As manufacturing in Mexico returns to pre-pandemic levels, several recent legal developments may affect those operations. Manufacturers, particularly those in the automotive industry, need to consider new Mexican labor regulations, the recent interpretation of the United States-Mexico-Canada Agreement´s (USMCA) Automotive Rules of Origin, and new requirements concerning transparency of ownership.

Recovery of Automotive Manufacturing in Mexico

North American manufacturers of sophisticated and highly-regulated products that are to be delivered Just-in-Time, such as automotive or aerospace products, benefit from reliable, close-to-home suppliers.

In the USMCA manufacturing region, Mexico has a number of competitive advantages to manufacture labor intensive and sophisticated products—namely several decades as part of North America’s complex supply chains, significant trade promotion programs, and a large number of Free Trade Agreements to name a few. Such advantages are reinforced through USMCA’s market access certainty to both the U.S. and Canada.

Although Mexico’s economy faced extreme difficulties due to the COVID-19 pandemic as there was no governmental program to boost its economy, the country’s resilient manufacturing sector already has surpassed pre-pandemic levels. This boost in manufacturing can be partially attributed to nearshoring of manufacturers into Mexico—many in the automotive industry—in order to be closer to the U.S. and Canada markets. This nearshoring trend has triggered the arrival of new foreign direct investment (FDI).

The Mexican Ministry of Economy recently reported that Mexico captured US$35.29 billion in FDI during 2022, up from $31.54 billion in 2021. Manufacturing reigns as the most influential sector in that increase, accounting for 36% of the country’s total FDI, with the U.S. and Canada standing out as Mexico’s two main trading partners. The Ministry of Economy also noted that automotive part manufacturers were among the largest recipients of foreign investment.1

According to 2022 data, the FDI in the automotive manufacturing sector has not yet recovered to pre-pandemic levels. However, there are reasons to be optimistic that this will change in the near future due to the USMCA’s market attractiveness and the natural advantages of manufacturing in Mexico, such as its highly specialized labor force and its geographic proximity to the U.S.

In anticipation of Mexico’s continued growth as a manufacturing hub for U.S. automotive companies, the following are recent updates and trends in Mexico that your company needs to consider when relocating or operating in the country.

Increase of Labor Benefits

The Lopez-Obrador administration has pushed for increasing labor benefits to employees in Mexico, which investors in Mexican manufacturing should take into account when making their budgets and economic projections. The following are the most recent and relevant changes to existing labor rules:


Effective January 1, 2023, the Federal Labor Law increased vacation days in Mexico. Before this amendment, employees had a minimum of six (6) working days’ vacation period per year of service. The new rule increases the period to a minimum of twelve (12) working days per year of service, which will grow by two (2) days per year up until the employee is entitled to twenty (20) working days vacations. As from the sixth year of service, the period shall increase by two (2) working days per every five (5) years of service.

Minimum Wage

Beginning January 1, 2023, the minimum wage for Mexican employees increased 20%. Even though most employees receive more than minimum wage as a starting salary, this increase is expected to impact even Mexican companies that pay above minimum wage, as they commonly index salaries to a minimum wage reference. The effect of rising minimum wage on salaries will become clearer when the common yearly salary revision takes place.

Pension Funds

According to a 2020 amendment to the Mexican Social Security Law, companies’ mandatory contributions to one of the components of employees’ pension funds shall progressively increase from the current 3.15% of the employee salary to 11.87%. This increase shall occur progressively from 2023 up until 2030; during 2023, employers’ contribution will range from 3.15% to 4.24%, depending on the employee’s salary.

Mandatory Legitimization of Collective Labor Contracts

May 1, 2023 is the maturity date for all existing collective bargaining agreements across Mexico to be legitimized through the express support of a majority of the workers covered by the relevant agreement (following a carefully staged process).  Legitimization efforts have long been underway as per the relevant rules issued May 1, 2019. However, it is expected that 80% to 90% of current collective labor contracts will not meet the legitimization threshold and, consequently, will be automatically terminated.

When such agreements are terminated, individual labor contracts will be automatically created for every worker; said individual contracts will incorporate the terms contained in the then-terminated collective labor contracts that are superior to the minimum standards established by Mexican laws.This measure intended for individual workers to continue under the same labor conditions, though no longer under a collective labor contract.

The lack of a collective labor agreement—the long standing status quo in the country—likely will bring restlessness in the workforce. Though workers’ current rights will be preserved by the individual labor contracts, Mexican workers will need to decide whether to enter into a new collective labor agreement sooner rather than later.


Source: The National Law Review

El Paso, Las Cruces,and Juarez add a combined 35,000 year-over-year jobs in October, Hunt Institute says.

The jobs are coming back to the Paso del Norte region.

El Paso, Las Cruces, New Mexico, and particularly Juarez, Mexico, saw an uptick in employment in October. El Paso added 8,900 jobs in October, led by growth in services, trade and transportation, the University of Texas at El Paso’s Hunt Institute for Global Competitiveness reported on Tuesday.

The same three sectors fueled job growth in Las Cruces, which added 2,300 jobs. Juarez gained 23,900 jobs led by its signature manufacturing sector.

Juarez is home to more than 300 U.S.-run manufacturing plants and the Mexican government has designated many as essential businesses, which has spared them from COVID-19 shutdowns. Juarez has seen year-over-year employment gains for the past 15 months, according to the Hunt Institute’s December 2021 report.

But whereas El Paso’s manufacturing sector remains stagnant, it leads all major Texas cities when it comes to growth in sales tax collections, the report states.

El Paso collected $93.5 million in sales taxes during the first 10 months of the year, a 20.3 percent increase compared to pre-pandemic 2019 levels. It also collected $16 million more over the same period in 2020.

El Paso also was among the top four in the Southwest border in terms of international trade. El Paso’s ports of entry recorded an increase of 11.2 percent in trade during the first 10 months of 2021 compared to 2019, the Hunt Institute reported.

EL PASO, Texas VIA (Border Report) –


The offer is worth less but is more likely to get the go-ahead from regulators

The battle to buy United States railroad Kansas City Southern (KCS) has taken a fresh turn after the company accepted an improved offer from Canadian Pacific (CP), trumping a higher value offer from rival Canadian National (CN).

CP had originally agreed to a US $29-billion deal to take over KCS in March, only for Canadian National (CN) to come in with an improved $33.6-billion deal in May, which KCS accepted. However, that agreement left open the option of switching for a “Company Superior Proposal” pending further offers, which allowed CP to strike a new agreement with KCS.

The new CP offer is worth a more modest $31 billion, but is thought more likely to secure the green light from regulators, who rejected a key part of the CN’s offer last month. CN had three days to make amendments to its deal to quash the rival CP proposal. Both offers include the assumption of about $3.8 billion in KCS debt.

Either deal will be a game changer for North American railway industry. Both agreements would connect ports in Mexico, the United States and Canada, and create a direct line between ports south of Mexico City through the continent to Canada, which both CN and CP cover comprehensively.

Canadian Pacific CEO Keith Creel said he was satisfied to reach a deal. “We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership,” he said.

“This merger proposal provides KCS stockholders greater regulatory and value certainty,” he added.

In Mexico, KCS transports freight to and from the ports of Tampico and Altamira in Tamaulipas, the port of Veracruz, and from the Pacific port of Lázaro Cárdenas in Michoacán through its wholly-owned subsidiary Kansas City Southern de México. But primarily it operates trains between the Valley of México and the El Bajío industrial region, taking automotive and industrial products into the United States via Texas.

CP began operating in 1881 and has approximately 20,100 kilometers of track in the United States and Canada, and acquired lines in the U.S. in 2009.

KCS is the smallest of the major freight railroads in the U.S, with 10,800 kilometers of track in the U.S. and Mexico.

CN is Canada’s largest railway company, spanning 32,831 kilometers of track. It gained control of the U.S. Illinois Central railroad in 1998, and Bill Gates is its biggest shareholder.



Adiconalmente, ambos gobiernos sostienen conversaciones sobre qué tanto Valor de Contenido Regional se le asignaría a México en estos proyectos para el cumplimiento de las reglas de origen en el Tratado entre México, Estados Unidos y Canadá (T-MEC).

México coproducirá semiconductores con Estados Unidos y, para ello, la secretaría de Economía, Tatiana Clouthier, se reunirá esta semana con varias empresas interesadas en Washington, DC.

Al respecto, el gobierno mexicano ha conversado con su contraparte estadounidense sobre la producción en México de “una parte importante” de los semiconductores y software en esa misma industria.

Al mismo tiempo, ambos gobiernos sostienen conversaciones sobre qué tanto Valor de Contenido Regional se le asignaría a México en estos proyectos para el cumplimiento de las reglas de origen en el Tratado entre México, Estados Unidos y Canadá (T-MEC).

El impulso de inversiones en esta industria ocurre luego de que la alta demanda de equipos electrónicos y de conectividad de red a nivel mundial originada por la pandemia de Covid-19 propició, a su vez, un desabasto de chips semiconductores para la industria automotriz.

Paralelamente, el gobierno estadounidense modificó las reglas para restringir la capacidad de Huawei de contratar chips semiconductores de instalaciones en el extranjero que utilizan tecnología estadounidense, como Taiwan Semiconductor Manufacturing Company (TSMC).

“¿Qué hemos planteado? Dos cosas: hacer una pieza importante y vincularla con la cadena de producción en Estados Unidos y, por otro lado, la parte de la programación; una parte en Jalisco y otra en Baja California”, dijo Clouthier este lunes en un foro organizado por Expansión.

Como una reacción a la carestía global de semiconductores, Estados Unidos atrajo inversiones por 32,000 millones de dólares en la construcción de esas piezas.

Por una parte, el gobierno de Estados Unidos negoció con la empresa taiwanesa TSMC para construir una fundición de chips de 5 nm de 12,000 millones de dólares en Arizona.

Además, Intel informó que invertirá 20,000 millones de dólares en la instalación de dos plantas de semiconductores, ambas también en Arizona.

“Si nosotros le vamos a meter (en la coproducción), cuál va a ser el compromiso que en el producto final me vas a dar, (qué) tanto porcentaje?, añadió Clouthier, en alusión a sus conversaciones con funcionarios estadounidenses.

Ya desde la anterior visita de Clouthier a Washington a finales de julio pasado, ella abordó con la secretaria de Comercio de Estados Unidos, Gina Raimondo, asuntos relacionados con la fabricación de semiconductores y las cadenas de suministro. A partir de entonces, se formaron grupos técnicos que están visualizando esta parte.

El Congreso estadounidense incluyó disposiciones en la Ley de Autorización de Defensa Nacional para el año fiscal 2021 a fin de impulsar las capacidades de Estados Unidos.

Fuente: El Economista

As the U.S. economy emerges from Covid-19-related lockdowns and subsequent supply chain disruptions, business leaders are beginning to develop a roadmap for redesigning their global supply chains with the aim of making them more resilient, environmentally sustainable, and agile. This endeavor, combined with the Biden administration’s goal of making critical sectors of the U.S. economy more self-reliant and less dependent on China, will require public-private partnerships and hundreds of billions in government investments, subsidies, incentives, and sourcing mandates.

But the United States can’t achieve these goals alone. They will require it to collaborate and strengthen trading partnerships with countries in North America, Central America, and South America and build a reliable, cost-effective land-based transportation network that connects the three Americas. Only with strong partnerships and a Pan-American transportation network will the United States be able to bring manufacturing home from Asia. This reconfiguration would benefit all involved: Creating jobs and promoting political stability in poor countries in the Americas would also build wealth in these nations and slow migration from them to the United States.

In a slew of sectors, the only way to develop cost-effective manufacturing in the United States is for those factories to be fed by an ecosystem of low-cost suppliers located in Central and South America rather than Asia. Given the long transit times from suppliers in Asia, it’s unrealistic for U.S. factories to depend on them. Nor is it realistic to expect a major chunk of the supply base now in Asia to relocate to the United States. That’s because the United States doesn’t have the population needed to support a large-scale factory and logistics infrastructure: The average age of its population is 38.5 — much older than that of the labor force in emerging economies — and more flexible service-sector options would make it difficult to find the huge amount of workers to consistently fill factory and logistics jobs such as trucking.

Leveraging Mexico’s and Central America Younger Populations

Mexico and countries in Central America do have the population and demographics to support a large-scale manufacturing and logistics sector. Their workforce is much larger and younger — the average age across Central America is 24 to 28. The labor cost of manufacturing in Mexico is now equivalent to that of China, and in parts of Central America, such as Honduras, it is even lower. Millions of poor Central Americans are desperate for legal job opportunities, and local manufacturing work would be welcomed, especially by communities now plagued by drug trafficking and production. The establishment of a robust manufacturing sector in these countries would also provide their governments with the resources to build professional security forces with the capability to root out drug cartels.

Creating better economic opportunities and reducing crime and corruption would undoubtedly reduce the emigration from those countries to the United States. And a thriving large middle class with spending power would present U.S. companies with a large market close to home.

Finding Sources of Renewable Water

Another consideration in building a robust manufacturing system that encompasses the Americas is the availability of water — an existing problem that seems certain to grow worse due to global warming. Manufacturing requires large amounts of renewable water, and in many parts of the U.S. West and Southwest, water availability is severely constrained.

Canada and the U.S. Great Lakes region have significantly more water. South American countries such as Brazil, Colombia, and Peru rank among the top water-rich countries in the world. According to the Global Water Partnership (GWP), nearly a third of the world’s renewable water resources are in South America.

In addition to their water resources, many South American countries also have stronger economies than those in Central America, decent infrastructure, and large talent pools (they have high literacy rates and excellent universities). They also are major food exporters and have established companies in a wide range of industries, including autos, steel, chemicals, electronics, pharmaceuticals, apparel and footwear, and appliances. And last but not least, they are also important sources of commodities such as lithium, copper, iron, silver, zinc, tin, lead, manganese, and bauxite.

Constraining China and Russia

A final reason for the United States and its allies in the Americas to build a strong Pan-American manufacturing ecosystem is to constrain the growing economic, political, and military power of China in particular but also Russia. It’s a goal that President Joseph Biden emphasized in the recent G7 Summit, where he called on the world’s richest democracies to offer developing countries an alternative to China’s Belt and Road initiative, which has made major inroads in Asia, Africa, and the Middle East and has large port and road construction projects in the works in Central American countries.

Russia and China have donated millions of Covid-19 vaccines to countries in South America in a bid to increase influence in these regions and gain preferential mining rights and bids on infrastructure projects. At their summit, the Group of Seven countries pledged to provide one billion doses of Covid-19 vaccines to poor countries over the next year and take other actions to increase supplies.

Modernizing the Pan-American Transportation Network

The existing Pan-American Highway is a 19,000-mile network of roads throughout North, Central and South America. The only major break in it is the Darién Gap, the 100-mile marshy and forested region separating Central and South America. To link major industrial regions across the continents in the near term, the roads would need to be expanded and upgraded, and the Darién Gap would have to be bridged, which new tunneling technologies could help achieve. In the medium to long term, a modern rail transportation network would have to be built. This road and rail network would allow goods to travel seamlessly and swiftly over land across the three Americas without spending weeks on the ocean.

In supply chains, speed translates into cash and flexibility translates into resilience. A regional, “near-shored” supply chain would accelerate movement between industrial hubs across the Americas, substantially reducing transit times from raw material to finished goods to final point of sale by weeks. Less time spent in transit would mean less cash tied up in inventory. Consequently, manufacturers would have reduced working capital requirements and healthier balance sheets.

Making It Happen

Of course, a strategic reset of this magnitude will take time and come with a hefty price tag. The best comparison is the Belt and Road initiative, which China launched in 2013. It is aimed at improving the infrastructure between 70 countries across Asia and Europe and into Africa. The estimated cost of this Chinese-financed mega-project is $8 trillion. The United States is in the best position to lead the Pan-American initiative, but it is highly likely that other countries in the Americas would be willing to help share the costs given the clear economic, political, and social benefits that they would reap. Indeed, the creation of the U.S. Interstate Highway System, which was originally championed by President Eisenhower in the 1950s, provided a huge economic boost and helped turn the United States into a global economic powerhouse.

In addition to public outlays, other means could be used to help finance the construction of the network. They include the cash flow from usage fees and tolls, offtake contracts or preferential-rights agreements that would obligate users of the transportation system to buy goods from a company or country making the initial investment in the network, and privately financed build-operate-transfer (BOT) projects, where a private party helps pay for infrastructure in return for the right to operate and collect fees from it for a set period.

Admittedly, the current security, political, and infrastructural problems plaguing countries in Central and South America pose enormous near-term challenges in building a Pan-American manufacturing ecosystem. However, industries like apparel and food already operate in these countries, and there is a budding medical-devices-manufacturing sector in Costa Rica. Other companies could apply the lessons that players in those industries have learned about how to build and ship from factories in Central and South America.

It would be up to more-developed countries like the United States, Canada, Mexico, and Brazil to persuade other countries to embrace the vision and join this ambitious endeavor. Most countries in the Americas aspire to work closely with the United States. And given the better future that a robust Pan-American manufacturing ecosystem could provide for their populations, many would undoubtedly be willing to support the infrastructure projects with guarantees and exclusive market-entry agreements and rights.

To remain competitive in the global landscape, the United States and other countries in the Americas need to revamp their economic ties. They should set their sights on designing the supply chain for the next 50 years that can bring prosperity to all of them.


(Article in spanish) by Ana De León / QuerétaroFebruary 2019

Con el objetivo de dar a conocer al sector industrial y a las entidades relacionadas con la industria aeroespacial en Querétaro y la región, el AeroClúster de Querétaro presentó su informe anual sobre las actividades realizadas en el 2018 y su plan de trabajo para el año 2019.

Juan Carlos Corral Martín, presidente del Aeroclúster de Querétaro, indicó que se siente satisfecho con los resultados obtenidos durante los primeros dos años que ha dirigido la institución.

“Cambiamos estatutos, hemos duplicado el comité directivo dando participación a más empresas, gracias a los trabajos llevados a cabo, el sector en general se ha dado cuenta de la importancia del AeroClúster”, destacó. La industria aeroespacial en Querétaro está integrada por 80 empresas; sin embargo, la membresía cerró el 2018 con 61 socios, de los cuales, el 68% corresponden a empresas, 47.5% grandes y 52.5% pymes, el 24% a la academia y el 8% a gobierno.

“Nuestro objetivo es que el 100% del sector participe, hemos presentado incrementos importantes, para este 2019 esperamos superar la cifra y llegar a un total de 70 agremiados”, detalló el presidente del AeroClúster de Querétaro.

Por su parte, Jorge Gutiérrez de Velasco Rodríguez, secretario del AeroClúster de Querétaro, mencionó que continuarán trabajando en la atracción de nuevas inversiones de la mano del gobierno federal.De acuerdo con la información publicada por la Secretaría de Desarrollo Sustentable, Norteamérica y Europa se posicionaron en 2018 como los principales destinos de exportación en el Estado. Además, indicaron que el 72% de la industria instalada en la región realiza procesos de manufactura, mientras que el 13% trabaja en diseño e ingeniería y el 11% en mantenimiento y reparación.

Entre los principales productos y servicios que ofrece se encuentran: aeroestructuras, tratamientos especiales, maquinado de componentes complejos de aeroestructuras, trenes de aterrizaje y motores, materiales compuestos, diseño e ingeniería, mantenimiento y reparación de aeronaves, así como motores, componentes y materias primas.

Querétaro se encuentra en el top 10 de ciudades aeroespaciales por el mejor desempeño en atracción de inversión extranjera directa, así como en el ranking mundial de ciudades aeroespaciales del futuro 2018/19 elaborado por la publicación fDi Intelligence.

José Antonio Velázquez Solís, director general del AeroClúster de Querétaro, indicó que durante el 2018 se logró la atracción de tres proyectos aeroespaciales que sumaron inversiones por 300 millones de pesos, así como la creación de 200 empleos en el Estado de Querétaro.

Durante su participación, Itziar Larrañaga, tesorera del AeroClúster de Querétaro, compartió estadísticas sobre el desempeño de las pymes que forman parte de la membresía.


Ventas anuales: $1.3 musd en 2017, y $1.87 musd en 2018 (+44%)

Exportaciones: 31% en 2017, 36% en 2018

Empleos directos: 58 en 2017, 82 en 2018 (+41%)

Certificaciones: 6 en 2017, 12 en 2018

Inspección de primer artículo: 27 en 2017, 158 en 2018.

Inversión en capacitación: 250 mil pesos (50% con apoyo de la SEDESU)


Perspectivas para 2019-2020

El AeroClúster anunció que espera lograr un crecimiento en la membresía, llegando a 70 miembros activos este 2019, además de aumentar a 30 el número de reuniones de comisiones.

“Uno de nuestros objetivos es continuar con el aumento de la facturación por encima de dos dígitos en porcentaje, contando con un crecimiento en el número de empleos directos que genera la industria aeroespacial, así como la atracción de nuevas inversiones aeroespaciales al Estado de Querétaro”, detalló José Antonio Velázquez Solís, director del AeroClúster de Querétaro.

Antes de concluir, Germán Borja Garduño, director de Desarrollo Industrial de la SEDESU, declaró que “este año trabajaremos para traer nuevas empresas a Querétaro, a nivel de Pymes queremos seguir creciendo buscamos mayor competitividad, incrementando el nivel de proveeduría, la generación de empleo, además de exportaciones a países en América del Norte y Europa”.

Original article:

by Luis Rojas

MEXICO CITY, Jan. 23 (Xinhua) — With a growing number of international tourists, Mexico’s aeronautics industry is poised for record growth, experts say.

Relatively a “young” industry in Mexico, the aeronautics industry has seen a sustained annual export growth of about 15 percent since records began in 2004, when exports brought in 1 billion U.S. dollars, according to the Mexican Aerospace Industry Federation (FEMIA).

The export revenue of the sector, which employs some 60,000 people, amounted to about 8.5 billion dollars in 2018, while in 2017, the figure was 7.6 billion dollars with 50,000 employees, attesting to the dynamic growth of the industry, said FEMIA’s Director General Luis Lizcano.

“In less than a decade, Mexico has succeeded in consolidating a competitive structure in this sector… Mexico now ranks the world’s 12th in exports and the exports will continue to grow in every area of an airplane, from the interiors to structures, landing gear, turbines, design and maintenance,” said Lizcano.

Mexico is home to more than 300 industrial plants operated by about 100 domestic and overseas aeronautics companies, most concentrated in its northern states. And as much as 80 percent of its aeronautic products goes to the United States.

“The industry proved to be much more resistant to global ups and downs, and is more stable in economic and financial aspects” than other industries, said FEMIA’s President Felipe de Jesus Sandoval.

“There is an immense, impressive opportunity for the aeronautics industry to develop its capacity as the automotive industry has successfully done,” Sandoval said, adding that the aeronautics industry only takes up 5 percent of the manufacturing chain, compared with 65 percent for the automotive industry.

Daniel Parfait, president of the Mexican branch of Safran, a French multinational aircraft engine maker, said his company is allotting more investment each year to expand capacity, given the solid demand for products. “The outlook is absolutely excellent,” he said.

“We haven’t felt any impact from the trade negotiations between Mexico and its partners, and I think it will stay that way,” he added, referring to last year’s renegotiation of the North American Free Trade Agreement (NAFTA), now called the United States-Mexico-Canada Agreement (USMCA).

Safran operates 20 facilities in Mexico and now employs 13,000 people, up from 4,000 in 2012. The company’s global sales grew 26 percent last year, a percentage that also applies to Mexico, said Parfait.

“The aviation industry is going to double. There is a lot of growth in terms of the number of passengers and production is going to increase,” said Edward Tobon, regional director for Boeing Latin America.

“The biggest supplier for us is Mexico, and in terms of aviation growth, Brazil is also important, but the region is good in general,” he added.

In Mexico, Boeing acquires around 1 trillion aircraft parts each year. The demand from Latin America for Boeing airplanes stand at 1,500, a figure Tobon expects to double over the next 15-20 years.

Latin America expects an annual growth of 3.6 percent in tourism flow to reach 731 million by 2037, up by 371 million from the current figure.