Nuria Minondo

07Sep

Kuntai Company, Tesla’s main supplier, to invest $57 million dollars in Durango

septiembre 7, 2023 Nuria Minondo

Kuntai Company is looking to set up in Durango, a region where it plans to invest around 57 million dollars and generate 500 direct jobs.

The Chinese company is engaged in the design, development, production and sales of soft interiors for vehicles. It is also a global supplier of automotive parts, with commercial partners such as Audi, Volvo, GM, Toyota, Nissan and BMW. However, it stands out for being Tesla’s main supplier.

Products made by Kuntai Company include essentials such as floor mats, inner and outer wheel covers, spare tire covers, as well as seat back motor cover plates, among others.

Durango Governor Esteban Villegas Villarreal met with Zhang Ming, CEO of Kuntai Company, and Zhang Ming Di, Executive Vice President in China, marking the beginning of a crucial investment in Durango.

Kuntai Company’s decision to locate in Durango is based on multiple advantages, including the availability of essential services such as water, electricity and natural gas. In addition, the strategic land connectivity from Mazatlan to the United States adds a vital component to the proposal.

Kuntai Company is currently in search of suitable land to build its industrial warehouse and yard in the state of Durango.

Source: Mexico Industry

28Jul

Nearshoring in Mexico and its Impact in the Aerospace Industry

julio 28, 2023 Nuria Minondo

What is Nearshoring?

Nearshoring is a business strategy where a company relocates or expands its manufacturing capabilities into a foreign country closer to the country where the current or parent company is located.

By these means, manufacturing in a nearby country, the company can benefit by taking advantage of proximity or socio-economic or socio-political factors of a specific country.

According to El Economista based on the 2023 Kearney FDI Confidence Index, imports from Mexico into the US have grown at least 76% in the last decade, and have surpassed Asian countries as shown in the graph below:

Source: El Economista (2023) México gana a países de Asia y a EU con nearshoring: Kearney obtained from: https://www.eleconomista.com.mx/empresas/Mexico-gana-a-paises-de-Asia-y-a-EU-con-nearshoring-Kearney-20230623-0003.html

Mexico Exports to the U.S.

The growth of imports into the US from Mexico is driven mainly by 3 factors:

U.S. companies already sourcing directly from China are decreasing.
Most of the products manufactured in Mexico that supply the U.S. market come from American or European companies that want to increase their capacity in Mexico and are looking to minimize supply chain risks by nearshoring.
Chinese investment in Mexico has increased and more Chinese companies are installing production facilities in Mexico, in order to take advantage of the USMCA and minimize the import duties into U.S.

Nearshoring to Mexico and the aerospace industry

The aerospace industry in Mexico has consolidated as a very important industry in the last years, as it is a very important sector which contributes significantly toward the overall growth of Mexican economy.

Mexico is the 14th largest aerospace supplier globally, and around 80% of the production of the aerospace industry in Mexico is exported to the U.S.

Currently there are over 350 aerospace companies located in Mexico, this number has increased in the last years and is expected to continue growing as companies see Mexico as an strategic location due to nearshoring. According to Mordor Intelligence, the Aerospace Industry in Mexico is estimated at USD 9.72 billion in 2023, and is expected to reach USD 19.71 billion by 2028, growing at a CAGR of 15.18% FROM 2023 to 2028.

Aerospace manufacturing capabilities in Mexico range from engines to turbines, cargo doors, fuselages, landing gear assemblies, seats, and several other components that are now present in many airplanes used over the world.

Moreover, Mexico aerospace clusters are located mainly in 5 regions which include Baja California, Chihuahua, Sonora, Queretaro and Nuevo Leon. Some of the main OEMs include Honeywell, Bombardier, Airbus and Beechcraft.

Main factors driving the aerospace industry

Some key benefits that Mexico can provide for foreign aerospace companies are:

Proximity
Time zone alignment with U.S
Costs savings
Beneficial trade conditions
Low labor costs
Growing market

Shelter services for Aerospace companies

The above-mentioned clusters and established supply chain in the aerospace industry, provide foreign aerospace companies the confidence that they can consider Mexico as a long-term strategy.

If your company has future plans to nearshore operations to Mexico, contact us for a free consultation. Our more than 20 years of experience can help your company set manufacturing operations in Mexico successfully and in the shortest amount of time.

Mexcentrix can support you since a feasibility or cost model analysis, site selection, obtaining permits and licenses for operating in Mexico, recruiting of employees, among many other administrative tasks, which will simplify your operations in Mexico.

We become your strategic partner in every step of the process.

26Jul

Nearshoring, an $80 billion dollar opportunity for Mexico if it offers conditions to companies: Fitch

julio 26, 2023 Nuria Minondo

The country will capture half of the investment due to the relocation of companies in Latin America, predicts Guillermo Vilchis, senior director of the rating agency.

Guillermo Marcelo Vilchis Gurza, senior director of Fitch Ratings, projected that Mexico could capture 80 billion dollars in investments from companies that are taking their operations out of China to bring them to the Mexican economy, a phenomenon known as nearshoring.

“As of today, we have already captured 40 billion dollars (in foreign direct investment through nearshoring), so in the future we expect -if the required infrastructure conditions are in place- to continue with this growth, this figure could double,” said the rating agency’s representative.

The arrival of companies attracted by nearshoring is a process that will take time to consolidate, that is, it will take 1, 2 or 3 years, said the economist during the Fitch on Mexico forum.

“As infrastructure progresses, opportunities will open up for the creation of new companies in the country that take advantage of nearshoring, and obviously the amount of investment will increase,” he said.

He added that Mexico will capture half of the nearshoring investment in Latin America, and that investors have put among their requirements a better business climate, a greater generation of electric energy, more security and a better qualified labor force.

He expressed that in some states there is already a labor shortage problem due to the fact that companies are located in the north and monopolize the labor force.

“As soon as we, as Mexicans, are able to provide and grant all those facilities to investors, the number (of foreign direct investment) will grow,” said the senior director of Fitch Ratings.

“It is a matter of getting to work and that in all the states (there is investment, not only) in the north, in all the states we can create those infrastructures and those opportunities”, he highlighted.

Companies from China are looking to set up in Mexico to take advantage of its proximity to the United States, the largest market in the world in commercial terms.

“They are very important amounts of foreign direct investment that we have to take advantage of because of all the conditions that have occurred in international markets,” he said.

He stated that the trade war between China and the United States has led to “these opportunities in Mexico, and the more we take advantage of (nearshoring), the greater the number of companies that come and invest”.

The investment of automotive companies, such as Tesla, is an excellent example of the broad generation of jobs, and “it is a very strong investment and so there can be many sectors”.

He maintained that Mexico is the most attractive country in Latin America for investment due to its location: “The only thing that would prevent us from not doing so would be not offering all the conditions required for the establishment of these companies”.

Source: Forbes Mexico

19Jul

BorgWarner Inaugurates Electromobility Manufacturing Hub in San Luis Potosí

julio 19, 2023 Nuria Minondo

San Luis Potosí, strategic location to support the industry supply chain in Mexico and the world

BorgWarner held the groundbreaking ceremony for the construction of anew production facility focused on power electronics and electric motors in San Luis Potosí .

The company dedicated to creating innovative and sustainable mobility solutions for the vehicle market chose this state for its strategic location to support the industry supply chain in Mexico and the world.

It should be noted that BorgWarner has been operating for more than eight years in San Luis Potosí and this will be the company’s first plant that will integrate a clean room environment, becoming an electromobility manufacturing hub . It will also have a product validation test laboratory , with a focus on investors, opening the door for the development of new technologies at home, for which it will be investing more than 198 million dollars.

Agility and innovation for a sustainable future

Stefan Demmerle, president and general manager of BorgWarner Powerdrive Systems , commented that they are proud of this project, which is committed to enabling a sustainable future.

“Our Charging Forward 2027 strategy demands agility and innovation, so we have a responsibility to drive the transition to electrification not only in manufacturing but in product development.”

The new plant will have an area of 64,000 square meters, will be installed in the WTC 2 Industrial Park and is expected to start operations in the second quarter of 2024.

Currently, BorgWarner has a manufacturing plant in San Luis Potosí, located in the Parque Industrial Tres Naciones Phase 1 , which is 100% dedicated to the assembly of integrated electric drive units (iDM) for global OEM clients, as well as components for eMotors. The current production is destined for both the national and international markets.

The ceremony was attended by the head of the Secretariat for Economic Development , Juan Carlos Valladares, and the mayor of Villa de Reyes, Daniel Lagunas. Likewise, Stefan Demmerle, president of BorgWarner Powerdrive Systems, and Ulises Pérez, manager of the San Luis Potosí plant.

Source: Mexico Industry

11Jul

Nearshoring to Mexico in 2023: Benefits and Challenges

julio 11, 2023 Nuria Minondo

Nearshoring is becoming a popular word in conferences, summits, and other events, as it plays an important role in the reconfiguration and streamlining of supply chain processes worldwide and business expansion strategies, due to the importance of agility and flexibility in the current business environment.

What is Nearshoring?

Nearshoring is the strategy by which a company seeks to move part of its production to be closer to its final destination. Manufacturing companies are establishing their operations in Mexico mainly due to its proximity to the American market, looking to minimize risks, transport timing, and costs, among others. These initiatives are being driven by this trend among manufacturers in several industries, such as the automotive, aerospace, electronic equipment among others.

Nearshoring to Mexico: BENEFITS

Faster shipping: The geographical location of Mexico provides a substantial benefit over China, as an ocean freight can be moved from Mexico to U.S. in 48 hours and in truck it can take 24 hours or less. Compared to approximate 2 to 4 weeks of an ocean freight to the US. The abovementioned also implies lower shipping costs.
Supply chain optimization: Related to the above, Mexico´s 2,000-mile border with the US facilitates just in time delivery and supply chain optimization.
Similar time zone and proximity: Another advantage of nearshoring to Mexico is that its similar time zone and proximity allows for more regular visits from management who wish to monitor the process or make modifications. Travel to Mexico does not necessitate extensive planning.
Skilled labor at lower cost: The increased demand for labor in Mexico is one of the key advantages of nearshoring. In Mexico around 115,000 engineers and technicians graduate from university every year.
Infrastructure: Transportation and Communications infrastructure have been upgraded to improve logistics for U.S. – Mexico border trade. Mexico has 76 international airports, more than 10 maritime ports and 27,000 kms of railway, which facilitate the flow of raw materials and final goods into the country and abroad.

Nearshoring to Mexico: CHALLENGES

There are numerous advantages to nearshoring to Mexico. However, there are certain difficulties in this process, ome of these challenges are:

Insufficient available facilities, as FDI keeps increasing the availability of real state options in the main industrial cities has decreased.
Increase cost in real state options.
High levels of insecurity in some desirable locations
The lack of availability of sufficient electricity in many states of Mexico, is an important challenge for companies with high power requirements to run operations in Mexico.

Overall, Mexico is considered and strategic location for nearshoring operations due to the several advantages it has to offer but it is also vital for government to develop favorable conditions in order to meet enough energy demand, maintain legal clarity, and promote safe conditions for foreign investors, as experts predict that nearshoring to Mexico will continue to grow in popularity.

Mexcentrix Shelter Services

If you are interested in Nearshoring to Mexico in Mexcentrix, we can help you by offering the necessary resources and knowledge. Our Selter-Services offers full administrative and operational support including human resources, payroll, tax and accounting, foreign trade, among others. Through our shelter program, our clients can focus on what they do best (production, quality, materials) and let us take care of the rest.

For further information, please contact us.

29Jun

Bosch Rexroth Inaugurates New Plant in Queretaro

junio 29, 2023 Nuria Minondo

Bosch Rexroth inaugurated its new plant in Pedro Escobedo, Queretaro, where it invested US$251 million and plans to add 900 jobs.

In an area of 42,000 square meters, it will manufacture hydraulic pumps for mobile machinery, linear motion technology for mechanical engineering applications in manufacturing and factory automation.

The company will have greater capacity to meet the growth of the mobile hydraulic systems and factory automation markets in North America, in addition to shortening delivery routes.

The new production unit strengthens the company’s participation in North America in order to provide a more efficient service to its customers.

Reinhard Schaefer, member of the Board of Directors of Bosch Rexroth and responsible for manufacturing and quality, explained that the company’s localization strategy increases the capacity, flexibility and strength of its supply chains.

This unit, he added, will help to reduce the CO2 footprint of the inputs produced in the region, as delivery routes will be shorter.

Christoph Kleu, Vice President of Finance and Administration of Bosch Rexroth in North America, emphasized that the new location will allow Bosch Rexroth to meet its customers’ needs more promptly.

Source: Mexico Now

20Jun

MEXCENTRIX CLIENT, ASIAWAY, CELEBRATES THE INAUGURATION OF PHASE I AND ANNOUNCEMENT OF INVESTMENT IN PHASE II

junio 20, 2023 Nuria Minondo

ASIAWAY INAUGURATION

With the arrival of Asiaway, Ricardo Gallardo Cardona reaffirmed the support for the generation of business and the ease of national and international investment.

The Governor of the State Ricardo Gallardo Cardona was present at the inauguration of the Chinese company Asiaway, this Monday; company announced it will bring an investment of 41 million, 400 thousand dollars, the equivalent to the approximate amount of 750 million pesos.

Ricardo Gallardo Cardona considered that with the arrival of the new company to San Luis Potosi, the support to business generation and the ease of national and international investment in the state was reaffirmed.

The State President shared that San Luis Potosi will exceed 3,500 million dollars in Foreign Direct Investment, which will allow the growth and economic development in the state, so he emphasized that this new company located in the WTC Industrial Park, dedicated to the production of automotive components, will increase its production to become an important leading supplier of the industry.

Ricardo Gallardo welcomed the executives and highlighted that the investment is the result of the confidence generated to foreign companies: “today there is support for education, technology and professionalization to respond to the challenges of the companies that are coming to the State”, he said.

During the inauguration event of the new plant, they announced that the plant will generate 300 new jobs and announced the investment of a second phase, which includes a total investment of 414 million dollars (more than 7 billion pesos), with 1,700 employees, for the creation of 2,000 new and better paid jobs.

Source: El Heraldo

15Jun

Mitsui Hihg Tech will arrive in Guanajuato with an investment of 130 million pesos

junio 15, 2023 Nuria Minondo

Mitsui High Tech will invest 130 million pesos for the construction of its plant in Apaseo El Grande, Guanajuato.

The Japanese company stands out for being the main provider of frames for integrated circuits, precision tools, motor cores and surface grinders ; and will be generating 180 new jobs in the entity.

During his work tour of Japan, Diego Sinhue Rodríguez Vallejo, governor of the State of Guanajuato , affirmed the arrival of this Asian company in the region to expand its market and production in America.

At the work meeting, executives from the Japanese company Mitsui High Tec were present ; Kazuo Narita, Executive Chairman and Takafumi Kashu, General Manager; the governor, Diego Sinhue Rodríguez Vallejo; as well as the head of the Secretariat for Sustainable Economic Development , Ramón Alfaro; the Consul of Japan in León , Katsumi Itagaki; the General Coordinator of Social Communication, Alan Sahir Márquez Becerra, and state officials.

JICA supports SMEs in Guanajuato

Continuing with the work agenda, Diego Rodríguez Vallejo met with executives from JICA , the international cooperation agency in Japan , with the aim of strengthening collaboration and training programs to improve the meeting between Japanese and Mexican companies installed in the state. From guanajuato.

JICA Vice President Yamada Junichi promised to continue the training programs for Mexican companies, the promotion of scholarships for Mexican workers in Japan, and support for SMEs through the Guanajuato Training Institute.

During the meeting, Yamada Junichi announced that JICA support will extend to Guanajuato to promote startups.

At this moment, there are two Japanese companies interested in doing business in Mexico, specifically in Guanajuato due to the growing number of Japanese companies in the state.

Source: Mexico Industry

13Jun

Mexico Shelter Services: What to know before starting operations in Mexico

junio 13, 2023 Nuria Minondo

Doing Business in Mexico

Did you know that according to the 2023 Global Business Complexity Index, Mexico ranks as the 4th most complex country to do business in out of a total ranking of 78 countries worldwide.[1]

The level of complexity defined by the above mentioned Index lies in the amount of paperwork, requirements, permits and licenses, regulations, local laws, penalties, among others, that companies must comply with in order to properly start their operations. It also states there are still a lot of face-to-face requirements in place, which can present challenges for international businesses with senior directors residing elsewhere.

Furthermore, when planning to expand abroad it is very common to think that things must be done as in our country of origin or that processes are similar, the truth is that every country is different, and therefore it is important to count with the advice and support from local experts.

Certainly, with the support from local experts which understand local laws and regulations you can be certain to start your new business in Mexico with the right foot, being 100% compliant and avoiding problems in the future.

Mexico’s Shelter Services

Due to the above-mentioned in Mexico there are shelter service companies, whose primary task is to remove those administrative, legal, political, territorial, and cultural obstacles for foreign companies. While helping them start operation through a risk mitigation approach.

Shelter companies have existed in Mexico for more than 40 years and their importance lies in the fact that they are the best ally of a foreign company to start operations without delay and at a very affordable cost.

Moreover, many foreign companies often ask if the shelter model cheaper than a stand alone. Even though the stand alone cost will depend on the nature of each business, what will be handled in-house, staffing compensation levels, among others,it has been proved that for companies for up to 300 employees operating under the shelter model is cheaper, due to economies of scale. Additionally, the expertise offered by a shelter company cannot be duplicated through a stand alone.

Some of the services a shelter shelter company offers, include:

Learn more about the services Mexcentrix can offer you.

If you are a foreign company and you plan to start or grow your business in Mexico, remember that no company has within its organization, the talent and experience of other economic activities outside its core business.

Therefore, if your company is dedicated to manufacturing, focus on your core business and let yourself be guided by shelter services companies, in charge of giving you the best orientation and protection.

Mexcentrix Shelter Services

At Mexcentrix we offer a cost effective solution for you manufacturing and service operations in Mexico, whether you want to operate under a full shelter or only need help with specific tasks, we adapt to the needs of each client.

Basically, can support you since the start-up phase including site selection, company incorporation, processing initial permits and licenses, cost model analysis among others.

If you are interested on learning more about the advantages of our shelter service, or have any questions regarding labor, fiscal or foreign trade topics in Mexico, get in touch with a Mexcentrix expert.

[1] 2023 Global Business Complexity Index. TMF Group. P.20.

01Jun

Aerospace Industry Ready to Add More Suppliers

junio 1, 2023 Nuria Minondo

With an amount of US$1.5 billion, nearshoring is opening business opportunities in the supply for the aerospace industry to North America, part of said amount could be directed to Nuevo Leon or in general to Mexico, said Erick Palacios, general director of the Aero Cluster of Nuevo Leon.

“Companies estimate that between US$300 million and US$400 million are being transferred to Mexico annually in supply chain purchases, and that this amount could grow. The areas in greatest demand are: machining, punching, harnesses, composite materials with fiberglass and carbon fiber, among others,” added the executive.

International companies are looking for suppliers throughout Mexico, so at this time it is premature to estimate how much Nuevo León could attract.

Nuevo Leon’s aerospace industry ranks fourth nationally in aerospace sales.

Nearshoring is pushing this movement and trying to strengthen supply chains and also how to reduce the risks of a possible China-Taiwan conflict, this is where the interest of foreign companies in Mexico comes from.

“With this nearshoring there is a lot of movement and viability for new players to enter the aerospace market in Mexico, this can occur in two ways: those companies that are already installed that can have access to aerospace supply with a certification and foreign companies that are looking to consolidate their operations in Mexico,” explained the executive.

In addition to the expansions of companies already operating and those that would be entering for the first time.

“There are no numbers of how many there could be, but there will be new players, at this moment they are evaluating in which state of the country they would be located,” he added.

Source: Mexico Now