- Posted by México
- On Wednesday March 16th, 2016
- 0 Comments
- automotive, Electronics and Aerospace, industries, Manufacturing, SRS
Since 2014, Mexico’s government has been setting up policies and legal reforms in order to build an attractive business environment for foreign investors. According with the study Competitiveness: Catching the next wave in Mexico of Deloitte, the multinational consulting firm, there are 7 industrial sectors which will keep growing over the next 4 years. By 2020, they will be the ones that boost the productivity inside the country.
This industry has been the most benefitted from the accession of Mexico to North America Free Trade Agreement (NAFTA) in 1993. Nowadays, manufacturing sector receives 50% of the total Foreign Direct Investment (FDI), represents 80% of the total trade, and accounts for 32% of the economic output of the country. That is the reason why new European and Asian investors have installed their fabrics in Mexican territory in the last years.
As a result of an additional investment of $15 billion dollars in automotive industry expected before the end of this decade, Mexico is projected to be the 5th largest vehicle producer in the world by 2020. Not only transnational car producers but also Japanese parts makers have taken advantage of reduced shipping and low labor costs in the country to develop their businesses. In fact, Kia Motors and Audi AG are going to open new plants in the next years at Monterrey and Puebla, respectively.
Electronics and Aerospace
Mexico has 10 main clusters of electronics production among which the largest one is set up around Guadalajara. In that city, there are 400 manufacturers where around 50,000 workers make their best to grow large-scale manufacturing. Moreover, 300 factories that produce aerospace components operate across five Mexican states. This has been possible because 130,000 engineers graduate each year on the nation, much more than in Canada, Germany or Brazil.
Thanks to the recent reform of energy, Mexico has allowed that companies of other countries participate in the exploration of oil fields and extraction of petroleum. With this policy, the government wants to expand downstream refining and manufacturing capacity. Regarding to the Hydrocarbon National Commission, just 57 oil wells have been drilled in the Mexican portion of the Gulf of Mexico, but the opening of oil industry to foreign investment will give the country $50 billion dollars by 2020.
Although the transmission and distribution of power still remains in the Federal Commission of Electricity (CFE), the Mexican reform of energy will allow that private firms can sell back electricity inside the country. In order to reduce power generation costs by using natural gas instead of fuel oil, the government has announced the construction of 7 new pipelines to take gas across the border with USA. Furthermore, CEMEX will invest $30 million dollars in the next years to obtain 1000 Megawatts of electricity from wind turbines.
The current reforms in the use of radio spectrum in Mexico stipule the entry of new players, the elimination of long-distance rates and the reduction in cellular fees. As a result, America Movil and Televisa, the telecommunications and broadcasting Mexican giants, respectively, are limited to a 50% of the total market share and obliged to lend their infrastructure with their rivals. Actually, AT&T, one of the most important companies of the industry worldwide, has acquired the Mexican enterprises Iusacell and Nextel to expand its presence in Latin America.
Foreign tourists spend around $16 billion dollars when visiting some place of Mexico each year. Besides its natural and cultural richness, Baja California, Puerto Vallarta and San Miguel de Allende have become top medical tourism destinations for American seniors who spent their retirement on nursing homes. They also come to Mexico looking for accessible medical procedures such as lap-band, dental and cosmetic surgeries. For this reason, the country expects to receive 650 000 American medical tourists by the end of the decade.
In 2016, the International Monetary Fund estimates a 2.8% of growth for Mexico, however, Deloitte’s study predicts that this 7 industries will grow 4% per year until 2030. Several opportunities are being opened for your company in this country. If you consider that it is time to explore new markets, you should start your expansion plan outside your borders.