Posts Tagged Manufacturing

Aerospace supplier forum set for Tijuana

airplane_cartoonWhile many industries are struggling in the current down economy, aerospace continues to post robust results in Mexico.  Aerospace manufacturing and support services in the country have grown from a relatively minor industry in the 1990s to become one of the world’s leaders by 2010.  Particularly in recent years, as the momentum of clusters grew, the industry has exploded from about 60 companies in 2004 to over 200 currently.   Export sales are projected at US$3.4 billion for 2009, and are expected to exceed US$4 billion in 2010.

Tijuana, the center of one of Mexico’s aerospace clusters, will host a forum in March to bring together aircraft manufacturers and suppliers of the parts and components they need.  The event will feature a conference series as well as one-on-one matchmaking meetings.  Full information and registration can be found here:

http://www.sedeti.tijuana.gob.mx/aerospace_2010.asp

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Recent and upcoming investment

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

  • Automotive:  Nissan and Volkswagen have announced plans to begin production on new models in Mexico this year, expanding current production.  Nissan will build a new compact model at its Aguascalientes plant, in addition to adding production of its new Micra model also at the Aguascalientes location.  Volkswagen will launch production of a mid-size sedan as well as new models of the Beetle and Jetta at its Puebla facility.
  • Electronics: Electronics industry leaders Samina-SCI and Hewlett Packard have announced plans to expand operations this year in Jalisco state, site of Mexico’s leading electronics cluster.  Sanmina projects investment of US$10 million in new machinery and equipment for manufacturing, and Hewlett Packard is investing US$5 million in infrastructure upgrades to expand staff at its Center of Excellence in Guadalajara.
  • Manufacturing: Danish cleaning equipment manufacturer Nilfisk opened a US$10 million facility in the central state of Queretaro.  The new plant will produce industrial cleaning machines.
  • Airports: Airport operator Grupo Aeroportuario del Pacifico announced planned investment of approximately US$42 million for this year in infrastructure upgrades.  Of the group’s 12 airports in Mexico, those at Guadalajara and Los Cabos are slated to receive the largest share of the upgrade investment. Read the rest of this entry »

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Worm turning for Mexican manufacturing FDI?

china_manufacturingMexico has taken a drubbing from China over the past decade in the attraction of foreign investment in manufacturing, maquiladora and otherwise.  While Mexico has by no means been abandoned by North American and Asian manufacturers, China became a veritable Klondike for foreign manufactures seeking to lower production costs in the early 2000’s.  But a recent story in Reforma reinforces our own anecdotal evidence that Mexico may be in the process of recovering some of the FDI that drank the China Kool-Aid over the past few years.

Throughout the early and mid-‘00s, in the course of participating in export promotion events in the United States, we were struck by the stampede of prospective exporters and manufacturers begging to be led to China.  And not just blender manufacturers either – we had little old ladies knitting doilies looking to offshore to Guangzhou to boost margin.   While there’s no question that China offered a lot of manufacturers very attractive opportunities for cost reductions, we suspect that some portion of those who went tearing off to China with stars in their eyes looking for “money for nothing” probably wound up with more of the latter than the former.  The big attraction, of course, was the low cost of labor.

According to a report by Boston Consulting Group cited by Reforma, in 2002 China’s average daily manufacturing wage was USD0.80, far below Mexico’s comparatively lavish USD3.00 at the time.  Double-digit average annual GDP growth since then, however, has helped drive wages steadily upward in China, while manufacturing pay has remained relatively stable in Mexico over the same period.  As a result, a gap in labor costs of over 250% between Mexico and China just a few years ago is projected to drop to under 20% in 2010.  When factoring in 4:00 a.m. conference calls, frustrating communications and the cost and time of shipping, China may now be losing some of its former luster for manufacturers looking to offshore to serve the North American and South American markets.  Mexico would do well to keep a close eye on items such as electricity costs, targeted technical education and other industrial location decision factors in order to take maximum advantage of any opportunities created by China’s unprecedented development surge.

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Thoughts on the Mexican economy at year’s end

el-nopalAs 2009 draws to a close, Mexico, like many countries, will be happy to see the back of this year.  Not only did 2009 see the worst economic decline in decades, but the steep recession was exacerbated by the outbreak of the H1N1 flu in April, which had a devastating effect on tourism and, to a lesser degree, business travel.  Mexico’s deep economic integration with the United States is a key motor for the economy, and as a result, the contraction of demand for vehicles and other durable goods in the U.S.A. hit Mexico’s productive sector hard.  The first two quarters of the year were practically catastrophic, as the precipitous dropoff in demand for vehicles led to layoffs and temporary plant closings in Mexico’s large vehicle manufacturing industry.  Tourism, hit by the one-two punch of the slumping U.S. economy and then the flu outbreak in April, is showing tepid signs of recovery, but the sector is still expected to close the year approximately 20% below 2008 levels.

The good news is that for the moment, the worst appears to have passed.  Read the rest of this entry »

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Recent and upcoming investment

Some investment and other economic activity reported in local media over the past month:

  • Logistics:  Argentina-based logistics company Axis Logistica announced plans to build a new distribution center in Mexico in 2010, in anticipation of economic recovery.  The company entered the Mexican market in 2007 and has invested US$10 million since that time in construction and upgrades of its distribution infrastructure in the country.
  • Aviation: Private air transport for executives is a growth industry in Mexico, with positive growth projected for 2009.  The sector is led by Aerolineas Ejecutivas (ALE), which is projecting 12% growth for the year.  The company invested approximately US$35 million in a new terminal at Monterrey’s international airport this year.
  • Aerospace: Mexico’s aerospace industry continues to post impressive growth despite the worldwide economic slowdown.  The number of companies in aerospace manufacturing, maintenance and related support services in Mexico has grown from 61 to 194 over the past four years, with export sales projected at US$3.4 billion for 2009.
  • Automotive: Ford Motor Company inaugurated a new engine manufacturing plant in the northern city of Chihuahua, in the state of the same name.  Ford invested a reported US$838 million in the new plant, which will produce diesel motors for pickup trucks.
  • Laboratory: Coca-Cola de México launched operations at a new testing laboratory in Mexico City.  The US$8 million facility includes state-of-the-art technology and will be used to verify the safety of ingredients, materials and finished products.
  • Solar power: The State of Durango announced it is preparing to develop a major industrial park to produce solar power equipment and generate solar electricity.  The complex, to begin construction in 2010, is planned to house 20 solar technology companies.  Durango reportedly recently signed a cooperation agreement with a German solar power research institute.
  • Airports: Tourist resort developer Grupo Vidanta inaugurated a new international airport in the northwestern location of Puerto Peñasco.  Vidanta, which operates resorts in the area, invested US$40 million in the project, which was also supported by the Sonora state and federal governments.  In the future the developer seeks to construct a new highway linking Puerto Peñasco with the U.S. border.
  • Processed foods:  Swiss processed foods giant Nestle announced plans for major investment in Mexico manufacturing operations for 2010.  The program includes a US$15 million plant in the south eastern state of Chiapas to produce Coffee-Mate, and a US$100 million expansion of the company’s coffee processing plant at Toluca, near Mexico City.
  • Aerospace: Canadian aerospace manufacturer Bombardier initiated construction of a new plant – the company’s third – at the Queretaro Aerospace Park in the central state of Queretaro.  Bombardier has plans to invest US$250 million in the plant to produce fuselages, wings and electrical harnesses for Learjets.
  • Retail: Grocery and general merchandize retailer Soriana announced 2010 investment plans to the tune of US$300 million for store upgrades and new store openings.  The company is looking to focus on growth once again following a period of reorganization in the wake of its buyout of 198 stores from former rival Gigante in 2007.  Soriana, with 470 stores, is Mexico’s second largest grocery chain after Wal-Mart.
  • Metal tubing: Multinational metal products giant Luvata inaugurated a new production plant in the north eastern state of Nuevo Leon.  The US$40 million facility will produce copper tubes, coils and coolers for heating, cooling, air conditioning and refrigeration applications.  The complex includes its own water treatment plant.
  • Automotive: Luxury automaker BMW announced plans to source US$2 billion worth of auto parts from Mexican manufacturers over the coming two years, in anticipation of a rebound in sales.  The increase in sourcing from Mexico is intended to hedge the cost of parts currently purchased in Euros.
  • Solar power: Japanese energy technology manufacturer Sanyo Electric Co. inaugurated a new production plant in the north eastern industrial city of Monterrey.  The US$15 million plant will assemble high-efficiency solar modules for the North American market.

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Signs of life in auto manufacturing

Plenty more where this came from

More to come

Mexico’s manufacturing sector will be pleased to welcome back into operation the Ford Motor Co. plant in Cuautitlán Izcalli, outside Mexico City, in 2010, local media are reporting.  The plant, shuttered since 2008, is currently being adapted to begin producing the Ford Fiesta automobile early next year.  In addition to helping skilled employment recover in the Cuautitlán industrial area, bringing the plant back on line will provide a much needed boost to some 20 autoparts suppliers located in the area.

While overall vehicle manufacturing continues to suffer worldwide, we have seen a number of instances in which Mexican manufacturing facilities have taken on additional production following plant closures in other countries.  While it’s not ideal for the industry, we won’t turn it down.

Read more about the Cuautitlán plant reopening here: http://www.eluniversal.com.mx/notas/631454.html

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