Mexico Business Blog

Considerations on trade, business, politics and life in Mexico

Recent and upcoming investment

Jul 13

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

Reports on some recent and upcoming investment collected from the local business media:

  • Water treatment:  Mexican sugar producer Grupo Azucarero México (GAM) revealed it will begin construction next month on a new waste water treatment plant.  GAM has invested US$35 million over the past four years in automation process technology, as well as a system for generating electricity through steam produced by burning cane bagasse.
  • Logistics: Guanajuato’s Guanajuato Interior Port multimodal logistics center will enter a new phase of expansion in the coming months.  Approximately US$55 million in new investment will be carried out to expand existing infrastructure at the site, which includes Customs facilities, a free zone, ground and air cargo handling services, industrial yards and related operations.
  • Automotive: German engine components maker Getrag Transmissions Manufacturing inaugurated a new production plant in the central city of Guanajuato.  The US$500 million facility will manufacture transmissions for the Ford Fiesta line being built at Ford’s Cuautitlan Izcalli plant outside Mexico City.
  • Manufacturing: French digital media manufacturer Technicolor will begin making 3D Blu-ray discs for Warner Brothers at its Guadalajara plant this year.  The company is investing US$11.4 million in the plant to boost production capacity.
  • Green building: Mexican developer Homex announced plans to develop four new housing complexes in north western Mexico based on the concept of Integrated Sustainable Urban Developments.  The first of these complexes will require investment of US$27 million and all will incorporate green building technologies.     Read the rest of this entry »

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Gubernatorial elections held in relative peace

Jul 5

Posted by Tom in Politics | No Comments

vote for pedroOn Sunday, July 4, Mexicans went to the polls to vote in gubernatorial elections in 12 states, as well as numerous mayoral and state legislature elections.  Today, headlines are dominated by analysis of gains for the PRI and multiple cases of electoral manipulation.   Hallelujah!

In the not-too-distant past, such an outcome on election day would primarily be cause for anger, frustration and concern.  But, as a great thinker once said, that was then and this is now.  Realistically speaking, many of us feared the elections would be the target of attacks by the drug cartels, particularly in the wake of last week’s murder of the front-running candidate for governor in the border state of Tamaulipas.  But when we crawled out of our hiding places this morning, we were greeted mostly with tales of corruption and gangstery old-school politics.  Just like the bad old days, which are actually starting to look kind of good by comparison.

The strong showing by the PRI is seen in some quarters as an ominous foreshadowing of return to the single-party domination and strong-arm tactics of yesteryear.  Certainly the reports of extreme electoral monkey business in Hidalgo and Veracruz suggest the PRI hasn’t forgotton how to throw a good old fashioned Mexican election.  Initial returns, however, indicate that the PRI actually lost the governorships of the states of Oaxaca, Puebla and Sinaloa, which are known for many nice things but seriously people pristine electoral democracy is not one of them.  Perhaps most promising, voter turnout in a good number of states was over 50%, according to published figures.  Even turnout in Tamaulipas approached 40%, which isn’t bad considering we’re on the verge of changing the state motto to “Hail of gunfire.”  So in light of widespread concerns about catching the “bullet flu” at the polls yesterday, on balance Mexicans should be commended for exercising their political rights.  Hopefully, the incoming governors, mayors and state legislators will show a similar commitment to democracy.  Hopefully.

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Mexico hoping yuan appreciation will boost exports

Jun 25

Posted by Tom in Manufacturing, Trade | No Comments

Put me in coach

Put me in coach

In the run-up to this weekend’s G20 meeting in Huntsville, Ontario, much ink has been spilled regarding the value of the Chinese currency.  Economists, pundits and observers of all stripes have taken positions on various sides regarding the question of how much and how fast the yuan (or Renminbi, if you prefer) needs to appreciate against other major currencies.  And, of course, how willing Chinese authorities are to allow this to happen.

Hypothetical scenarios projected in some circles of a rapid appreciation of 40% have China’s export competitors salivating.  Basic trade theory holds that by hiking the value of the yuan, Chinese exports become more expensive, making competing products made in countries such as Mexico that much more cost competitive.  Gaining ground of this type is seen as critical in the hotly disputed U.S. market for goods such as appliances and electronics.  Trade data for 2009 suggests that Mexico is already gaining some overall market share from China in the United States, and we have touched on the relative cost competitiveness between Mexico and China in this space before.

Read the rest of this entry »

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Recent and upcoming investment

Jun 1

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

Reports on some recent and upcoming investment collected from the local business media:

  • Real Estate:  Mexican real estate developer Marhnos announced plans to build up to five office towers in Mexico City over the next five years.  The company is projecting investment of approximately US$1.5 billion in the projects, which will be carried out in alliance with New York-based developers Turner International.
  • Apparel: Sports apparel and footwear maker Grupo Charly is manufacturing in Mexico again after an absence of six years.  The  Mexican company offshored the last of its domestic production to Asia in 2004, but began to move some manufacturing back home last year to improve delivery times.  They project ramping up Mexico production to 600,000 pairs of sports shoes over the next three years.
  • Automotive: Nissan Mexicana has reported plans to invest US$600 million at its plant in Aguascalientes, Mexico, to manufacture a new model car.  The auto maker plans to build 50,000 units annually of the new model, which will include 75% components from domestic suppliers.
  • IT: Mexico’s top telco Telmex announced it will significantly expand its Triara Data Center over the coming two years.  The US$100 million facility provides integrated hosting services, data storage, backup and connectivity solutions to domestic and international corporate clients as well as government agencies.
  • Automotive: U.S. truck maker Navistar announced its Mexican subsidiary Navistar Mexico will increase production by 50% by the end of the current year.  The company’s US$250 million facility in Escobedo, Nuevo Leon is the largest truck and bus chassis manufacturing plant in Latin America. Read the rest of this entry »

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Aerospace meetings set for Guadalajara

May 28

Posted by Tom in Investment, Manufacturing | No Comments

GdlaMexico’s aerospace industry continues to grow aggressively (see our past post on the Tijuana aerospace forum at http://bdp-americas.com/blog/2010/02/aerospace-supplier-forum-set-for-tijuana), and this Fall the sector will achieve another milestone:  Guadalajara will host the first event organized in this country by BCI Aerospace.  The French firm specialized in global promotional events for the aerospace and defense industries will host “Aerospace Meetings Guadalajara” October 4 – 8 at Expo Guadalajara.  The event provides a forum for aircraft manufacturers and potential suppliers to engage in one-on-one meetings, in addition to attending conferences, workshops and tours of Mexican manufacturing facilities.  According to BCI’s brochure, Aerospace Meetings Guadalajara will feature participation by 100 Mexican companies and 150 foreign firms representing a total of 20 countries.  For complete details, the event brochure is available here: www.bciaerospace.com/mexico

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Mexico tops for tax competitiveness?

May 18

Posted by Tom in Investment, Manufacturing | No Comments

Read the fine print

Read the fine print

Here’s one that, we confess, took us by surprise: in a recent study of tax attractiveness for business, when the final numbers were in, Mexico came in at a whopping…wait a moment…(removes glasses, rubs eyes, puts glasses back on)…number one??!!

Well, we are beaming, we must say.  It’s not that we feel Mexico is not tax competitive – it’s just that, well, we’re still a little grumpy after filing our own Mexican corporate and personal taxes earlier this year.  But in KPMG’s Competitive Alternatives 2010 Special Report: Focus on Tax, Mexico is ranked number one, with the lowest Total Tax Index (TTI) based on a study of 95 cities in 10 countries.   The three major tax components under analysis in the report are corporate income tax, other corporate taxes, and statutory labor costs.  Tax systems vary widely from country to country, of course, and the overall tax burden on businesses can vary significantly by industry within a country.  Any attempt to boil down the corporate tax environment to a single index score will be complex, and KPMG addresses the challenges to such an undertaking in detail in their report.  Nonetheless, at least in this document, we are number one, and we must say we are well chuffed.  Now, if we can only keep the momentum going into the World Cup…

For a look at KPMG’s full report, go here.

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Recent and upcoming investment

Apr 29

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

Reports on some recent and upcoming investment collected from the local business media:

  • Beverage:  Mexican beverage giant and retailer FEMSA announced plans for US$750 worth of investment this year.  The lion’s share of the funds will go toward upgrades and expansions of bottling plants, while the remainder will support the company’s Oxxo chain of convenience stores.
  • Automotive:  Chinese autoparts maker Minth opened a manufacturing plant in the northern state of Aguascalientes.  The plant, representing a total investment of US$16 million, is planned to supply molding and interior components to Nissan, Ford, Chrysler and Fiat plants in Mexico.
  • Mining: Mining companies operating in Mexico will invest a combined US$13.8 billion through 2012, according to the Mexican Mining Chamber (Camimex).  The chamber projected that expansions and upgrades of operations in mining zones will contribute toward improvements in roads, electrification, potable water and other basic infrastructure in the areas. Read the rest of this entry »

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Great leap forward near for net metering?

Apr 22

Posted by Tom in Energy, Politics | No Comments

Be the first on your block

Be the first on your block

Mexico’s progress in making greater use of renewable energy sources has long been shackled by regulatory restrictions on independent energy generation by private enterprises and citizens.  This, of course, has much to do with the histrionics of political sectors that oppose energy reform for reasons wholly unrelated to energy, but that’s another topic.  It’s a fundamental problem of, as we say in Mexico, “ni picha, ni cacha, ni deja batear.”  The resources of the Federal Electricity Commission (CFE) are far too stretched to finance a wide range of innovative alternative generation projects, particularly at the micro level, but regulation has largely prevented anyone else from generating electricity, even for their own consumption.  Some furtive steps toward modernization of the regulatory framework fortunately have been taken in recent years.  One such step, introduced almost surreptitiously in 2007, was the Interconnection Contract for Small-Scale Solar Energy Sources, which permitted private generation of up to 10kw for residential use and 30kw for general low tension use.  Although the practical impact of this regulatory innovation was virtually nonexistent, it is significant nonetheless in that it represents Mexico’s first toe-dip in the waters of net metering for private electricity generation.  Now, however, the government has taken another important step forward toward clearing the way for wider use of net metering for private electricity generation. Read the rest of this entry »

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Recent and upcoming investment

Apr 7

Posted by Tom in Economy, Investment, Manufacturing | 1 Comment

Reports on some recent and upcoming investment collected from the local business media:

  • Steel:  Mexico’s steel manufacturing industry chamber of commerce Canacero projected investments of US$10 billion over the next five years to significantly boost production in the sector.  Canacero estimates production will increase 13.5% this year over 2009, when output dropped significantly.
  • Airports: The Mexican Ministry of Transport (SCT) announced plans for three new airports to be constructed in 2010, with investment of US$36 million.  The local airport developments are planned for La Pesca in the northeast and the tourist sites Creel in the north and Palenque in the south.
  • Transport: Inter-city bus operator Grupo IAMSA reported it plans to add 300 new luxury buses to its fleet this year.  The US$100 million investment is slated to go primarily to Volvo for the new buses.
  • Aerospace: French aerospace manufacturer Grupo Safran inaugurated two new plants in an aerospace park in the central state of Queretaro, site one of Mexico’s leading aerospace clusters.  The approximately US$150 million investment set up plants for Safran’s affiliates Messier-Dowty and Snecma to produce jet engine parts and undercarriages.
  • Solar power: BP Solar, the solar technology subsidiary of Great Britain-based energy giant BP, announced plans to subcontract the assembly of solar modules with Jabil Circuit in Chihuahua, northern Mexico.  Plans call for producing modules with a combined capacity of 45 MW, with the possibility for expansion as demand dictates. Read the rest of this entry »

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Secretary Clinton Visits Mexico

Mar 26

Posted by Tom in Politics, Uncategorized | No Comments

bienvenido-mister-marshallU.S. Secretary of State Hillary Clinton travelled to Mexico on March 23 to lead a high-level security team in meetings with top Mexican officials to discuss the country’s war against the drug cartels.  The size and level of Clinton’s all-star team at the meetings, which included Defense Secretary Robert Gates and Homeland Security Secretary Janet Napolitano, is an indication of how much attention violence in Mexico is receiving in the Obama administration right now.  The March 14 shooting deaths of three people connected to the U.S. consulate in Ciudad Juárez certainly helped to raise the profile of the situation.

In Mexico, Secretary Clinton’s meeting with President Felipe Calderón and his security team was surely welcomed by some and decried by others.  Given the United States’ history of interventions in Mexico both military and political, many in Mexico discard out of hand any cooperation proposed by the neighbor to the north as a subterfuge to cover ill-defined but surely nefarious ulterior designs.  While this perception emerged for good reason, we feel that under the current circumstances, the question of intent is now academic.  While many political leaders in Mexico look for ways to spin the drug violence for partisan gain, the cartels continue to act with near impunity.  With executions and home invasions related to drug trafficking taking place in Atlanta, Phoenix and other U.S. cities, the cartels are now a domestic security threat in the United States, not just someone else’s problem in one of those other countries. Read the rest of this entry »

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