Mexico’s maquiladoras, an important generator of manufacturing and employment activity along the U.S.–Mexico border, confront a changing landscape. Evolving global trade patterns, reflecting stressed supply chains and increasing electric vehicle production, will test maquiladora agility and growth prospects.

The role of Mexican maquiladoras—large, mostly foreign-owned plants engaging in labor-intensive assembly of intermediate and final goods for export—has evolved over the years, though the basics remain the same.

Most inputs are imported duty-free from the U.S. or another country. U.S. tariffs are applied only to the value that is added by assembly on products sent back across the border.

However, more than two years removed from the onset of the COVID-19 pandemic, the maquiladora operating environment has changed. Global trade, including chronic input shortages and the specter of a worldwide economic slowdown, poses tough challenges. Moreover, longstanding auto assembly and parts businesses, making up the largest portion of maquiladora output, confront a transition to electric vehicles that require new and different manufacturing processes.

Manufacturing for Export

Rules adopted in 2007 merged the maquiladora industry and a program for homegrown exporters into what is currently known as the Manufacturing, Maquila and Export Service Industry Program. The more familiar name, “maquiladora,” is used here. In 2021, maquiladoras accounted for 58 percent of Mexico’s manufacturing GDP (as well as a majority of the country’s manufacturing exports) and 48 percent of industrial employment.

For perspective, manufacturing represented 19 percent of Mexico’s overall GDP and 19 percent of employment. In the U.S., manufacturing accounts for 11 percent of GDP and 8.4 percent of employment.

Besides auto parts and automobiles, maquiladora production includes electronics, medical devices, aircraft parts and machinery. Maquiladoras also sell engineering services.

Following adoption of the North American Free Trade Agreement (NAFTA) in 1994, maquiladora activity became increasingly correlated with U.S. manufacturing production and, thus, susceptible to recessions and expansions north of the border.

When there is a pickup in U.S. consumer demand for refrigerators, televisions, washing machines or automobiles, production orders reach Mexican maquiladoras. They specialize in the relatively labor-intensive side of production, while the U.S. engages in the more capital-intensive part of the process.

By spreading production costs across borders and taking advantage of lower labor costs in Mexico, firms can produce at a lower average unit cost, which leads to greater competitiveness in both global and domestic markets and to lower prices for consumers.

International competitors, notably Chinese manufacturers, have pressured the maquiladora sector, much as they have done to U.S. manufacturing. In the early 2000s, a U.S. recession and increased competition from China following the country’s entry into the World Trade Organization forced the maquiladora industry to downsize and cut employment. The industry was again tested during the Great Recession of 2007–09 and later amid the onset of the pandemic in 2020.

After the Great Recession, maquiladora employment took more than three years to recover, while production required a year and a half to return. By comparison, U.S. manufacturing has not yet recovered. Employment remains 5.2 percent below pre-Great Recession levels, while production lags behind by 2.9 percent.

In the wake of the pandemic in 2020, supply-chain issues particularly affected the automotive sector, reducing new orders and sending the maquiladora industry into another production downturn, the recovery from which required nine months (Chart 1). Employment was virtually unaffected, reflecting the difficulty of firing and then rehiring workers in Mexico.

Chart 1

Wages and Productivity

Of the many reasons for factories to locate in Mexico, proximity to the U.S. and preferential tariffs predominate. Mexico has 13 free-trade agreements with 50 countries—including the United States–Mexico–Canada Agreement (USMCA), the 2020 successor to NAFTA. There are also preferential considerations granted to maquiladoras.

Mexico has a plentiful labor supply, with an economically active population of 58 million. Relatively low labor costs remain a primary factor prompting foreign companies—mainly from the U.S.—to locate manufacturing operations in Mexico. The country’s average hourly wage was $6.57 in purchasing-power-adjusted dollars in 2021, significantly lower than in other advanced economies such as Canada, $25.24; Germany, $27.18; and the U.S., $34.74. Mexican wages trail comparable eastern European economies such as Poland, $15.75, and the Czech Republic, $15.05 (Chart 2).

Chart 2

Such wage differences reflect much more than differences in labor costs; they also indicate more capital-intensive production and higher productivity among workers in the high-wage countries. Mexico’s low-cost labor and low-productivity growth is the product of less worker schooling and training combined with a large informal sector (relatively untaxed with little government oversight), lack of access to credit, government red tape and a poor business climate.

Mexico’s gross domestic product per worker (in constant U.S. dollars calculated at purchasing power parity to ensure an accurate comparison) increased at an annual rate of 0.3 percent from 2010 to 2021. This is well below the average for the Czech Republic (1.4 percent) and Poland (2.6 percent) over the same period. Comparable GDP-per-worker growth was 1.3 percent in the U.S and 0.9 percent in Canada.

U.S. Border Spillovers

Most maquiladora employment remains concentrated in Mexican border states (though plant proximity to the U.S. has not been a government requirement for many years). Together, the Mexican states bordering Texas (from east to west: Tamaulipas, Nuevo Leon, Coahuila and Chihuahua) plus the other border states of Sonora and Baja California represent 62 percent of total maquiladora employment.

Four of the top five maquiladora states border Texas. Historically, the economic benefits of these large industrial complexes have spilled over into neighboring Texas cities, creating jobs in manufacturing, warehousing, transportation, logistics, real estate and services.

States adjacent to Texas tend to produce automobile-related parts and components, while those near California and Arizona specialize in consumer and business electronics.

The industry concentration in northern Mexico has created an economic development divide that generally separates the northern and southern regions. In the north, where 30 percent of the population lives in poverty, the informal sector accounts for 40 percent of jobs. In the hardscrabble south, 57 percent of the population lives in poverty, the highest concentration in Mexico, and about 70 percent of the labor force works in the informal sector.

Seeking New Opportunities

Maquiladoras have slowly shifted from low-skill, low-wage production toward high-wage, high-productivity operations. China’s entry into the World Trade Organization in 2001 hastened this evolution as lower-end production moved overseas.

The shift to higher productivity over the past several decades provides insight into where the industry is headed. The top five fastest-growing sectors—absent the period of pandemic disruption—are transportation equipment, paper, plastics and rubber products, fabricated metal products and primary metals manufacturing. This manufacturing activity generally boasts higher wages and higher labor productivity than the national average (Table 1).

Table 1: Maquiladora Selected Statistics by Sector

Employment
2021
 Share of total
maquiladora
employment (%)
Change in
employment
2008–19
(%)
Average labor
productivity
growth
2008–19
(%)
Hourly
compensation
wage, 2021
($)
Hourly
compensation
wage,
2021 ppp
($)
NAICS Total nation 2,791,909 40.8 2.2 4.8 9.6
336 Transportation equipment 932,093 33.4 96.9 2.4 4.9 10.0
322 Paper 44,916 1.6 89.0 3.0 4.5 9.1
326 Plastics & rubber products 191,702 6.9 66.7 2.1 4.3 8.7
332 Fabricated metal products 148,898 5.3 53.1 2.8 4.9 10.0
331 Primary metal mfg 89,060 3.2 47.9 4.3 6.6 13.4
333 Machinery, except electrical 110,811 4.0 46.7 1.6 5.4 10.9
339 Miscellaneous manufactured
commodities
215,179 7.7 46.4 1.2 5.1 10.3
323 Printed matter and related
products
16,440 0.6 38.1 1.8 4.0 8.04
316 Leather & allied products 24,169 0.9 35.7 3.6 3.8 7.7
337 Furniture & fixtures 40,563 1.5 31.6 -0.2 4.2 8.4
325 Chemicals 64,496 2.3 26.2 2.4 4.9 9.9
312 Beverages & tobacco
products
38,524 1.4 14.5 0.7 5.9 11.9
334 Computer & electronic
products
366,471 13.1 12.6 -1.7 4.9 9.8
311 Food & kindred products 125,261 4.5 10.1 3.2 4.0 8.0
327 Nonmetallic mineral
products
55,712 2.0 9.2 3.0 4.3 8.6
335 Electrical equipment,
appliances & components
190,712 6.8 6.0 2.0 4.6 9.2
321 Wood products 9,531 0.3 0.6 2.6 3.6 7.21
314 Textile mill products 14,137 0.5 -7.0 -0.2 3.8 7.65
313 Textiles & fabrics 32,518 1.2 -13.1 0.9 3.0 6.1
315 Apparel & accessories 80,716 2.9 -34.4 0.9 2.4 4.9
NOTE: The table refers to IMMEX statistics (Mexico’s Manufacturing, Maquila and Export Service Industry Program); ppp stands for purchasing-power-parity-adjusted dollars.
SOURCES: National Institute of Statistics, Geography and Informatics (Instituto Nacional de Estadística Geografía e Informática); author’s calculations.

Rubber and metal products manufacturers bend, form and weld metal and plastic parts used in the production of components and finished products for U.S. automakers. Paper manufacturing represents just 1.6 percent of total employment but has grown rapidly with the booming U.S. e-commerce business that boosted demand for boxes and other packaging.

By comparison, low-wage employment has declined, affecting sectors such as textiles and fabrics and apparel and accessories manufacturing.

Autos’ Leading Role

Maquiladoras’ future will likely include their biggest industry—auto parts manufacturing and auto assembly. U.S. and Mexico have a long history of motor vehicle production that preceded the maquiladora program.

Ford became the first entrant in Mexico when it began assembling Model Ts in Mexico City in 1925. General Motors and Chrysler built their initial Mexican assembly plants in the 1930s. Although the maquiladora program set the stage for U.S.–Mexico market integration, the auto industry did not take full advantage until the 1980s.

During the decade, Mexico shifted its auto industry policy toward export promotion. Vehicle manufacturers responded by opening modern and competitive plants, representing the beginning of the process of integrating Mexico into North America’s auto industry. Broader North American vehicle production consolidation came with NAFTA in 1994.

Transportation equipment manufacturing represents one-third of maquiladora employment and production and 3.6 percent of Mexico’s GDP. Besides cars, SUVs, buses and trucks, the sector includes all related manufacturing—engines and engine parts, electronics, steering and suspension components, brake systems, transmission and power-train components, seating and interior trim.

Transportation production employment growth averaged 9 percent per year from 2008 to 2021, while output as a percentage of total manufacturing increased from 9 percent in 2008 to 12 percent in 2021.

This expansion contributed to Mexico becoming a global leader in internal combustion engine vehicle manufacturing—No. 7 in total world vehicle production and No. 1 in Latin America. Additionally, Mexico is No. 4 in automotive parts exports worldwide and the top supplier of autos and auto parts to the U.S. (Chart 3).

Chart 3 vehicles poses a challenge to Mexico’s transportation equipment manufacturing leadership. Almost 1.8 million electric vehicles were registered in the U.S. in 2020, more than three times as many as in 2016. Detroit’s Big Three automakers have announced plans for electric vehicles to represent 40 to 50 percent of new vehicle sales by 2030.

Manufacturing internal combustion and electric vehicles is fundamentally different. Electric vehicles are mechanically simpler, with many fewer parts than a traditional internal combustion unit. For example, a typical electric motor used to power an electric vehicle has three parts. By comparison, a typical four-cylinder internal combustion engine has 113 moving parts. A gearbox for an internal combustion engine vehicle has 27 moving parts; its electric vehicle counterpart has 12. Overall, an electric vehicle powertrain has 79 percent fewer moving and “wear” parts—meaning fewer parts to manufacture.

Industry experts anticipate that from 2020 to 2025, a large share of automotive component demand will shift toward electric powertrains, batteries, advanced driver assistance systems, sensors, infotainment and communication at the expense of conventional components such as transmissions, brakes, axles, exhaust systems, steering and fuel systems (Chart 4).

Chart 4

Still other vehicle technology changes, such as more computer software and advances in autonomous driving, have accelerated a convergence of automotive manufacturing and technology, transferring significant supplier value from parts and components to software.

As a result, technology and consumer electronic companies are entering the automotive value chain. Japan’s Sony and China’s Baidu—neither traditional automakers—have announced plans to manufacture electric vehicles.

Studies undertaken of these developments’ impact on the European Union predict net automotive manufacturing job losses should a complete transition to electric vehicles occur. The European Association of Automotive Suppliers, for example, estimates a net job loss of 275,000 positions (about 8 percent of the total) because the 226,000 new jobs generated by growth in electric vehicle components will be insufficient to offset the roughly 500,000 jobs lost among automotive suppliers. However, official reports by the European Commission show a much less severe impact on aggregate employment.

Electric Vehicle Pivot

The U.S.–Mexico manufacturing relationship reflects decades of production integration, with large, specialized industries spreading costs across borders. As U.S. automakers plan their conversion to electric vehicle production, they are instituting changes in their Mexican subsidiaries.

General Motors announced in 2021 that it will invest $1 billion in its factory in Ramos Arizpe, Coahuila, to produce two electric Chevrolet SUVs in 2023. GM plans to offer 30 all-electric vehicles by 2025. Ford recently began producing the Mustang Mach-E in Cuautitlan in the state of Mexico and announced two additional midsize electric crossovers will be built in the same plant.

Additionally, several electric vehicle parts manufacturers are believed to be looking at Mexican operations to support production for the U.S. market. China’s Contemporary Amperex Technology, the world’s biggest maker of batteries for electric vehicles, is considering plant sites in Ciudad Juárez, Chihuahua, and in Saltillo, Coahuila, to potentially supply Tesla and Ford—a possible $5 billion investment.

While the maquiladora industry has quickly adapted to changes in technology and those arising from business cycles, the shift to electric vehicles is different, creating demand for new types of auto parts with possible competition from new market entrants.

Post-COVID Opportunity

Maquiladoras may benefit from the much-discussed reshoring or near-shoring of manufacturing arising from pandemic supply disruptions and simmering trade disputes with China.

Aggregate data don’t yet show clear evidence of a shift in U.S. imports from Asia and Europe to Canada and Mexico. Average import shares are about the same now as before the pandemic. Near-shoring won’t happen overnight, but Mexico could potentially capitalize from such an opportunity in the medium to long term.

The USMCA has applied new pressure to maquiladoras. It is more restrictive in some respects than NAFTA, particularly involving the automotive sector. It imposes restrictions on the origin of steel, aluminum and vehicle parts and new requirements governing labor and wages.

The new rules-of-origin and higher-wage requirements will increase production costs that, in turn, imply higher prices, reduced output and a decrease in consumer surplus in North America. Projections indicate the USMCA negatively affects all countries in North America, though Mexico stands to sustain the biggest loss to auto production and GDP.

Mexican government policies pose another challenge for maquiladoras. For example, recent changes in electricity generation rules favoring the state-run utility over cheaper power sources could raise costs for businesses. Labor market regulations are also changing, pushing up labor costs.

Additionally, challenges to private sector and foreign investment in Mexico are increasing, something that is especially problematic given the country’s weak public investment.

These and other changes could signal a departure from what has been an investment-friendly environment since NAFTA, dimming Mexico’s prospects in what has become an increasingly volatile global business environment.

 

Source: Jesus Cañas, Federal Reserve Bank of Dallas

Are the US and Mexico winning globalization?

The era of globalization could be slowing as companies continue to battle supply chain challenges and reshoring continues to be a trend discussed in all sorts of industries.

Moving production closer to end users in the United States — reshoring and nearshoring initiatives — could make supply chains more resilient by eliminating long shipping routes while also bringing more manufacturing jobs back to North America, said Tasneem Manjra, CEO and co-founder of Caravan.

“Reshoring is huge, and I’m hearing this trend a lot as we talk to potential clients,” Manjra told FreightWaves. “[Companies] want to make decisions about reshoring for a number of reasons — for political reasons, to make sure that the countries that they work with are politically sound. They also don’t want to have the labor crisis that China has, for example, or they want to make sure that they are closer to home for environmental purposes, creating a smaller footprint.”

San Francisco-based Caravan is a vendor relationship platform that aims to streamline and optimize the way manufacturers and retailers engage with their vendors.

Nearshoring often explains when a company moves work to another organization that’s in a nearby region or country. Reshoring is the process of returning domestic product manufacturing from a foreign country back to the home country where the business products are sold.

A recent example of nearshoring is California-based toymaker Mattel, which announced in March it was consolidating all North American manufacturing to its plant in Monterrey, Mexico.

Mattel said it was also investing $47 million to expand the Monterrey plant, where it employs nearly 3,500 workers, becoming the company’s largest manufacturing site. Mattel closed two of its factories in Asia in 2019, as well as plants in Montreal, Canada, and another in Tijuana, Mexico, in 2021, ahead of expansion of its Monterrey factory.

“We believe that Mexico, given its geographical position, has a unique opportunity to position itself as a toy hub in the world. To contribute to the development of this industry in Mexico, we have supported local suppliers and motivated international suppliers to establish themselves in [Mexico],” said Ynon Kreiz, CEO of Mattel, according to El Financiero.

California-based semiconductor manufacturer Intel Corp.’s announcement in January that it was investing $20 billion to build two chip factories near Columbus, Ohio, was a big recent win for the U.S. manufacturing sector.

Construction of the plants is expected to begin later this year, with production coming online at the end of 2025. The two Ohio plants are expected to create 3,000 direct jobs.

Intel, which has a global workforce of 116,000, has more than a dozen research and manufacturing facilities around the world, including the U.S., France, Germany, Italy, Ireland, Poland, Israel, India, Malaysia and Vietnam.

While North America has had recent wins in regard to attracting manufacturing back, U.S. imports of manufacturing goods from low-cost Asian countries (LCCs) actually increased in 2021, according to Kearney’s ninth-annual Reshoring Index.

Kearney’s Reshoring Index tracks trends in manufacturing returning to the U.S. from 14 LCCs and regions where sourcing, production and assembly have been offshored.

Manufacturing from LCCs totaled 14.49% of U.S. domestic gross manufacturing output, up from 12.95% in 2020, according to Chicago-based global management consulting firm Kearney.

However, Kearney officials said that “there are strong indications that attitudes and strategies are changing, thanks to the pandemic, trade wars and tariffs, and ongoing resulting supply chain disruptions.

“American companies are getting more serious about adopting expanded versions of reshoring. Large portions of offshored manufacturing may soon be returning thanks to companies combining their nearshoring production to Mexico, Central America and even Canada, with manufacturing and assembly in the U.S.,” Kearney said.

Manjra said she’s hearing from many clients that the tide may be turning, with companies looking to create a closer-to-home — rather than a lowest-cost — supply chain.

“I just think about that for the last 20 or 30 years, companies were almost rewarded for basically shipping American jobs overseas,” Manjra said. “It was quite harmful for the domestic economy because we have less skilled workers today than we ever had domestically.

“I’m really encouraged when I see manufacturers say, ‘No, we want more jobs here, we want to keep the jobs here, we want to bring back our operations to … America or to Canada.’ I think that’s super encouraging.”

Fleetmaster Express receives first Volvo VNR electric trucks in Texas

Fleetmaster Express recently received two Volvo VNR Electric Class 8 trucks in Texas as part of the company’s plan to transition from a diesel fleet to an electric one.

The Roanoke, Virginia-based carrier said the two electric trucks will be based at the company’s terminal in Fort Worth. Eight additional Volvo VNR electric trucks are scheduled to be delivered by early 2023.

The two Volvo VNR Electrics are the first battery-electric Class 8 trucks in its fleet, and “deploying zero-tailpipe emission Volvo VNR Electrics is the next big step in our effort to create the most sustainable, energy-efficient fleet possible,” said Travis Smith, COO of Fleetmaster Express, in a statement.

Fleetmaster operates more than 300 trucks with 1,000 trailers from 13 terminals across the country. The company offers dedicated hauling, as well as freight brokerage, warehousing and spotting services.

Texas seaport announces new ro-ro service from Asia

Marine shipper Nippon Yusen Kabushiki Kaisha (NYK Line) made its initial call at Port Freeport, Texas, on May 16 to begin a regular service.

Headquartered in Tokyo, NYK Line is a provider of roll-on/roll-off (ro-ro) services, including shipping and vehicle logistics, managing the distribution of cars, trucks, rolling equipment and breakbulk cargo.

“Port Freeport’s proximity and efficiency to regional and global markets combined with room for expansion makes the port a strategic hub for vehicle imports and exports,” Phyllis Saathoff, Port Freeport’s executive director and CEO, said in a release.

NYK Lines’ Opal Leader discharged OEM vehicle units and heavy cargo at Port Freeport. The service will also call ports in Mexico, Panama, Colombia and Brazil and will call Port Freeport monthly.

Port Freeport is located about 60 miles southeast of Houston along the Gulf of Mexico.

Houston multimodal park signs 2 tenants

The Greens Port Industrial Park along the Houston Ship Channel has two new tenants: JD Fields & Co. and ZL Chemicals.

Houston-based JD Fields & Co. is a global supplier of steel products. ZL Chemicals is a Houston-based manufacturer of chemicals used in the oil and gas industry.

The 735-acre, multimodal industrial park is owned by Watco, a transportation and supply chain services company with locations throughout North America and Australia.

Steve Pastor, NAI’s vice president of global supply chain and ports/rail logistics, said operators are looking for locations that help with efficiency. Pastor was part of the team that represented Watco in the transaction.

“Over the past 18 months, logistics tasks as simple as offloading cargo from ship to shore have become increasingly time-consuming and expensive at many ports,” Pastor said in a statement. “For this reason, Greens Port Industrial Park stands out as it offers direct access to [Port Houston], one of the nation’s most important ports.”

 

Source: Noi Mahoney, Freight Waves.

El estado de Baja California se ha destacado por su aumento en la llegada de inversión extranjera y nacional. Su posición geográfica, es una de las ventaja que han observado diversas empresas multinacionales, mismas que han decidido establecer sus operaciones de manufactura, logística y distribución en la región.

De acuerdo con el “Panorama Económico de Baja California”, realizado por la Secretaría de Economía e Innovación del estado, al cierre del 2021, el crecimiento de la actividad industrial fue de 12.7% en la entidad, hecho que la posicionó como el primer lugar de la frontera norte. Mientras que, al primer mes del 2022, el sector de la construcción creció 12.1 por ciento.

De igual forma, la dependencia, detalló que al 3T2021, los sectores con mayor crecimiento fueron las manufacturas (19.2%), el comercio (18.2%) y la minería (13.9%).

Inversión Extranjera Directa en Baja California 

En cuanto a la captación de Inversión Extranjera Directa (IED), la entidad se posicionó durante el mismo periodo, en el tercer lugar a nivel nacional, con 7%, solo por debajo de Nuevo León con 12.7% y CDMX con 16 por ciento.

“Se trata de un incremento del 85% respecto a 2020. De esta, el 45.7% se destinó al transporte de gas natural por ductos, seguida por la fabricación de automóviles y camiones (9.8%). Cabe mencionar que 8 de cada 10 dólares invertidos en B.C. provinieron de Estados Unidos (82.4%)”, se detalla en el documento.

Por su parte, la Secretaría de Economía Federal, destacó que la captación de IED del estado fue de 2 mil 212.8 millones de dólares, del cual 52.8% correspondió a nuevas inversiones.

Cabe destacar que la cifra total de IED, significa un récord para la entidad, ya que es la más alta registrada en 20 años.

Adquisición de vivienda en Baja California 

Otro de los sectores que han mostrado crecimiento en el estado, ha sido la adquisición de vivienda, principalmente por ciudadanos estadounidenses, que ante el aumento de costos en su país, buscan comprar alguna propiedad en la entidad.

El Comité de Turismo y Convenciones de Tijuana (Cotuco), explicó que el 40% de los inmuebles adquiridos en Tijuana, corresponden a personas del sur de California.

Por lo que en 2021, este sector dejó una derrama económica de 420 millones de dólares. Ante esto, Kurt Honold, secretario de Economía e Innovación de Baja California, informó que se busca continuar  impulsando este sector para que ciudadanos americanos, comiencen a comprar propiedades en la ciudad y no solo en las costas.

Arturo Gutiérrez Sánchez, presidente de Cotuco, explicó que los rubros económicos que crecieron durante la pandemia fueron el desarrollo habitacional, construcciones y turismo de salud.

 

Fuente: Monica Herrera, Inmobiliare

China dejó de ser el centro manufacturero para 15 empresas de origen alemán, japonés y estadounidense, las cuales invertirán los próximos dos años cerca de 400 millones de dólares en León y El Bajío de México.

Esa relocalización de la empresas obedece a la intención de cumplir con las nuevas reglas del Tratado entre México, Estados Unidos y Canadá (T-MEC), así como ya no pagar altos precios de transporte y dejar de depender de la industria marítima.

“Hay alrededor de entre 14 y 15 proyectos en cartera de inversión (de compañías alemanas, japonesas y estadounidenses) para el municipio de Guanajuato, pero no hay uno que sea particularmente de una empresa de China”, revela Guillermo Romero Pacheco, secretario para la Reactivación Económica de León.

Las empresas alemanas y japonesas aprovechan este momento para cumplir con las nuevas reglas comerciales del T-MEC, especialmente el contenido de integración del 75%, señala el funcionario del gobierno del municipio de León.

Mazda importaba algunas piezas y autopartes de Japón, China, Singapur y otros países de Asia, pero ahora sus proveedores y otras empresas aterrizarán en México para que “tengan el acta de nacimiento regional y cumplan con el factor de integración”, dice a Forbes México.

“Están llegando algunos proveedores de Asia a instalarse a León, pero son ligados a las mismas fábricas automotrices”, comenta el ex director general de la Coordinadora de Fomento al Comercio Exterior del Estado de Guanajuato.

Los proyectos en cartera representan una inversión de entre 350 millones de dólares hasta 400 millones de dólares, los cuales serán cerrados y amarrados en los próximos dos años, dice el economista egresado del Tecnológico de Monterrey.

Según el secretario, entre los proyectos de inversión están los que apuestan a la industria automotriz y autopartes, así como servicios y ventas de mayoreo.

“No hay en este momento particularmente alguna petición o proyecto de inversión con capital chino en León”, agrega Guillermo Romero Pacheco.

Desde hace muchos años están operando empresas de origen chino o se aliaron para producir suelas, accesorios, herrajes y autopartes, añade.

En la parte automotriz en los últimos cinco años llegaron entre 2 y 3 empresas de capital chino para ser proveedores de la industria automotriz a León, apunta el funcionario.

 

La presencia de China en San Luis Potosí

“Tengo conocimiento de que 4 empresas chinas llegaron al Bajío en los últimos dos años, especialmente en San Luis Potosí”, señala David Novoa Toscano, presidente de la Asociación de Empresas Proveedoras Industriales de México (Apimex).

Las empresas de origen y capital chino se dedican a la producción de autopartes para las armadoras como BMW y General Motors con fuerte presencia en San Luis Potosí, dice el empresario.

Cada vez más empresas están buscando productos mexicanos, si bien un gran porcentaje de las exportaciones de México van a Estados Unidos, hoy en día las empresas quieren y están buscando más proveeduría local y hay un tema conocido como nearshoring.

Los empresarios y empresas estadounidenses quieren el producto en dos días, porque ya no les es rentable esperar hasta seis meses los contenedores importados de Asia a puertos como Long Beach en California, destaca Novoa Toscano.

“Esperar seis meses para tener producto en Estados Unidos, pues es un mundo de tiempo en uno de los países de mayor consumo de bienes y servicios a nivel mundial”.

México, Guanajuato y León tienen la capacidad para colocar producto en sólo tres días en cualquier parte de Estados Unidos, agrega el representante de los proveedores.

“El americano viene a México a buscar más proveeduría y quien le maquile, porque ya no quieren estar en Asia y las empresas con operaciones en México les llevan un mes de ventaja en el trayecto”, expuso el presidente de Apimex.

Las empresas al dejar Asia encuentran muchas ventajas por instalarse en el Bajío, especialmente ya no dependen de la industria marítima que vive una crisis por la pandemia de Covid-19, recuerda el presidente de Apimex.

En enero de 2020, cuando se daban los primeros contagios de Covid-19, el traslado de un contenedor de 40 pies desde los puertos chinos de Shanghái, Ningbo, Yantian, Xiamen, Qingdao y Hong Kong a Lázaro Cardenás costaba sólo 2 mil dólares.

Para la tercera semana de noviembre de 2021, las navieras APM-Maersk, Mediterranean Shg Co, Cosco Group, CMA CGM Group Hapag-Lloyd, Ocean Network y Evergreen Line cobraban 13 mil 500 dólares por traer la misma caja cargada con mercancía de China a México. En octubre de 2021, el traslado de un contenedor de 40 pies llegó  a costar más de 14 mil 265 dólares.

China tiene Alibaba, JD.com y Pinduoduo entre las cinco empresas de comercio electrónico por volumen de negocios del mundo. Estados Unidos tiene a Amazon en el segundo lugar y Canadá a Shopify.

 

Source: Enrique Hernandez, Forbes Mexico

 

At the 2022 Spring Meeting in San Diego, panelists shared some of the opportunities they see in Mexico, while addressing some of the perceived challenges, both real and imagined.

Blanca Rodriguez, director of finance and capital at Marhnos Inmobiliaria, said that Mexico’s REITs, known as “FIBRAs”, help provide liquidity to the market for those looking to transact. “’How am I going to exit from these investments?’ is no longer a question,” said Blanca. “An institutional investor from anywhere in the world is welcome.”

Gonzalo Robina, CEO of FIBRA UNO, a real estate investment trust, said that many of the global events of the last decade are benefitting Mexico. Manufacturers are returning to Mexico to China and elsewhere. Even some of China’s companies are creating manufacturing facilities in Mexico to be closer to the North American customer base, said Gonzalo.

Federico Martin del Campo said that Mexico’s workforce is fairly well educated in engineering and other trades but at a lower cost.

Rodriguez said that some parts of Mexico have become destinations for “digital nomads” who can work from anywhere with Internet access.

“You don’t see too many cranes,” said Erez Cohen I, co-CEO of Urbium Property Group. “So we’re not worried about overheating or overbuilding.”

“Exchange rates have been stable, but with some of the hotels, you are getting paid in dollars with your expenses in pesos,” said Robina.

Del Campo said that in the past industrial has been somewhat recession proof as you can cut back on labor by reducing hours or shifts but you are still paying your full rent at least until the end of the lease.

Rodriguez said she sees an opportunity in the future for public private partnerships for infrastructure.

Cohen said Mexico is also home to six different unicorns, a term for tech companies with a valuation of more than $1 billion. He also sees a sees a nearly 10 million home deficit in terms of housing Mexico’s population, larger per capita than the United States.

Robina said that in the office space, most new development is the equivalent of LEED certified and energy efficient. Del Campo said that lenders are also interested in giving favorable financing to ESG compliant projects.

In response to an audience question, Carlos de Icaza, a partner with law firm Creel, García–Cuéllar, Aiza y Enríquez, said that there is some exaggeration of the issue of eviction in Mexico where ultimately it is a country of laws and courts where if you don’t pay, you eventually leave, particularly at the middle to higher income levels.

 

Source: Urban Land

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 chunks metal being worked on do not look terribly special. But the factory of Aerospace, a chemical-processing firm in Tijuana, hints at Mexico’s importance to global supply chains. These are components, from tray tables to door parts, for aircraft made by companies including Boeing, Cessna and Lockheed Martin. BAP applies surface treatments to the pieces, from submerging them in big vats of chemicals to meticulous work done by hand, before shipping them north.

Mexico has long been a hub for manufacturing. Toyota, a Japanese carmaker, has had a plant in Tijuana since 2002. Honeywell, an American industrial giant, opened one in 2010. But increasingly the country is moving into higher-value processes. It now accounts for 3-4% of aerospace imports to the United States, up from 1.5% in 2010. By contrast China’s share, which was the same as Mexico’s a decade ago, is now just 1%. American sanctions on China and tariffs on Chinese goods explain much of this change, as well as rising wages in China and the difficulty of doing business there. The trend has accelerated recently. Pandemic-induced border closures, increased freight costs, and consumers’ demands for instant gratification have all nudged firms around the world to consider shortening their supply chains.

“This is a golden opportunity for Mexico,” says Helen Wang, a consultant. The country has some natural advantages, not least a long land border with the United States. Mexico is party to fully 23 free-trade deals. Manufacturing wages are lower than in China. A survey this year by the American Chamber of Commerce of Shanghai found that a fifth of its members were considering moving some work out of China; more than a third of those who were thinking of moving were looking to Mexico.

In Tijuana the mood among many Mexican businesspeople is optimistic. Several big firms have expanded recently. Panasonic, a Japanese electronics company, opened a plant in 2018 to make cables for aerospace. Other companies are diversifying into logistics and distribution. In September this year Amazon, an e-commerce giant, opened a warehouse there, though the company denied that it would use it to serve customers in the United States.

In addition to aerospace, the manufacturing of medical devices and other electronics is booming. “We are doing things [in Mexico] that once would have had to be done in Japan or Germany,” boasts Eduardo Salcedo, the manager of the local operations of Össur, an Icelandic medical-devices company. “We have guys running a million-dollar machine with their right hand and another one with their left hand.”

Chain reaction

The result is that the richest part of the country, by the border, is becoming even better off. “Northern Mexico is growing at similar rates to Asia,” says Luis de la Calle, a consultant who used to work at Mexico’s economy ministry. Elsewhere, however, the picture is mixed. FDI fell from 3.1% of GDP in 2018 to 2.3% in 2019, compared with 3.7% in Brazil or 6.2% in Vietnam.

And despite its proximity to the United States, Mexico has its shortcomings. Business parks provide world-class facilities but the infrastructure outside—from roads to ports—is of poor quality, says Mr de la Calle. Businesses complain of problems obtaining inputs. The likes of Panasonic and Össur import many of the materials they need. Similarly Össur nearly pulled out of Tijuana because it could not find a company to apply chemical processes to its products, which include prosthetics. (BAP eventually stepped in.)

Some of the causes of Mexico’s problems are outside its control. When the government of the United States talks about “near-shoring”, it really means onshoring, says Bill Reinsch of CSIS, a think-tank in Washington. It can be protectionist in negotiations with Canada and Mexico. USMCA, the revised trade deal agreed in 2020 between the three countries, is stricter than its predecessor, NAFTA—indeed it was negotiated in part to preserve manufacturing jobs in the United States.

But Andrés Manuel López Obrador, Mexico’s populist president, has not helped. In 2018 his administration replaced one of the most business-friendly (if corrupt) governments in Mexico’s history, that of Enrique Peña Nieto. Mr López Obrador, in contrast, seems to enjoy unnerving investors.

Soon after taking office he cancelled a new airport for Mexico City, after the diggers had been working for three years, at a cost of at least $5bn. In 2020 he also pulled the plug on a $1.4bn investment in a new factory by Constellation Brands, an American brewer, which was near completion. He has weakened independent regulators by absorbing them into government or slashing their budgets.

Mr López Obrador is also reversing his predecessor’s opening of the energy industry to private firms and favouring inefficient state-owned outfits. Along with making electricity dirtier and less reliable, this sends forbidding signals to investors. In November the boss in Mexico of General Motors (GM), an American carmaker, said the company would not invest further in the country without laws that promote renewable energy. Earlier this year GM had said it would invest more than $1bn to make electric cars in Mexico from 2023. Last year Tesla, a leading maker of such cars, considered opening a factory in Mexico but opted instead for Texas. Although Tesla did not explain its reasons, Elon Musk, its boss, has grumbled about the Mexican government’s closure of some of the factories of its suppliers during covid-related lockdowns.

Mexico risks “shooting itself in the foot” by not taking advantage of shorter supply chains, says Michael Camuñez, who started a series of meetings to boost the economic relationship between Mexico and the United States during Barack Obama’s administration. (Mr López Obrador and President Joe Biden relaunched this “economic dialogue” in September.) Unfortunately it is Mr López Obrador who has his finger on the trigger and, if his past treatment of foreign investors is any guide, seems likely to pull it. 

This article appeared in the The Americas section of the print edition under the headline “Missing links” in the economist