The aerospace industry in Mexico is in a clear recovery, there were many players that suffered after the COVID-19 pandemic, others disappeared and some others had to join forces to avoid disappearing, but at the end of the day, those that remained are now very strong, says Carlos Robles Alvarez, new president of the Mexican Federation of Aerospace Industry (FEMIA).

In an interview for A21, the executive explains that the company has not yet reached the export levels recorded before the pandemic, but in 2022 there was a growth of almost 18% net in exports compared to the previous year.

“We still haven’t recovered from the pandemic, we would have to exceed US$9 billion (in exports) to be back to pre-pandemic levels, but we are already back to US$8 billion and more,” said the president of AMBE Engineering.

He added that the “nearshoring” phenomenon is currently very important, since it is a trend that is gaining strength and should be taken full advantage of.

“The pandemic exposed many of the weaknesses that existed in the supply chain and much of this supply was in Asia, especially China, but with the trade problem it faces with the United States, other options are being sought; that is why nearshoring is one of the opportunities that this health crisis gave us,” stated Robles Alvarez.

In this way, there are large manufacturing companies in the United States and Canada that are demanding suppliers with a presence in North America or in the region, this is where Mexico has a great opportunity because of its capabilities, its proximity to the United States, the facilities it has and the knowledge it has of the sector, which makes it a major player in this area.

Robles Álvarez explains that in order to take advantage of nearshoring, there are two major challenges: the first is to strengthen the supply chain in Mexico; in other words, not only to promote the construction of more factories or create basic services to serve the sector, but also to integrate the supply chain.

Source: Mexico Now

The main suppliers of goods and services to the United States are China, Mexico and Canada. Although the Asian giant has lost ground in U.S. imports, it still accounts for 16.5% of the total.

The United States is readjusting its international trade dynamics; after five years of trade war with China, this Asian giant has already lost strength among U.S. suppliers, although it continues to position itself as the leading supplier.

During 2022, U.S. imports of Chinese origin amounted to 537 billion dollars, 16.5% of total U.S. purchases, according to figures from the U.S. Census Bureau.

It bought goods and services from Mexico for 455 billion dollars, making it the second largest supplier.

Canada was in third place, and U.S. imports from this country were equivalent to 438 billion dollars.

Source: El Economista 

The U.S. company Tesla will indeed install its electric vehicle plant in Nuevo Leon, as announced by Andres Manuel Lopez Obrador, President of Mexico, during his conference on February 28.

“This is good news, the entire Tesla company is coming, the entire automotive plant is coming to Mexico. Yesterday we spoke with Elon Musk, director of Tesla, there is already an understanding. Yes, they are going to invest in Mexico and they are going to establish the plant in Monterrey with a series of commitments to address the problem of water scarcity. They are going to help in this regard,” he revealed.

He said he is satisfied with Tesla’s installation in Monterrey because it means more investment and more jobs, which will have an impact on increasing workers’ salaries.

Tesla will make the official announcement of its arrival in Nuevo Leon.

The president informed that, probably tomorrow, Tesla will make the announcement of the construction of the gigafactory in detail and, in addition, they will report on some commitments acquired.

“I spoke with Elon Musk on two occasions by videoconference, on Friday night, from Chetumal, and yesterday morning. He was very receptive, understanding our concerns and accepting our proposals, which will be made known starting tomorrow,” he assured.

The President of Mexico thanked Elon Musk for understanding the importance of addressing the problem of water scarcity.

“There is a first commitment which is that it is the use of treatment water in the entire manufacturing process of electric cars, even up to the painting of cars,” he revealed.

He explained that an investment of this magnitude induces an increase in population, which means more water consumption.

“We have been helping the state government [of Nuevo León] to solve the problem of the water deficit for human consumption, which is the priority; they are investing in the Libertad dam and in the construction of the aqueduct. This will solve the problem in the short term. This was presented to Musk, therefore, we reached agreements to think in the medium and long term about the water supply”, he mentioned.

“There is going to be technological development, not only in the plant, but also in relation to water management,” he said.

Finally, he said that the announcement will be made by Tesla executives.

Source: Mexico Industry 

SAN LUIS POTOSI, Mexico,  German automaker BMW will invest 800 million euros ($866 million) in the central Mexican state of San Luis Potosi to produce high-voltage batteries and fully electric “Neue Klasse” models, the carmaker said Friday.

The expansion, set to add around 1,000 new jobs at its operations in the Mexican state, is BMW’s latest push into electric vehicles (EVs) as it looks to convert more than half of its sales into all-electric cars by 2030, it said.

More than half of the funds to be invested in Mexico – 500 million euros – are earmarked for the battery assembly center on the carmaker’s existing plant grounds, BMW said, and some 500 additional employees will work there.

Additionally, another 500 jobs will be created in other areas, it said.

The remaining 300 million euros will go to adapting and extending the body shop and building a new assembly line to install the battery packs, plant head Harald Gottsche told Reuters.

“We will start building, constructing the extensions and the new battery assembly in the beginning of 2024, and we will start (to ramp up) production at the beginning of 2027,” he said.

The announcement follows several other major expansions from the automaker in recent months, including a $1.7 billion investment in the United States and a 2-billion-euro push to build an EV factory in Hungary.

The plant in Hungary has been pitched as the first of BMW’s to be completely fossil-free. Gottsche added the Mexico plant was in the process of increasing its solar production on-site and swapping out natural gas for biomethane.

“We want to beat the Hungary plant, of course,” Gottsche said.

The push comes as manufacturers worldwide shift to comply with more stringent environmental regulations to mitigate their impact on climate change.

Mexico has also increasingly made the push for EVs as it looks to turn half of auto production electric by 2030.

While some industry leaders have cast doubt on that goal, Gottsche said BMW’s sales in Mexico were already 30% hybrid or fully electric.

“We will need much more renewable energy” to make the switch, Gottsche said.

Source: Reuters

HSBC Research forecasts an economic growth outlook for Mexico thanks to the investment attracted by nearshoring.

Foreign direct investment (FDI) in Mexico could oscillate between 35 and 40 billion dollars in 2023, driven by nearshoring, which would be key for the Gross Domestic Product (GDP) to grow 1%, estimated HSBC Research.

The financial institution has a positive economic outlook for the country this year, due to macroeconomic strength and the arrival of some catalysts, such as the overcoming of inflation and interest rate peaks at a global and local level, which will lay the foundations for a stronger investment positioning.

The combination of resilience in economic activity, opportunities and implications of nearshoring, falling inflation, the end of rate hike cycles and solid external and fiscal accounts will be key factors for Mexico in 2023.

“We have a constructive economic outlook on Mexico in 2023, despite global and local challenges, which is based on: resilient GDP growth of 1.0%, with an upward bias, supported by nearshoring opportunities that could translate into foreign direct investment (FDI) of $35-40 billion in 2023.”

Last November, the Ministry of Economy reported as of the third quarter of the year that preliminary foreign direct investment amounted to 32,147.4 million dollars, an increase of 29.5% compared to the same period of 2021 and the highest since 1999 for a similar period.

Likewise, HSBC states that the drop in inflation, which it estimates will remain at a level of 4.5% year-on-year, added to the stabilization of inflation expectations, will create room to reduce the reference rate by 100 basis points in the second half of the year; in fact, it expects it to close at 9.75%.

“This does not mean that the country’s restrictive monetary policy stance will be withdrawn, since our monetary policy rate path implies an ex-ante real rate of around 6.0% in 2023, thanks to the space that the gradual fall in inflation expectations will open up,” it specifies.

The financial institution also states that the orderly external accounts, led by strong and sustainable inflows, combined with contained trade and current account deficits, and the solid short-term fiscal position will also help significantly, despite a small primary deficit in 2023.

Source: Forbes Mexico

With an investment of 300 million dollars, Daikin started the construction of two new production plants that will be located in San Luis Potosí, in the Millenium Industrial Park. One of the factories will produce minisplits and the other will produce chillers for the entire world.

With these two new plants, in addition to the current facilities, the Japanese company will consolidate the new Daikin Campus in Mexico.

In addition, it will grow from 1,200 employees to 4,000 in 2023, when the Daikin Campus starts operating, which will be one of the largest production centers of the company in the western hemisphere. It is expected to be a research and development hub that will boost production chains.

According to the company, which is a leader in the industry of heating, ventilation and air conditioning (HVAC, for its acronym in English), these two new production centers are part of the expansion strategy in response to growing demand for products in Latin America and North America.

The two new plants will be located on an extension of 11 hectares including the establishment of an Innovation and Development Center (R & D) where they will develop air conditioning products that anticipate changes in the market in the Americas.

Daikin will grow almost 10 times the size of its facilities in San Luis Potosi in the 332,000 square meters where the two new industrial plants, recreational and leisure areas, showroom, training center, customer service center, green areas, intelligent parking, electrical substation and Research and Development Center will be installed.

Satoru Akama, president and CEO of Goodman Manufacturing (a Daikin Industries brand), said that trust is an important asset that cannot be replaced by anything else.

“It is precisely trust that has summoned us today to San Luis Potosi, the best place to continue and accelerate our growth in this extraordinary country. Because of its economic stability, the strength of its institutions, its privileged access to the world’s main markets.”

He added that the world is clear that the subsistence of humanity depends on using clean energy, reducing CO2 emissions and rationing water, so the Daikin Campus will be a source of pride for companies and for San Luis Potosi in terms of environmental sustainability.

“Mexico should be the destination of this historic investment by Daikin,” he said.

In his message, Ricardo Gallardo Carmona, governor of San Luis Potosi, said that thanks to the trust placed in the company by Daikin’s directors, San Luis Potosi is consolidating its position as one of the best destinations for national and foreign investment.

“This first stone of the expansion of the Daikin company represents the good omen of growth and economic development for our state,” he said.

Meanwhile, Margarita Alcántara, general director of Global Economic Impulse of the Ministry of Foreign Affairs, commented that the construction of the Daikin plants endorses Mexico’s position as one of the main destinations for foreign investment in the manufacturing industry and gives the region a relevant strategic importance in terms of economic and social development, which will translate into the generation of new jobs, growth of human capital, access to new technologies and the exchange of good practices in environmental sustainability and labor welfare.

Finally, he acknowledged the role played by Japan in the dynamism of the global economy, positioning itself as one of the countries of reference in terms of technological innovation, infrastructure, manufacturing production, automotive industry, among others.

The groundbreaking ceremony was also attended by Itagaki Katsumi, Consul General of Japan in Leon; Enrique Galindo Ceballos, Mayor of San Luis Potosi; Andres Benavides, CEO of Daikin Manufacturing Mexico; Juan Carlos Valladares, Secretary of Economic Development in San Luis Potosi; Jose Guadalupe Torres, Secretary General of Government; Nestor Garza Alvarez, Secretary of Labor and Social Welfare of San Luis Potosi, among other special guests.

Source: Mexico Industry 

NUEVO LEON – During 2022, the state of Nuevo Leon reported positive numbers in terms of Foreign Direct Investment (FDI) and support for owners of small and medium-sized enterprises (SMEs).

As of October 2022, the state confirmed 101 investments: 53 new investments and 48 expansions of companies already operating in the state, representing a total of US$4.3 billion.

Most of the companies were from the manufacturing, automotive, logistics, furniture and information technology sectors. In terms of origin, they were mainly from the United States (47 projects), China (22), South Korea (6), Germany (4) and Denmark (3).

“The arrival and expansions of these companies have a positive impact on the lives of Nuevo Leon families, as they will help in the creation of 50,091 jobs,” said Iván Rivas, state Secretary of Economy.

The State also highlighted the boost to SMEs, which represent more than 97% of the economic units registered in 2022, for which 2 thousand 989 million pesos were lent to 1 thousand 256 companies in soft loans; while 4 thousand 098 microcredits were given to entrepreneurs for a total amount of 30.2 million pesos.

In addition, 120 hours of training and 20 hours of mentoring were offered to 992 affiliated entrepreneurs to triple their sales, under the successful SBDC model.

“This is the greatest effort to support owners of small and medium-sized businesses that a state has ever made,” added Secretary Rivas, who explained that these trainings are carried out hand in hand with the 4 main universities in the state (UDEM, Tec de Monterrey, UANL and U-Erre).

Finally, it was highlighted that through the program Hecho en Nuevo León (Made in Nuevo Leon) -focused on entrepreneurs and micro-businesses- 51 courses have been given to 3,110 participants.

SOURCE: Mexico Now 

French companies that come to Mexico do so to stay, said the head of the Economic Service of the French Embassy.

Xavier de Bellefon, president of the Franco-Mexican Chamber of Commerce and Industry, reported that there is interest from French companies to relocate some of their operations from the United States to Mexico, so the country should take advantage of this economic moment.

“Mexico has an incredible role and opportunity to seek more growth and acceleration for companies that need the location, logistics and everything it brings,” said the business representative.

The French community saw that Mexico is close to markets as important as the United States and Canada, commented the businessmen at the forum “Challenges and opportunities of nearshoring”, organized by the CCI France Mexico.

From January to September 2022, French companies invested in Mexico more than 757.6 million dollars, which represents an increase of 59.39% over the same period last year, according to the Ministry of Economy (SE).

The issue of nearshoring has become critical for many companies in their strategic decisions, due to many changes in the world such as political decisions and political tensions, De Bellefon said.

Companies faced the pandemic and in the last 25 years they have gone from globalization and optimization of value chains worldwide to a reality that “proposes how companies shorten and are a little closer to our customers,” said the president of the ICC.

He added that nearshoring has become one of the most strategic issues for many industry groups and advisors.

“French companies choose Mexico to invest in the long term, if they arrive it is to stay and this is explained because Mexico is a country of opportunities and our companies are aware of it,” said Alexis Loyer, head of the Economic Service of the Embassy of France in Mexico.

Mexico has 12 free trade agreements with 46 countries, as well as access to two oceans and the economies of North and South America, highlighted the French diplomat.

On the other hand, the French economic and commercial ecosystem is vast, since there are more than 500 French subsidiaries with operations in Mexico, commented the representative of the French government.

The French subsidiaries generate more than 150,000 direct jobs and more than 700,000 indirect ones, and there is at least one French company in each of the states of the Mexican Republic, he added.

From the embassy, he affirmed, the opportunity of nearshoring for Mexico and for our companies to bring their value chains closer together has been reviewed.

Mexico has geography, commercial openness, manufacturing tradition and human capital, which are strategic factors in the new world panorama, Loyer mentioned.

Source: Forbes