacturers have chosen Mexico as their production center and export platform, some of which have been operating in the country for more than eight decades. Three American manufacturers, GM, Ford, and Chrysler, the leading German carmaker Volkswagen, and major Japanese companies such as Nissan, Honda, Mazda and Toyota operate assembly plants in Mexico, and together produce 40 car models in the country.
According to the Mexican Association of the Automotive Industry (AMIA) and the International Organization of Motor Vehicle Manufacturers (OICA), Mexico was ranked as the fifth automotive exporting country by units and is the ninth vehicle producer in the world during the first half of 2011. The value of its vehicle exports is almost the triple of Brazil and India combined.
Mexico is the leading auto parts supplier to the US market with more than 1,100 companies. Out of the top 100 auto parts companies in the world 84 have set up manufacturing operations in Mexico. The country’s auto plants have received international awards and recognition for their high levels of productivity and quality. Furthermore, many of them have recently announced ambitious reinvestment and expansion plans in the country. The auto parts industry reached a production value of 45.3 billion dollars in 2010.
During the last 5 years, foreign investment in the Mexican automotive sector has totaled more than 10 billion dollars, with investment by several international companies. One example of a leading foreign investor in the automotive sector is. Volkswagen granted Mexico exclusive production of the Jetta Bicentenario model in the State of Puebla. In July 2011, Volkswagen invested 400 million dollars in its Puebla plant to produce its totally revamped Beetle. The company also established a new plant in Guanajuato, with a 550 million dollar investment, which will produce next generation diesel engines for the plants in Puebla and Chattanooga in the United States. Mexico was the only launch platform of this model in the world, which created an estimated 2,000 jobs.
From January to November 2011, automotive production in Mexico grew 14% compared to the same period in 2010, reaching 2.3 million cars. The Mexican automotive industry will continue to grow and evolve in this fashion as more foreign investors bring production to the Mexican manufacturing platform.
In June 2012, world leaders will convene in Los Cabos, Mexico to discuss measures to promote the financial stability of the world and how to achieve sustainable economic growth and development at the G-20 Summit. This meeting marks the first time in history that a Latin American country is hosting the… summit, an event that brings together top Finance Ministers and Central Bank Governors every year.
The Centre for International Governance Innovation (CIGI) gathered the opinions of world experts who commented on Mexico as an emerging power and the expectations of Mexico as the summit leader including: former Prime Minister of Canada Paul Martin, chief economist of the ADB Changyong Rhee, Chair of FTI Consulting Lord Malloch-Brown, and director of economic studies at Institut Francais des Relations Internationales Jacques Mistral.
CIGI chair, Jennifer Clapp, noted issues that Mexico could bring to light at the G-20 Summit, “As an emerging power and a country that’s largely agricultural, it’s probably got more credibility to deal with these issues, and the other members might be willing to go along with perhaps more bold activities to address questions like food price volatility, agricultural production, etc.”
Yamana Gold Inc., a Canadian-based gold mining company, has just announced that they’ve started production at their Mercedes mine in Northern Sonora,… Mexico, located southeast of the city of Magdalena de Kino. Yamana Gold Inc. now has land production facilities in Brazil, Chile, Argentina, Mexico, and Colombia. This new mine will enable the company to increases its gold mining, extraction, production, and consumer distribution activities.
The newly opened Mercedes mine is currently producing at a rate of 1,500 tons per day. The rate of the underground expansion of the mine is considerably ahead of schedule. The mine will focus on the production of gold, silver, managing solid waste, environmental infrastructure, and water resources. Yamana Gold Inc. expects output to be approximately 120,000 gold equivalent ounces (GEO) per year at this new plant, and to increase to around 130,000 GEO by 2013. Yamana Gold Inc. is also in the process of developing projects in Pilar, Santa Luz, and Ernesto/Pau a Pique in Brazil.
MetLife, the world's largest life insurer, is convinced of the benefits of doing business in Mexico.
It's strong economy, based on a banking system that works, is host to a large and ever-growing middle class, says C. Robert Henrikson, the Chairman of the Board for MetLife. In this video, he confirms that thanks to the present day Mexican economy, "the opportunity is huge."
Ricardo Salinas, the Mexican billionaire whose banking and retail empire spans eight countries, is looking to expand his microlending business by offering the loans to lower income populations in the U.S.
Ricardo Salinas said in an interview at Bloomberg’s headquarters in New York, that Grupo Elektra SA seeks clients at the “bottom of the pyramid” in terms of income and assets; U.S. households with less than $25,000 in annual income fit that profile. “[It] would be my dream to set up a series of 10,000 branches over the U.S. that addressed the bottom of the pyramid,” he said, adding, “It’s complicated because of the environment, but we’re looking at it.”
In the same interview, Salinas mentioned a desire to serve those who are “unbanked,” by entering the U.S. market with loans and “micro-insurance” plans that would entail paying $10 a week, for example, for a $5,000 life-insurance policy. According to government statistics, Ricardo Salinas, who is 56, has used loans of an average size of $400 to build Banco Azteca, Mexico’s 10th largest bank in terms of credit portfolio. The Mexican Banco Azteca, started by Salinas in 2002, has 12 million loan accounts across Latin America.
Banco Azteca, like many other banks in Mexico, charges interest rates high enough that customers in some cases end up paying double the amount of the original loan over its full term, Salinas said. But without higher interest rates, Banco Azteca wouldn’t be able to offer loans to poor people, he added. “Lots of people who like to help the less fortunate group of people at the bottom of the pyramid think that by regulating interest rates they’re going to do that, but it’s exactly counterproductive,” he said.
Banco Azteca, based in Mexico City, began making loans to women about a year ago, to help them finance group businesses such as a dance studio or a restaurant. The bank signed up 400,000 women for the program in its first year and expects to have 1.5 million women sign up next year, according to Salinas.
In February, 2011, Texas became the leading importer of Mexican produce, surpassing Nogales, Arizona. With the construction of a new highway… in Mexico underway, the Rio Grande Valley should continue to see growth in Mexican produce outputs. According to John McClung, President of the Texas Produce Association, their goal is not to detract from Arizona’s imports, but rather to increase the total volume of produce shipped over the U.S. border.
“What really matters is that there’s plenty of business for both of us (Nogales and Texas), and for California, for that matter,” McClung said.
To further this cause, the organization is working in collaboration with Nogales’ Fresh Produce Association of the Americas. In March, the two parties set up the first-ever America Trades Produce Conference. The conference provided a forum to network, discuss cross-border trade issues, and stay up to date on the latest research in fruit and vegetable growth and transportation. The next America Trades Produce Conference is scheduled to be held on March 21-23, 2012 in Nogales.
“This flow of products is not just positive for the Mexican Economy; it is estimated that for every dollar of mexican produce purchased by the US, 50 cents of goods are purchased by Mexico from this country, compared to, for example, 6 cents of buy back potential from China.”
The prominent Canadian aerospace and industrial manufacturing company, Héroux-Devtek Inc., recently opened a new 47,200 square foot,… technologically-advanced aerospace facility in Mexico’s Querétaro Aerospace Park. Héroux-Devtek Inc. focuses on supplying developmental resources and industrial parts for the military and commercial sectors of the Aerospace industry. Héroux-Devtek Inc. will invest around $20 million in the next three years in the facility, which could lead to the physical expansion of the facility to around 150,000 square feet.
At an event celebrating the opening of the new Querétaro facility, Gilles Labbé, President and Chief Executive Officer of the leading industrial manufacturing company Héroux-Devtek Inc. said, “Today’s inauguration represents an important milestone in the evolution of Héroux-Devtek, as it significantly enhances our value proposition to original equipment manufacturers (OEMs).” He went on to say, “This network expansion places Héroux-Devtek in a solid position to capture new business opportunities, as it will benefit from close proximity with the existing facilities of several global aerospace OEMs in Querétaro, including some of its largest customers. More importantly, this facility also improves our global competitiveness by further specializing each of our manufacturing sites, thus ensuring we provide our customers with value-added products and services at the most optimal cost.” The aerospace industry has become an important one for Mexico, and this new facility marks an important step forward in the industry’s expansion.
The Asociación de Empresarios Mexicanos (AEM), a Mexican non-profit trade association dedicated to strengthening relations between the United States and Mexico, recently announced they will be opening a chapter in Brownsville, Texas.
Brownsville was chosen as the location for a new chapter partly because of the Mexican airline Aeromexico has a prominent presence in the area. Aeromexico has connected Mexico and United States in a variety of different ways – both physically and conceptually. The announcement came during an event sponsored by the Brownsville Economic Development Council and AeroMexico at the Brownville Museum of Fine Arts.
At the event, the Mayor of Brownsville, Tony Martinez, said, “I think with these progressive groups they are understanding the great need to give back.” He went on to say, “It’s catching on. I just never understood why not. Why not help people out?”
AEM’s headquarters are located in San Antonio, and their goal is to promote positive business practices between Mexico and the United States, as well as help organize cultural events attuned to both countries’ distinct cultures.
GE Energy Services recently signed a service agreement with Mexico’s Comisión Federal de la Electricidad (Federal Electricity Commission). GE manages the supply of repairs, services, and parts for generators and gas turbines. This is the most distinct time in history that the Mexican… government has signed a service agreement of this magnitude with a power plant service company. Under the terms of the agreement, GE will support the efficiency of gas turbines for the next 15 years. Additionally, six new gas turbines have already been installed at their sites and the full power plant should be ready for operation during the summer of 2012.
This project by GE Energy Services and the Mexican government is anticipated to provide employment opportunities for more than 80 individuals.
Mexico’s Federal Electricity Commission chief executive officer Antonio Vivanco stated, “This repowering project will benefit more than 10 million Mexican households by delivering access to reliable electric power.” He went on to say, “Additionally, it will contribute significantly to a National Infrastructure Plan to promote the development of other industries and services in the region.” Ramón Barrientos V., account executive director for GE Energy Services, claimed, “For 115 years, GE has not only developed advanced technology to meet local power needs in Mexico, but also has offered innovative energy solutions […] This new agreement provides a platform for us to deliver long-term services and support our commitment to drive progress in the country.”