Mexico Welcomed Record-Breaking 35 Million International Visitors in 2016

World-famous Mexican hospitality and diverse tourism experiences fuel industry growth

The Mexico Tourism Board announced today a record-breaking 35 million international visitors traveled to Mexico in 2016, representing a growth of 9 percent compared to 2015. This growth is more than twice the global industry average, most recently reported at 3.9 percent by the World Tourism Organization (UNWTO) in January 2017.  Additionally, tourism spending by international visitors grew even faster, at 10.4 percent, highlighting the strength of Mexico’s appeal to luxury travelers, interest in multi-destination visits, and demand for Mexico’s gastronomy, artisanal goods and shopping offering.

“Mexico’s sustained, fast growth is a testament to the incredible quality and diversity in our tourism offering and the hard work for the entire industry, both internationally and domestically. More than 9 million Mexicans working in the tourism and hospitality industry have made it their mission to ensure visitors have incredible experiences,” remarked Lourdes Berho, CEO of the Mexico Tourism Board.  “Plans are already underway to ensure 2017 builds upon these achievements and that Mexico continues to welcome all visitors and give them reasons to come back again and again.”

Mexico’s World Famous Hospitality Makes Visitors Feel At Home
True to the famous Mexican adage, ‘Mi casa es su casa’ (my home is your home), travelers from all over the world have recognized Mexico as being one of the most welcoming and friendliest places to visit in 2016.  In fact, the Mexico Tourism Board’s internal consumer tracking studies showed more than 94 percent of visitors reported an experience that “exceeded their expectations” and 86 percent say they would “like to come back again” in the next six months– some of the highest scores in the industry.  Examples include:

  • Mexico was awarded #1 country in the world for Family Travel and Puerto Vallarta as #2 destination in the world for LGBTQ travel by the global Travvy Awards
  • For the third year in a row, Mexico was ranked as the friendliest and most welcoming country in the world by the John Mason survey of expatriates in 191 countries
  • “Close to China” (Cerca de China) is a special program co-created by both China and Mexico which shares and recognizes best practices in the services offered to Chinese travelers by hotels, restaurants, travel agencies and guides
  • “Halal Mexico” is a special program to help prepare airlines, hotels, restaurants and the wider Mexico tourism industry to cater to travelers from around the world that maintain a halal diet

Mexico’s Visitors by Air and Expanded Connectivity Continues to Grow
Tourists arriving by air grew at an even faster rate of 10.7 percent, propelled by continued expansion in connectivity.  This includes service from new international markets to multiple Mexico destinations, expanded frequency on existing routes, and upgraded aircraft featuring additional seats along with improved passenger experiences.

Mexico’s Top Destinations Featured and Recognized Around the World
From industry awards to consumer media, surveys and high-profile brands, Mexico has once again proven itself once of the world’s most recognized destinations in 2016.  Examples include:

  • The New York Times named Tijuana (#8) and Puerto Escondido (#32) in their 52 Places to Go in 2017.  Mexico City was featured as the #1 place to visit in their 2016 list.
  • Travel & Leisure’s “World’s Best Awards” reader survey named five Mexican cities in its Top 10 Best Cities in Latin America rankings, including San Miguel de Allende (#1), Oaxaca (#3), Mexico City (#4), Merida (#5), Guadalajara (#8)
  • Mexico and its local partners and destinations across the country, won a collective 35 International Travvy Awards in early 2017 including: Mexico as Best Family Travel Destination in the world; Riviera Maya region as the Best Honeymoon Destination in Latin America, and Puerto Vallarta as Best LGBTQ destination globally. In Mexico, Los Cabos received top recognition for its culinary and luxury offerings.
  • The Rough Guides named Mexico City as the #2 city to visit
  • National Geographic named Baja California as one of its top places you need to visit in 2017
  • Sports Illustrated Swimsuit 2017 selected multiple locations in the Riviera Maya and Yucatan region including Tulum for one of its largest features in 2017

The Mexico Tourism Board’s recently announced 2017 tourism development strategy included a focus on developing expanded products and personalized marketing campaigns focusing on areas such as luxury, weddings and romance, diving, biodiversity and nature, culture, gastronomy, high-profile events, sports and adventure, as well as programs for audience segments such as millennials, LGBTQ and retirees.

In each of these areas, partnerships with key destinations as well as global travel operators will bring an ever-expanded portfolio of options to travelers of all types. These industry partnerships are critical to Mexico’s goal to appeal to a broader audience in new markets, globally. This will help in achieving the new ambitious goal of reaching 50 million international visitors by 2021.

Source: http://themexicoreport.com/2017/02/28/mexico-welcomed-record-breaking-35-million-international-visitors-in-2016/

Unintended Consequences

Mexico reacts quickly to US elections.

by GARY SWEDBACK

 

American sociologist Robert Merton’s law of unintended consequences has evolved to include political actions that result in events not foreseen by the originating government body.

The run-up to the US election on November 8 saw campaign-cycle rhetoric that challenged US manufacturers’ business structure and integration practices in the North American economy. The common thread to protect US jobs, raise wages, and grow manufacturing in the US is appealing.

Yet the advocacy neglected to disclose that by November 2016, US manufacturing output and employment had nearly returned to 2007 levels, and exceeded 2009. Even more importantly, the annual number of factory closings and migrations was not increasing. NAFTA withdrawal was one of numerous campaign pledges made by the President-elect during the heat of the election cycle, leaving our team of specialists to discuss, “What would be the consequence and what happens next?”

The consensus in Mexico is that Trump pronouncements for a 35-percent tariff increase for targeted products entering the US will equal a self-defeating trade policy.

The first election result already drove a 12-percent devaluation of the Mexican peso, making US export products more costly to sell. Conversely, 40 percent of Mexican exports to the US contain American content. Increased tariffs automatically increase the price to the US consumer for cars, electronics, phones, medical, aerospace and other products.

North American firms have spent the last 15 years leaning out their supply chain and manufacturing processes. To raise tariffs now will impact production in all locations, increase expenses and again, consumer prices.

Higher tariffs and moving production to the US have further unintended consequences.

Historical escalation of protectionist measures against China has backfired, creating retaliation against US auto and agricultural products. Higher entry prices to the US result in lower corporate sales, falling investment and less hiring. This will result in job loss in both Mexico and US, and downward pressure on US wages to remain competitive.

Many federal agencies in Mexico are managed by younger-generation, disciplined technocrats educated in the best business schools in the US. Another consequence of the election is that Mexican government teams prepared contingency plans in the event of either US candidate winning. While Mexico already has free trade agreements with 45 countries, now it is launching a more globalized market strategy designed for less reliance on the US. For Mexico, globalization is changing, not ending.

Since the election, Mexico has moved quickly to strengthen ties with China.

China is Mexico’s second largest trading partner. Chinese trade delegations have met with Mexico trade ministers twice since the US election, and already agreed to leverage the nearly 1,000 Chinese firms in Mexico, utilizing the new China Mexico Binational Investment Fund.

 

For Mexico, globalization is changing, not ending.

In November, Mexico also began the first round to modernize the EU-Mexico Trade Agreement. The EU seeks to modernize the 16-year-old accord, and Mexico has identified six sectors for update. The results of the EU elections in 2017 will help to gauge potential success of the Trans Atlantic Partnership.

 

New Opportunities

During December 2016, Mexico surpassed Canada as the US primary trading partner. Much of the increased trade results from the OEM automotive business originating in central Mexico. Mexican officials are signaling a willingness to discuss an update to NAFTA. The trade relationship between Mexico and US is an integrated production sharing arrangement, with materials potentially crossing the border several times. China’s relationship to the US is more of a lender and seller.

The appointment of Rick Perry as US Secretary of Energy will also leverage oil and gas sector opportunities. Numerous US firms are already deeply involved offering equipment, resources, and services. Much of the equipment for exploration, extraction, and processing Mexican oil and gas is imported from the US. Significant amounts of energy are already exported from the US to Mexico, under the relaxed energy accords of 2016.

 

What We See Across Mexico for Foreign Firms

NAI coordinates with 60-70 international firms, at various stages of planning for Latin America, at any given time. After the election, NAI polled firms from the US, Canada, Europe and Asia regarding Mexico planning.

Foreign firms with current Mexico operations: Of those with expansion plans, 90 percent are still moving forward.

Foreign firms currently investigating Mexico: None are cancelling, but 35 percent are postponing plans for six to nine months. Few want to publicly share their plans.

Industrial real estate developers in Mexico: 95 percent continue development plans and searching for additional land reserves.

Asian clients, especially Chinese (always taking the long view) are doubling down on Mexico. One Chinese auto supplier is seeking 70 acres (28 hectares) of land Central Mexico for a campus. Samsung is currently inviting six new Korean suppliers for both Tijuana and Queretaro. Japanese automotive OEMs are encouraging strong supplier migration to support vertically integrated Mexico operations.

 

Managing Interim Uncertainty

Foreign firms considering Mexico for the first time are likely to utilize a more extended planning process, with additional fiscal and transfer pricing analysis. Operations already in Mexico will preemptively perform network rationalizations to reconfirm best practices for their North American supply chains. In a few cases, when politically expedient, some firms will establish parallel manufacturing plants, with some final assembly in US markets.

What Will Not Happen: The new administration will not replicate the Carrier deal to launch a company-by-company industrial policy. US and foreign firms will not unbolt and remove their factories from Mexico en masse, because it’s not possible to disrupt the deep integration of the North American supply chain.

In the short term, (next three to six months) the US will experience new infrastructure commitments and positive news with some job growth resulting from new investments. During the first 100 days, the Trump administration will not conclude any immediate structural changes with NAFTA, as it will be focused on immigration, the Affordable Care Act and ISIS security issues.

During the mid term, (six to 12 months) the administration will judge the realistic potential to raise taxes on imports entering the US, potential retaliation from trade partners, impact on domestic sales, investment, and employment loss, and disruption in production to US firms.

Investment plans are quietly proceeding for foreign firms. Operations currently in Mexico will conduct network analyses with their supply chains. Those not in Mexico will assess the market, and proceed in six to nine months.

The newest trend for 2017 will be for Mexico to attract more R&D operations from US manufacturers in Silicon Valley and nationwide. Global R&D centers such as Yumana Tech Center in Tijuana have launched to leverage the advantages of the Cali-Baja megaregion bordering San Diego.

 

Source: http://siteselection.com/issues/2017/jan/unintended-consequences-mexico-reacts-quickly-to-us-elections.cfm

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Bajio Operations Directors Forum – January 19, 2017

NAI Mexico is pleased to invite you to the Bajio Operations Directors Forum, Thursday, January 19.

Global industrial operations executives in Mexico’s Bajio Region are meeting for lunch at the GPARK Building 2, in Queretaro, from 1:00 – 3:00 p.m.

The Bajio Operations Directors Forum will present the impact of US political elections, latest trends in Mexico, and how directors can support their 2017 planning processes. The agenda will include:

  1. Welcome and Introduction to Visitors

    • Host Welcome:  GPARK Alberto Giundi, Vice President
      • Introduction to the Presenters
  2. 2017: Global Macro Outlook Impacting Mexico
    • Presented by: Price Waterhouse Cooper (PWC)Joshua Levy: Foreign Client Services www.pwc.com
      • 2016 Prediction Review: Global Trends Affecting Mexico
      • 2017 Global Economic Perspectives
      • Trends and Economic Risks: Mexico and North America
  3. Impact of US Elections on Foreign Industrial Operations in Mexico: Planning 2017
    • Presented by: Seraph Ambrose Conroy: Founder and Managing Partner www.seraph.com
      • Proposed Changes by the Incoming US Leadership
      • Likely Impact on Foreign Firms and Exporters in Mexico
      • Preparation Suggestions by Industry Sector
  4. Bajio Market Trends and Activities: Real Estate and Facilities Decisions
    • Presented by: NAI Mexico Gary Swedback: CEO www.naimexico.com
      • US Elections: Feedback from Our Global Clients
      • Planning Mexico vs. Other Markets
      • Multi-Market Comparison Analyses: Total Occupancy Cost
      • Operations Location Planning: 2017
  5. What Are Most Important Issues to Maintain Competitiveness for Bajio Management Teams ?
    • Roundtable and Interactive Discussion
    • Largest Challenges Perceived for 2017

Location: KM 28.5 Carretera San Luis Potosi – Queretaro,  Fase 4 Parque Industrial Queretaro, Santa Rosa de Jauregui, QRO. 76220

Invitations and seating will be limited to 30 attendees.

 

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NAI Mexico Headquarters in Tijuana, to host End-of-Year Regional Meeting

NAI Mexico HQ in Tijuana Hosting 2016 Year End Regional Planning Conference

Tijuana, Baja California, — Professionals from NAI 10 offices throughout Mexico are gathering together November 30 — December 2nd. at NAI Mexico’s headquarters, to discuss current business, plans, trends, opportunities and strategies for the future of commercial real estate in Mexico and Latin America.

CEO Gary Swedback noted, “We are very pleased to assemble such a talented group of sales and staff to focus on business development opportunities throughout Mexico, Latin America, and the Caribbean. We are also honored to host alliance partners and visitors from New York, Los Angeles, and Toronto.” Mr. Swedback also cited the Panamericas initiative, created by NAI Mexico, as a way to offer global clients consistent service from Mexico to the Caribbean, and throughout South America.

Jay Olshonsky, President, NAI Global will be visiting from New York and attending the meeting in Tijuana. Mr. Olshonsky observed:

“The US election results are prompting our North American clients in Mexico to request broad ranging advisory analyses to help plan for the next 9-12 months. The NAI teams are already deeply involved with analyzing both the challenges and opportunities for new firms and existing operations in Mexico. This regional meeting will provide inputs from all 10 NAI Mexico offices to benefit our clients through our national presence and unique point of view.”

NAI Mexico is an exclusive member of NAI, the world’s leading managed network of commercial real estate firms serving over 375 markets worldwide.

NAI Mexico supports both Mexican and global clients through a platform of 10 offices in Mexico. In addition to traditional leasing and sales, NAI Mexico offers additional integrated services for design and construction, project management, valuation, market analytics, capital markets and supply chain solutions.

 

Nearshoring: why now?

NEARSHORING: Why now?

When you think of outsourcing manufacturing operations, what country do you typically think of? China? Vietnam? Philippines? Yes, Asia is typically the go-to region for companies looking to cut costs by outsourcing production processes – and for good reason. Asia possesses both the labor and raw material resources to make the region an effective substitute to higher cost labor in the U.S. and the limited availability of certain raw materials in North America.

While outsourcing to low-cost countries such as China has its benefits (i.e. labor/overhead costs, raw material costs, scalability, freeing up the business’ time to focus on other critical functions, etc.) it comes with challenges as well. Lead times, language barriers, time zone differences, IP integrity, and a general lack of physical presence make outsourcing certain functions a constant struggle for US-based manufacturers and can outweigh the initial savings gained over the long-term. Companies oftentimes look at the price-tag of outsourcing functions such as IT support or manufacturing assembly work, figuring the decision is obvious. However, to minimize risk and to optimize/streamline domestic manufacturing operations it is important to weigh the pros and cons of outsourcing, especially in deciding which low-cost region to outsource to, which processes to outsource, and which partner(s) to use.

As the industry changes and the outsourced business model matures, domestic manufacturing companies have begun to consider alternative options to outsourcing in Asia given the inherent challenges that have to be overcome in order to benefit from their low costs. The aforementioned challenges that come with outsourcing business functions across the globe have nurtured the growth of an emerging trend – the nearshoring model. Nearshoring is an alternative to US trade/outsourcing to Asia by shifting the outsourcing of production, assembly, and other business functions and processes to our neighbors in Mexico and Canada and vise-versa. With the establishment of NAFTA in the early 1990’s came the development of transportation and telecommunication infrastructure through the CANAMEX corridor along with IP protection provisions and the elimination of tariffs on the vast majority of exports between the three countries. As a result, trade barriers were reduced, fostering the growth of inter-North American trade.
The gap between Chinese and Mexican labor rates in the late 20th and early 21st centuries has closed, and then reversed. With the maturation of the Chinese manufacturing industry, they have seen an accompanying demand for a higher wage for skilled labor. From about 2000 and on, Chinese labor rates have steadily increased while the Mexican labor rate has remained relatively stagnant. In fact, multiple studies have shown the average Mexican labor pay-rate dropping below that of China’s. Moreover the Mexican labor force maintains a competitive edge over China from a productivity per worker standpoint year- over-year.

Though a gap a still persists from a raw material and natural resource prospective, the wage rate shift marks a significant turning point in the traditional outsourcing school of thought. This has been further compounded in the Yuan/Peso exchange rate where the Peso has continued to steadily weaken against the Yuan over the past five years making it even more affordable to produce in Mexico. Other factors such as the natural gas costs per MMBTU steadily decreasing for Mexico and increasing in China over the past 10-15 years gives an additional cost advantage to Mexico from an operating cost standpoint.

The list of the tangible benefits of nearshoring goes on: Other advantages include transit times being shortened from 2-3 weeks to less than one day. Intellectual Property is protected by Mexican authorities and IP laws are more effectively enforced than in China and other Asian countries. Social responsibility and strict child labor laws are prevalent in their 48 hour week.

The geographical proximity of Mexico to the US also gives some less tangible benefits to US manufacturing companies looking to nearshore in Mexico. Let’s say it is 11:30 am Eastern Standard Time in Philadelphia and approaching lunchtime. Meanwhile its 11:30 PM in China and your business partners are fast asleep. Any questions that you have for your Asian manufacturing partner will have to remain on hold until the following day and the answer will come while you are long off the clock. This inherently makes communication more difficult and extends response times. Mexico meanwhile shares the same time-zones as the US split up into Eastern, Central, Mountain, and Pacific. The Mexican and US cultures also have many more similarities than differences when compared to the US/Chinese cultures which further the ease of doing business (i.e. more commonly English speaking, language and numbers use same characters, similar holiday schedules, at most a few hour flight away, etc.).

When you couple the labor and productivity rates of the Mexican workforce with the less tangible factors that make doing business in Mexico much easier than with China, old school assumptions about outsourcing to low cost countries requires a new look.

There’s no doubt that nearshoring presents countless benefits over the traditional practice of outsourcing to Asian countries. In my next blog post, we’ll discuss some of steps to take in order to make sure your Mexico supplier sourcing initiative is successful.

 

Source: http://buyersmeetingpoint.com/blogs/bmps-qthe-pointq/entry/nearshoring-why-now

Roca Desarrollos

ROCA Desarrollos in partnership with Gava Capital consolidate their participation in one of the major industrial markets in northern Mexico, Tijuana BC

ROCA Desarrollos in partnership with Gava Capital consolidate their participation in one of the major industrial markets in northern Mexico, Tijuana BC, with an initial investment of 3 million dollars.

The project consists of the construction of the first of two buildings forming part of an industrial complex designed to meet the growing space demand for manufacturing, logistics and assembly operations.

The TJ01 building will be located on Via Rapida de Otay / Alamar, one of the prime industrial areas in the city, with a total area of 175,000 square feet. The facility will accommodate projects from 50,000 SQFT. Roca TJ01 will be available for lease in February 2017.

With this national investment ROCA Desarrollos commits to provide Class A industrial construction for a high demanded market, in one of the best locations in the country.

ROCA Desarrollos provides the flexibility to fully comply with its clients’ requirements; always seeking to suit clients needs. Although each project varies in complexity, size and location, the business approach is to adopt a direct and open communication with each of its customers and suppliers to achieve mutual reward, and establish long-term relationships.

Besides the development of inventory buildings for lease, ROCA Desarrollos, provides turnkey projects tailored to lease or sale anywhere in the country; ROCA Dearrollos also services: architectural design, infrastructure development, project and property management.

ROCA Desarrollos envisions to be a leader in the Mexican real estate development.

 

Why the TPP Matters for Latin America

Why the TPP Matters for Latin America

Traditionally, Latin America’s role in global trade has been impeded by the same anti-trade suspicions which are now discrediting the benefits of globalization in the United States. The TPP is the world’s most extensive trade agreement to date, extending into different industries and reforming trade practices in areas such as intellectual property. The 12 country agreement, whose members include: Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore, the United States, and Vietnam, make up almost 40 percent of global GDP and almost 30 percent of all global foreign direct investment (FDI).

 

Trade and Regional Development

Despite the waves of populism in the United States and Europe, a trend which is all but unknown in Latin America, trade is universally recognized as the fuel for growth in the Western hemisphere. Mexico, for instance, can attribute most of its recent growth to its reliance on trade and foreign investment; Mexico has signed the most free-trade agreements in the world.

The region’s growth, however, also depends on intraregional trade, which is low but slowly increasing. The TPP’s three Latin American members: Mexico, Peru, and Chile, are also members of the Pacific Alliance, a Latin American trade bloc encouraging regional integration and intraregional trade.

By approving the TPP, countries like Mexico gain access to a market of almost 1 billion consumers and low cost goods which can be traded within the region. Mexico already does this through the NAFTA agreement with the United States and Canada. By import- ing value-add products from the United States, the region gains access to a market of American goods that would otherwise be unavailable. This agreement also facilitates the creation of small to medium sized businesses in the region who will inevitably have lower costs of production and new markets.
Despite the enormous benefits of trade in the region, it is not enough for countries to reach their development goals. A strong middle class and a new entrepreneurial class are the future of a less commodity dependent region. By lowering costs, the new trade agreement will empower the middle class by offering low-cost goods to increase domestic spending. This agreement also facilitates the creation of small to medium sized businesses in the region which will have lower costs of production and access to new markets.

 

Regional Trade Security

Besides the potential gains from trade in the Pacific, the TPP fulfills an important geopolitical strategy of Chinese containment.

China’s footprint in the hemisphere over the past decade has increased substantially. In part due to the United States’ interests in the Middle East, China’s international pivot not only perpetuated Latin America’s dependence on commodities, it also increased their vulnerability. China has expanded its interest in the region through investment in infrastructure and even arms sales to governments for preferential business. Playing to historic resentment towards Western institutions like the World Bank and the IMF, unconditional loans from China have done little to strengthen the region’s institutions.going on in those home countries of our buyers.”

 

Source: http://intpolicydigest.org/2016/09/13/tpp-matters-latin-america/ 

 

Michelin breaks ground on plant in León, Mexico

Michelin breaks ground on plant in León, Mexico

LEÓN, Mexico (Aug. 24, 2016) — Group Michelin has started construction in Mexico of its 21st factory in North America — eight years after the global economic crisis of 2008 forced it to postpone the project.

“I’m really excited because a few years ago, in 2008, I had to come to this country to postpone our investment because of the crisis,” Michelin CEO Jean-Dominique Senard told Tire Business Aug. 22.

“At the same time I was incredibly impressed by the way the Mexican authorities took the news. So coming back with the decision (to revive the project) is a joy.”

Mr. Senard had earlier hosted a groundbreaking ceremony at the 242-acre site in central Mexico where the French tire company is investing $510 million in what, according to one senior executive, will be Michelin’s first greenfield passenger tire plant in North America in three decades.

In a speech, Mr. Senard said the León investment is the tire maker’s largest investment anywhere in 2016.

“The last time we launched a greenfield passenger tire plant in North America was over 30 years ago,” Scott Clark, executive vice president and COO of Michelin North America, said in a separate interview with Tire Business.

“So this is not something we do every day. This is a big deal and this is exactly the right place to be and at the right time.”

The factory, which will employ 1,000 when finished in late 2018, will be within a threehour drive of 18 car maker assembly plants, Mr. Clark said. It is located in a new industrial park called León-Bajio, which stands beside the León-Silao highway.

 

“The new Michelin investment in Mexico represents a vote of confidence that strengthens the positioning of Mexico as an investment destination, because it comes from a company with a long tradition in the industry and widely recognized for its commitment to innovation”

Idelfonso Guajardo Villarreal, Mexico’s federal economy secretary.

 

Source: http://www.tirebusiness.com/article/20160824/NEWS/160829978

 

Security Concerns Take a Back Seat as More US Manufacturers Look to Mexico

Mexico City (CNSNews.com) – Experts who help foreign companies build factories in Mexico report a recent surge in interest by U.S. and international firms, with executives voicing less concern about Mexico’s crime and security problems.

“We’ve seen a 40 percent increase in inquiries about building factories in Mexico compared to where we were last year,” Ricardo Rascon, a salesman with The Offshore Group in Tucson told CNSNews.com.

“It has surged dramatically in recent years,” he said. The number of companies approaching the company looking to build facilities in Mexico is not as high as it was prior to the financial crisis of 2007, however.

Half of the increased interest is coming from U.S. companies, while the other half is from companies located in Canada, Germany, South Korea and even China, Rascon said.

“We signed our first Chinese company this week. They are moving a product line from China into Mexico for the logistical advantages for serving the U.S. market.”

Companies in Germany in particular were also showing a “big interest” in building factories in Mexico to be closer to the U.S. market, Rascon said.

U.S. companies that move to Mexico don’t always shut down in the U.S., but often instead open new factories in Mexico to be closer to suppliers, he said.

Rascon also said company executives were asking fewer questions about crime in Mexico than was the case several years ago.

“I could tell you three or four years ago, security was the first thing people would ask, but now it’s on the back burner. Now, all they ask about is cost.”

According to the business data firm Dun & Bradstreet, inquiries from multinational companies about locating in Mexico have increased by 20 percent through June just this year, Reuters reported on Tuesday.

A recent survey of companies that moved jobs overseas to take advantage of lower wages and costs in Asia, but now want to relocate them back to North America, found Mexico to be their “first-choice destination” over the United States.

A third of the companies surveyed said they were now actively looking at moving “primary production and assembly operations currently located in China, India and Brazil back to North America,” it said.

Entitled “Footprint 2020: Expansion and Optimization Approaches for U.S. Manufacturers,” the survey was sponsored by Deloitte and The Manufacturers Alliance for Productivity and Innovation.

In a report this week analyzing corporate credit worthiness in Mexico, Moody’s Investors Service said free trade agreements make Mexico especially attractive to U.S. automakers Ford, GM and Chrysler.

“Hourly industry wages in Mexico are well below rates in Brazil, South Korea and even China,” the report said, noting that the auto manufacturing industry in Mexico is now the seventh largest worldwide and the country’s second largest industry.

“Mexico’s auto-parts manufacturers depend heavily on North America, which bought 82 percent of their exports in 2015, far more than South America (8 percent) or Europe (6 percent),” the report said.

A 2015 survey of 250 senior-level manufacturing and distribution executives in North America and Western Europe by the consulting firm Alix Partners found “continued appetite for nearshoring” with a 32 percent of those surveyed reporting they had recently moved production facilities nearer to their customer markets.

Fifty-five percent of the North American companies said they preferred to locate in the U.S. in order to be closer to their markets while 31 percent favored Mexico.

The firm’s research showed Mexico’s popularity with manufacturers had declined in 2015 from 49 percent three years earlier, possibly due to security concerns.

Asked about security concerns in Mexico, the number of respondents saying they “expected improvement in those areas” dropped from the previous year’s survey.

 

Reshoring is the New Offshoring – But it’s Not Just a U.S. Trend

The offshoring trend that has dominated manufacturing footprint strategy for the last 30 years was based on solid benefits: lower labor costs, access to raw materials, inexpensive rent, etc. However, many factors such as the significant travel involved in managing overseas business, proximity to the U.S. market, perpetually shifting regulations and intellectual property concerns are significant deterrents for companies to offshore their manufacturing lines. OEMs with constantly scaling or smaller volumes find it especially hard to justify the hassle and expense involved in offshoring. As a result, many OEMs are reversing the trend and moving to a reshoring strategy, and they have sound rationale for doing so. While the United States manufacturing industry has plenty to celebrate with this trend, the movement is more broadly focused on North America as a whole, and Mexico is an especially attractive location for manufacturers.

According to a Deloitte report, 66 percent of survey respondents have offshored manufacturing work overseas in the last two decades. Among those, a third are now considering relocating operations to North America, with Mexico being their first choice and the United States their second.

Mexico offers several key benefits that make it especially attractive: lower labor costs, advantageous land and facility cost structures, more favorable transportation logistics expenses and increased proximity to the U.S. market are a couple of examples.

However, some of the obstacles and concerns manufacturers had about Mexico years ago remain today – transportation infrastructure, security concerns in certain areas and access to skilled labor are a few examples. That is why the component distribution model employed in the U.S. can’t be easily replicated in Mexico and that is also the driving force that led TTI to create a sustainable model that would allow it to fully serve this growing market buyers.”