Mexico Business Blog

Brazil weasels on auto trade with Mexico

May 4

Posted by Tom in Economy, Manufacturing, Trade | No Comments

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Setting trade policy?

Setting trade policy?

In March 2012, Brazil insisted on putting artificial curbs on imports of Mexican-made automobiles, contrary to the long-standing pact governing vehicle trade between Mexico and the Mercosur trade bloc comprised of Brazil, Argentina, Paraguay and Uruguay.  We’re in a snit about this, because the move creates problems for Mexico and in general adds to the list of alarming actions coming out of Mercosur countries lately that are undermining the environment for trade and investment.

The Economic Complementation Agreement No. 55, known as ACE 55, was negotiated between Mexico and Mercosur in 2002 as a means of reducing tariffs on vehicles and auto parts to facilitate trade in these goods between the five countries.  It worked; automotive trade surged and the deal seemed to suit Brazil just fine as the South American giant racked up a trade surplus in cars with Mexico year after year. Read the rest of this entry »

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Recent and upcoming investment in Mexico

May 2

Posted by Tom in Energy, Investment, Manufacturing | No Comments

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Information collected from media reports over the past month:

  • Automotive: German luxury automaker Audi, owned by Volkswagen, will build its first manufacturing plant in Mexico by 2016, the company announced.  The assembly facility, planned to produce sport utility vehicles, will cost an estimated US$2 billion. (Bloomberg, April 19, 2012)
  • Automotive: U.S. auto maker Ford will invest US$1.3 billion to expand capacity at the company’s production facility in the northern Mexico city of Hermosillo.  The resources are planned to boost production at the stamping and assembly plant for new Ford Fusion and Lincoln MKZ models for 2013. (Torque News, April 2, 2012)
  • Energy: U.S.-based solar technology company SolFocus will lead the development of a major new solar energy generation site in the northern Mexican state of Baja California.  The project, to be built in conjunction with Mexican real estate developer Grupo Musa and U.S. contractor Synergy Technologies, is projected to cost over US$1.5 billion and generate 450 Mw. (San Francisco Chronicle, March 29, 2012)
  • Biofuels: The Veracruz Bioenergies Institute (Inverbio) will invest US$2.3 million this year to produce sweet sorghum, sugar cane, jatropha, yucca and palm oil for use in the development of biofuels.  Inverbio is contributing to efforts in Mexico to lower the cost of biofuels for aviation use. (Mexican Business Web, April 9, 2012)
  • Aviation: Mexican airline startup AeroJal announced it will launch regional passenger service in the west and northwest of Mexico this year.  The company will invest US$30 million to begin direct flights from Guadalajara to regional centers in the states of Sonora, Chihuahua, Coahuila and Nuevo León. (El Economista, April 16, 2012)
  • Food processing: Mexican baked goods multinational Grupo Bimbo announced it will undertake record investment of US$780 million this year.  The company, which has carried out a series of overseas acquisitions in recent years, plans to expand its production capacity and improve logistics infrastructure in its new markets. (Milenio, April 17, 2012) Read the rest of this entry »

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President Felipe Calderón to headline Business Future of the Americas Conference

Apr 24

Posted by Tom in Investment, Trade | No Comments

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Business Future of the Americas ConferenceThe Association of American Chambers of Commerce in Latin America (AACCLA) will host the Business Future of the Americas Conference in Mexico City this year, May 14 – 15 at the Hotel Camino Real Polanco.  Aimed at addressing the challenges and opportunities facing intra-regional trade, the conference will bring together leading figures from the private and public sectors to present their experiences and points of view.  The event will feature presentations by key players on topics such as competitiveness, logistics, education and innovation, as well as workshops on corporate social responsibility, energy efficiency and rule of law and transparency.  The conference will include speakers of the stature of President Felipe Calderón of Mexico, U.S. Ambassador to Mexico Anthony Wayne, Mexico Central Bank Governor Agustín Carstens, former President of Peru Alan García, and representatives of top international companies such as BASF, Cisco Systems, Ernst & Young, Amgen and ManattJones, among others.

AACCLA is made up of 23 American Chambers of Commerce throughout Latin America and the Caribbean devoted to promoting trade and investment between their countries and the United States.  The upcoming conference will include a match-making forum with representatives of the Mexico offices of various U.S. states.

Please visit the web site of the Business Future of the Americas Conference for details on how to attend.

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Mexico presidential election campaign update

Apr 16

Posted by Tom in Politics | No Comments

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Nonplussed electorate

Mexican voter

A few things have changed since our last discussion of the Mexican presidential campaign, so here is an update on where we stand in mid-April.

To recap the basics, elections will be held in Mexico on July 1, 2012 for president and mayor of Mexico City, as well as various governorships and Congressional, state and local posts.  Each of the three principal political parties has registered its candidate for the presidency, as follows:

Partido Revolucionario Institucional (PRI): Enrique Peña Nieto

Partido Acción Nacional (PAN): Josefina Vázquez Mota

Partido de la Revolución Democrática (PRD): Andrés Manuel López Obrador

Right vs. Left is often in the eye of the beholder, particularly in the case of the PRI, which is both a member of the Socialist International and the party that brought Mexico into the North American Free Trade Agreement (NAFTA).  Conventional analysis would probably cast the PAN as the party of the right, the PRI in the center, and the PRD on the left.  For the purposes of the current campaign, we should note that both Peña Nieto and Vázquez Mota have expressed support for considering increased private sector participation in state-run oil and gas monopoly Pemex.  Read the rest of this entry »

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Recent and upcoming investment in Mexico

Apr 4

Posted by Tom in Energy, Investment, Manufacturing | No Comments

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Information collected from media reports over the past month:

  • Retail: Mexico’s leading retailer Walmart de Mexico announced it will invest approximately US$1.5 billion in its Mexico and Central American operations this year.  The record investment will be channeled into the opening of over 400 new stores, in addition to technology acquisition and efficiency programs. (El Financiero, February 22, 2012)
  • Water treatment: Mexican construction company Grupo Carso announced it will invest approximately US$1 billion in the construction of a major water treatment plant at Atotonilco in the central state of Hidalgo.  The plant is planned to recycle 60% of waste water in the Valley of Mexico, in which Mexico City is located. (El Financiero, March 7, 2012)
  • Automotive: Japanese autoparts maker Yorozu plans to invest approximately US$70 million to build a new manufacturing plant in the central state of Guanajuato.  The new facility, the company’s second in Mexico, will produce shock absorbers to meet demand from the country’s surging vehicle production. (Businessweek, February 13, 2012)
  • Food processing: Italian confectioner Ferrero will invest US$190 million to build a new production plant in the central state of Guanajuato.  The plant will produce chocolates under the Ferrero Rocher brand in addition to other sweets. (El Economista, February 22, 2012)
  • Retail: U.S.-based supermarket and general merchandise retailer H-E-B plans to add five new stores in Mexico in 2012, raising the number its sales locations in the country to 44.  H-E-B Mexico sales surpassed US$1 billion in 2011.  (NAFTA Works, March, 2012)
  • Energy: The North American Development Bank (NADB) agreed to provide financing for the construction of a wind farm to produce electricity in the northern state of Tamaulipas.  The generation plant, to be developed by Compañía Eólica de Tamaulipas, S.A. de C.V. (CETSA), will provide energy for purchase by leading grocery and general merchandise retailer Soriana. (NADB, February 13, 2012) Read the rest of this entry »

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Mexico joins Wassenaar Arrangement on export controls

Mar 15

Posted by Tom in Investment, Manufacturing | 1 Comment

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Made in Mexico, one of these days

Made in Mexico, one of these days

Effective January 20, 2012, Mexico was admitted to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.  It may sound like an arcane treaty of interest only to trade policy eggheads, but it actually stands to have concrete impact on some of Mexico’s most advanced manufacturing industries and their foreign business partners.

The Wassenaar Arrangement is an agreement among 41 manufacturing countries to abide by common guidelines intended to enhance transparency and responsibility in the exportation of arms and “dual-use” goods and technologies, which means those which could be used for both civilian and military applications.  For example, a chemical used in plastics manufacturing that could also be used in chemical weapons would be considered a dual-use good.  Participants in the arrangement must each implement their own internal controls and procedures domestically in compliance with the guidelines of the arrangement.  Mexico applied for admission in June 2011, and was accepted as a member after implementing a system of export permits and reporting applicable to arms and dual use goods which entered into effect in October 2011. Read the rest of this entry »

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Recent and upcoming investment

Mar 8

Posted by Tom in Investment, Manufacturing | No Comments

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Information collected from media reports over the past month:

  • Food processing: Mexican meat processor SuKarne initiated construction of a new beef processing plant at a total cost of US$110 million.  Plans for the facility include the addition of a 70,000-head feedlot in the future. (Meat & poultry, February 24, 2012)
  • Manufacturing: American medical device manufacturer Welch Allyn inaugurated a major expansion of its Tijuana production plant.  The infrastructure upgrade, which required investment of US$7.4 million, will allow the facility to boost production of medical thermometers. (Siglo 21 Periódico Industrial, January 30,  2012)
  • Pharmaceutical: Mexican pharmaceutical and cosmetics manufacturer Genomma Lab announced it will invest US$23 – 30 million in research and development of new products this year.  The fast growing company was founded in 1996 and now exports to over 30 countries. (El Financiero, January 27, 2012)
  • Hospitality: Mexican hotel operator Hoteles City plans to open 14 new locations in Mexico and one in Costa Rica this year.  The chain intends to seek LEED certification for 10 of its units already in operation. (El Financiero, January 30, 2012)
  • Automotive: Ford Motor Co.’s Mexican subsidiary will invest approximately US$1.5 billion in expansion and upgrades at its manufacturing plant in the northern city of Hermosillo in 2012.  Plans include a new diesel motor production facility and an engineering center. (El Financiero, January 30, 2012) Read the rest of this entry »

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Regulatory Cooperation Council to support U.S.-Mexico trade

Mar 1

Posted by Tom in Trade | 2 Comments

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HLRCC

Regulatory official

So this morning we were reading through the work plan for the High Level Regulatory Cooperation Council between Mexico and the United States (HLRCC).  We figure you’ve probably already read it too, but just in case you were tied up in a meeting or something, here are a few comments on the Council and its work plan.

As we’ve mentioned before, the Mexican government has been on something of a regulatory-upgrade roll during this administration.  We noted a package of regulatory reforms aimed at facilitating new business startups, the drive to take Customs processing online and a raft of green policy initiatives as some recent examples.  The HLRCC, charged with improving the compatibility, efficiency, transparency and effectiveness of government regulations across the two countries, was announced jointly by Presidents Barack Obama and Felipe Calderón on May 19, 2010.  Both countries held consultations with stakeholders during 2011 to gather input from industry and the public, and the work plan, released February 28, 2012, provides an outline of the objectives and timelines of the Council’s activities for the coming two years. Read the rest of this entry »

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Recent and upcoming investment

Feb 2

Posted by Tom in Economy, Energy, Investment, Manufacturing | No Comments

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Information collected from media reports over the past month:

  • Aerospace: American aircraft maker Hawker Beechcraft is joining forces with Mexican executive jet operator Aerolineas Executivas to build a new maintenance facility to serve private aircraft in the northeastern city of Monterrey.  The US$2.2 million project is planned to provide repair and painting services in the country’s second largest private aviation hub. (El Financiero, January 2, 2012)
  • Automotive: Japan-based Nissan Motor Co. is preparing plans to build a new automobile factory in Mexico.  The new facility will add production capacity to the company’s two existing plants in Mexico which currently have capacity to produce over 700,000 vehicles a year. (Wall Street Journal, January 6, 2012)
  • Automotive: Japanese automaker Nissan announced it will construct a new vehicle assembly plant in the central state of Aguascalientes at an estimated cost of US$2 billion.  The large-scale plan includes a supplier park nearby the new manufacturing facility, which will become Nissan’s third in Mexico. (Autoweek, January 25, 2012)
  • Aviation: European aerospace manufacturer Airbus announced an order from Mexican airline Volaris for the purchase of 44 new A320Neo and A320 aircraft. The total value of the deal, planned for delivery 2015 – 2020, was estimated at approximately US$4 billion. (AFP, January 12, 2012)
  • Aviation: U.S.-based aerospace manufacturer Hawker Beechcraft announced the sale of six new T-6C+ training aircraft to the Mexican Air Force, with the possibility of additional future orders.  The value of the deal was not specified. (Defense Media Network, January 11, 2012)
  • Electricity: German electronics and electrical engineering giant Siemans inaugurated a Low Voltage Research and Development Center near the northeastern city of Monterrey. The company invested approximately US$22 million in the new facility, which will help to develop high efficiency electrical systems for Siemens products. (Reforma, January 13, 2012)
  • Retail: Mexican grocery and general merchandise retailer Soriana announced plans to open 50 new sales locations in the country this year.  The company currently operates 558 stores across its five formats. (Reforma, January 16, 2012)
  • Logistics: The Mexican affiliate of Philippines-based International Container Terminal Services Inc. (ICTSI) has begun construction on a new container handling terminal at the Pacific port of Manzanillo.  The new facility will require investment of US$250 million.  (Maquila Portal, January 17, 2012) Read the rest of this entry »

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Regulatory reforms aim to spur new business

Jan 24

Posted by Tom in Economy, Investment | 1 Comment

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Clear path to business startup

Clear path to business startup

Driven by a desire to stimulate employment and the internal market, as well as to scale the World Bank’s “Ease of Doing Business” rankings, the Mexican government approved a package of reforms in December 2011 aimed at facilitating the creation of new businesses.  The modifications, which affect laws such as the Foreign Investment Law, the General Law of Mercantile Societies, the Public Administration Law and others, are intended to reduce the time, cost and aggravation of registering a new company.  Some of the changes entered into effect as of January 1, 2012, and others will become operational as of June of this year.

Taken as a package, the reforms seek to concentrate the required procedures for forming a business within the Economy Ministry (SE), instead of having them distributed throughout various government agencies, each with their own offices, forms, procedures and fees.  The official reform decree also calls upon the SE to coordinate the harmonization of procedures across agencies and incorporate the overall process into a unified digital registration system, via the web portal www.tuempresa.gob.mx.  Examples of the regulatory modifications include:

•    Reduction of obligatory response time for new business approval applications
•    Elimination of fixed amount of initial share capital
•    Elimination of various fees from new business application process
•    Removal of requirement to establish a fixed duration for registered companies

Read the rest of this entry »

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