Mexico continues to benefit from U.S. companies who see it as an attractive manufacturing destination.
In fact, 63 percent of foreign investors surveyed by the business advisory firm AlixPartners, named Mexico the most attractive country for siting manufacturing operations closer to the United States; only 19 percent of the companies reported supply-chain disruptions in Mexico as a result of security issues.
According to Rich Bergmann, Accenture’s global lead for manufacturing, Mexico’s proximity to the United States solves the most pressing issue facing manufacturers, which is speed to market: "The stability of the time schedule of supply has become paramount in manufacturing. Whether we like it or not, a 12-month forecast, steady-state demand is no longer a reality. Everyone is running lean supply chains and inventories. Being close to customers is key to reducing lead-time. Add to that the overall total landed cost and that explains why reshoring is occurring in Mexico," he says.
In fact, Mexico is currently helping multinational firms cope with a variety of factors stemming from intense global competition, says Arizona State University associate professor, Arnold Matlz, of the W.P. Carey School of Business. Mexico has played an important role in easing these pressures amongst the manufacturing industry by allowing companies to reduce and control operating costs, offering an increased operational flexibility, and accommodating shorter product/service development cycles, among other things.
One industry flocking to Mexico for its lower cost structure and ample workforce is aerospace manufacturing. Between the years 2010 and 2011, total sales in Mexico's aerospace industry increased by 25 percent to $4.5 billion, according to the Aerospace Industries Association, which, according to World Bank statistics, was a significant improvement on the aerospace industry's overall annual growth rate of 15 percent.
"In spite of what is in the news, Mexico's manufacturing economy is humming along," says Steve Colantuoni, director of corporate marketing for the Offshore Group. Foreign direct investment in Mexico rose 9.7% in 2011 compared to 2010 to reach $19.44 billion and many in the manufacturing industry believe that their economic outlook will only improve in the next five years in Mexico.
Mexico’s auto production and exports leaped 24.1 percent in February as carmakers got off to a record start in 2012. The Mexican Auto Industry Association (AMIA) said on Tuesday production in February rose to 242,317 light vehicles. Exports increased to 194,640 vehicles, up 24.9 percent from a year earlier. Local car sales totaled 74,703 units last… month, up 12 percent. According to the AMIA, Mexico’s car industry could have a record year this year, as production levels in February were the highest ever for any February.
For the first two months of this year, the auto industry production is up a total of 13 percent compared to 2011, and exports increased 10 percent; local sales were up 11 percent. Even though the exports to South America are rapidly increasing, the US is receiving the bulk of Mexican auto exports.
The three biggest car exporters from Mexico last year were U.S. carmakers Ford Motor Co. and General Motors Co, followed by Germany’s Volkswagen.
DuPont, the American chemical manufacturer, is looking to further strengthen Mexico’s growing business and investment sectors. By… leveraging the power of their global network, DuPont plans to establish a Mexico based “innovation center” that allow rapidly expanding countries to ‘collaborate with their customers, partners, governments and academia to meet Mexico’s growing needs in areas of food, protection and energy.’
“We are looking forward to helping our customers grow their business right here in Mexico,” said Jorge Cossío, president, DuPont México. “These centers are a new way of looking at innovation and collaboration to help our customers find solutions to their unmet needs so that new products can be developed and go to market faster.”
DuPont has more than 9,500 scientists and engineers located in 150 technical centers around the world, so expanding this operation into Mexico was an easy choice.
“The DuPont Mexico Innovation Center will provide a critical missing link in our ability to collaborate with direct and indirect customers and other innovators in Mexico,” said Eduardo Wanick, president, DuPont Latin America. “It will enhance our ability to put science to work to address the specific needs of society in Mexico and Central America.”
The Innovation Center in Mexico is part of the company’s global plan to create a worldwide network of innovation centers to develop new solutions together with their partners to address global needs. In addition to Mexico, the company has Innovation Centers in Korea, Taiwan, Thailand, India and Japan.
This March 12-16, London is the host of ‘Mexico Week in the UK’ 2012, a multi-sector Business & Academic mission intended to promote trade & investment. The mission has been established with the objective of furthering cooperation between Mexican & British companies and… institutions.
Organized by the Mexican Chamber of Commerce in the UK (MCCUK), the British Chamber of Commerce in Mexico (BRITCHAM), and the Mexican Business Council for Foreign Trade, Investment and Technology (COMCE), Mexico Week in the UK intends to improve the image of Mexico in the UK by providing relevant and accurate information on business opportunities in Mexico. As a forum for networking with representatives of leading institutions and companies in targeted business sectors, attendants have the opportunity to expand their knowledge and connections within their field of interest. Figures of importance invited to attend include important British executives and academics currently operating in Mexico, who openly share experiences and information on “Doing Business in Mexico.” Additionally, ‘Mexico Week in the UK’ has the goal of connecting Mexican chamber members, general participants and their UK counterparts.
The Americas Society and the Council of the Americas (AS/COA) held the “Mexico and the G20: Rethinking Global Economic Balance” conference on March 13 in Mexico City. In partnership with ProMexico, the Mexican Government’s institution in charge of strengthening Mexico’s… participation in the international economy, the conference focused on Mexico’s turning point as an international player as the country prepares for the upcoming G20 Summit and the World Economic Forum Latin America.
The United States Treasury Department’s Deputy Assistant Secretary for the Western Hemisphere Leo Martínez-Díaz was the keynote speaker. Under the session “North America and the Prospects for Global Economic Recovery”, Martínez-Díaz highlighted how since the implementation of the North-American Free Trade Agreement (NAFTA) in 1994, “the value of the US-Mexico bilateral trade has increased by 350 percent, U.S. investment in Mexico has increased 430 percent, and Mexican direct investment in the U.S. has increased by 500 percent,” according to a AS/COA blog.
Among top public and private officials, Martínez-Díaz also publicly praised Mexico on how the country has in many ways led by example into becoming a global economy due to its openness to free trade, fiscal stability, and being a pioneer in the area of conditional cash transfers. He also said when U.S. and Mexican officials meet now they discuss global issues rather than just bilateral ties.
Tom Donohue, U.S. Chamber of Commerce President and CEO, Talks to MexicoToday about Mexico's Geographic Advantage
Recent openings of economic markets and an end to the Mexican central bank’s tendency of completely financing the government’s… actions, have led to a significant rise in Mexico’s middle class. The country has seen an increase in price stability, which has led to more wealth coming into the area as well as an overall wealth accumulation of the peso in the social structure of Mexico. Inflation has also gone down in the country because of many influencing economic factors. This has resulted in an increase in investor confidence in the country and therefore a rise in long-term bond interest from international investors has occurred. The North American Free Trade Agreement (NAFTA) with the United States and Canada has helped open up the economy for Mexican residents, giving them the ability to buy products at increasingly competitive prices. In addition, the North American Tree Trade Agreement has also generated new jobs in diverse sectors of the Mexican economy.
In an influential new book called “Mexico: A Middle Class Society” by authors Luis de Calle and Luis Rubio, the intricate happenings of the ever-shifting Mexican economy are documented. The authors declare in the book that today, “the middle class population is the majority in Mexico.” They go on to say that this rise in Mexico’s middle class has transpired, “by combining the income of various family members (including remittances from abroad) rather than through the increased income of an individual or couple.”
Bruno Cattori, President of Mercedes Benz in Mexico, recently stated in an interview Mercedes Benz’s intentions of opening yet another manufacturing plant in Mexico this year. With this, Mercedes Benz Mexico plans to promote Germany internationally and increase its production capacity in North… America.
The Mercedes Benz Mexico executive continued to explain that the automaker is experiencing a huge surge in demand and is building the new plant to cover the international market’s appetite: "Last year we built a new factory in Europe and one in the United States, and both plants are working at maximum capacity, but we still need additional supply, so the company needs to build another [plant]," he said.
As automakers around the globe struggle to cope with currency fluctuations, more and more auto brands are considering manufacturing in regions where they enjoy the bulk of their sales. For Mercedes-Benz, manufacturing in Mexico is an obvious first choice due to the renewed strength of the U.S. luxury segment as well as its proximity to emerging Mexican and South American markets.
In order to become the leading brand for high-end vehicles in the premium sector, Mercedes will need to double sales from 1.26 million units, explained Head of Mercedes Benz cars, Dieter Zetsche, in a recent interview with Germany’s Manager Magazin. The new manufacturing plant in Mexico will play a key role in Mercedes Benz’s plans to double its current sales by the year 2020.
A variety of different trade missions are being instituted in Mexico for businesses hoping to establish economic relations with Mexico. Trade missions are usually organized by governmental officials and give businesses the chance to learn about resources available in different sectors of the economy. These… international trips give businesses the platform to develop relationships worldwide. Companies come from all over in order to learn in-depth information about a specific market. These new trade missions are sponsored by Louisiana State University’s Ourso College of Business and will provide translation services, sales opportunities, and training workshops to businesses in attendance.
A business consultant at the Louisiana Business and Technology Center at Louisiana State University Ourso College of Business, Shannon McCormick stated, “We’re trying to get between six and eight companies to go to each of these missions.” The first mission will occur in Mexico City on May 2-4 and the second one, the Petroleum Exhibition and Conference of Mexico (PECOM), will occur in Villahermosa, Mexico on June 12-14. The first mission will focus on the oil, robotics, and the industrial gas industries. There will also be information on architecture, agriculture, and aerospace developments.
NBA Hall of Famer and former sports broadcaster, Bill Walton has become an equity partner with Azuñia Tequila, an ultra-premium tequila brand imported by Intersect Beverage of Newport Beach, California. Azuñia Tequila is known for its superior taste and unique flavor and Tequila coinsures… credit the location of the distillation for this high quality.
Part of the success of the brand comes from the location of its production. In the heart of Jalisco, Mexico, is the world’s best climate for growing Weber Blue Agave, the principal ingredient in Azuñia Tequila. It is here, in the heart of the Tequila Valley, that Azuñia Tequila is created.
The Zuñiga family is one of the oldest agave growing families in Mexico and has generations of expertise in producing tequila. Azuñia Tequila is made from Weber Blue Agave, which grows for 8 to 10 years in sun-drenched fields surrounding the small town of Amatitan. Each agave plant receives rich nutrients from the fertile volcanic earth and a steady diet of perfect seasonal weather.
Bill Walton’s well-documented life has been filled with daunting challenges and great success. He knows the value of hard work, patience and a commitment to excellence, the very qualities that are adhered to by the experienced Jimadors who produce Azuñia Tequila.
"We are thrilled to have a first class partner like Bill Walton that understands persistence, discipline, structure, and some good luck," commented CEO, Jim Riley.
SuKarne, a subsidiary of Grupo Viz, plans to invest $110 million to establish the largest beef production and processing complex in Durango, Mexico, as a part of its plan to strengthen its presence in the country. …
The project will be carried out in two phases, with the first phase involving the setting up of a meat processing plant with an investment of $40m followed by a feed yard for 70,000 head of cattle in second phase, which will double the company's existing capacity.
According to the company, the plant will feature cutting edge technology and will adhere to the international sanitary standards.
For the project, the company has entered into a partnership with regional producers, who will jointly invest about $300 million.
The group's main shareholder and chairman of the board Jesus Vizcarra Calderon said that agricultural sector can become an even more important driver of the national economy.
"With this project we are taking a step towards bringing together cattlemen, agricultural suppliers, government and SuKarne in this effort, so that together we can transform this region into the Animal Protein Capital of our country," Calderon added.
The complex is expected to create about 1,200 jobs and 6,000 indirect jobs, in addition to the 680 jobs required for the construction.
SuKarne, based in Culiacan, Mexico, supplies meat, beef and poultry products throughout Mexico and its products are exported to Japan, the US, Russia and Hong Kong, among others.
In May 2011, the company announced its plan to invest $100 million over a period of 18 months to build a livestock factory in Nicaragua, which will feature ten feed storage centers for direct feeding of livestock, a permanent inventory of 50,000 head of cattle, a slaughterhouse and deboning unit.
The creation of a new Technological Innovation Park in Esperanza, Puebla has recently been announced by Baltic Group, a company which invests in trade, biofuels, infrastructure and construction, among other industrial sectors. With an investment of 145 million dollars, the state-of-the-art… technology park, focused on innovation, will generate nearly 400 direct jobs and 3,500 indirect jobs.
The Technological Innovation Park currently is host to eight companies that use the facilities with the guarrantee of zero CO2 emissions and recycle water utilized on a daily basis. For this and other reasons, Mexico’s Ministry of Economy recognizes the project and facility as a technological innovation.
An example of the usage of the facilities is the generation of electricity from sorghum grain, which is purchased from the producers of the grain in three areas: Huastecas, el Itsmo and Juchitan, Oaxaca. These regions supply 20,000 tons a year, reviving more than 15 hectares of crops. After the second quarter, the new Tecnological Innovation Park in Puebla will be incorporating companies engaged in the manufacturing of different feed foods from the practice of grain processing.
While a number of U.S. companies host their manufacturing operations in China, Mexico is becoming a more desirable location for the production of goods. In fact, shipping containers entering the Los Angeles and Long Beach ports (with cargo largely from Asia) declined by 0.2 percent last year,… whereas trains and trucks carried 8.7 percent more freight across the Mexico-U.S. border in the first eleven months of 2011, compared to 2010.
Transportation and trucking companies are reaping the rewards of increased manufacturing in Mexico, with a few having the most to gain. For example, Kansas City Southern Railway's Mexican controls both a rail system and a railroad bridge in Mexico, with the bridge occupying a key area spanning the Rio Grande into Laredo, Texas. Additionally, Union Pacific has 26 percent stake in Ferromex, a Mexican railway that services six border crossings. Shares and earnings of both companies have surged over the past year.
However, despite this, Mexico is the biggest winner of all, with increased manufacturing and trade helping to revive the nation’s economy.
Jorge Lopez, Regional Director for ProMexico North America, describes the rising middle class in Mexico and the increase in quality of life for the general population in the country.
In an interview with MexicoToday, the Regional Director for ProMexico North America, Jorge Lopez, talks about the Creative Services industry in Mexico and what types of companies he envisions succeeding in the near future.