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“This does not mean that the country’s restrictive monetary policy stance will be withdrawn, since our monetary policy rate path implies an ex-ante real rate of around 6.0% in 2023, thanks to the space that the gradual fall in inflation expectations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

The Hofusan Industrial Park, in the municipality of Salinas Victoria, Nuevo León, continues to attract Chinese companies. Daye, which specializes in the production of power tools and smart garden products, will invest $120 million in a plant that will employ 2,000 workers.

James Ye, president of Daye, told the press that they chose the state of Nuevo Leon after having seen many options in Southeast Asia, in Bangkok, in North Carolina, outside China and Singapore; this was the best location for the industrial park, “the whole environment we checked”.

“The global market is strong and growing. Daye’s investment in Mexico is intended to continue expanding our growth in the North American market. North America remains the world’s strongest market for outdoor electrical equipment,” he said.

This is the first plant they will build in Mexico, which consists of two stages, in the first it covers an area of 50,000 square meters and in the second phase it will be 100,000 square meters.

The company’s headquarters are in China, and they have a presence in Hong Kong, the United States and Europe. Daye is one of the world’s leading manufacturers of outdoor electrical equipment, such as lawn mowers, tractors, blowers, thread mowers and other lawn equipment.

It is worth mentioning that the Hofusan Industrial Park is close to three canals: National Highway 85D, Highway No. 1 and the main freight railway line. Each channel can connect Monterrey with major cargo destinations.

In turn, Raúl Cantú, mayor of Salinas Victoria, stressed that this municipality occupies the second place with the highest attraction of foreign direct investment (FDI), this has generated an accelerated growth of the population. According to the Census of Population and Housing of the INEGI, there is a record of 86,000 people, however, the figures of the municipality indicate that the population has grown to 180,000 people.

Currently, they have technical high schools, however, they are reaching an agreement with the Autonomous University of Nuevo León (UANL), to have a university, which specializes in engineering with terminal lines in Logistics and Information and Communication Technologies.

China accounts for 30% of investment in Nuevo León

Iván Rivas Rodríguez, Secretary of Economy of Nuevo León, told the press that in the third quarter of this year, “China represented 30% of the FDI that arrived in the state, the United States 20%, Germany 22 percent. There are 101 investment projects, we know that in five years they will generate more than 50,000 jobs, according to data with their own registration, “said the official.

He considered that China, as a country of origin, brings strong investments. “Today is 120 million dollars, with the creation of 2,000 jobs. Furniture maker Man Wah to invest $300 million; Kuka(robotics, software and service) carries more than 250 million dollars.

So far, we have 101 projects in the investment portfolio, which have already said yes, and confirmed their investment or expansion,” concluded Rivas Rodríguez. “Right now, Salinas Victoria is the second municipality with the greatest investment attraction, Apodaca is the first and Ciénega de Flores is number three.

Source: Mexico Industry

Have you heard about Nearshoring to Mexico?

It would give the region almost $78 billion dollars in new exports, particularly pharmaceutical, textile, automotive and renewable energy.

Boce Industrial Systems is installed in Querétaro with an investment of 1.5 million dollars to potentiate the supply of the entity and cover the North American market. The company is engaged in the manufacture of automation lines

Querétaro, October 3, 2021.- Boce Industrial Systems, a company of Turkish origin, settles in Querétaro with an investment of 1.5 million dollars. The brand is dedicated to the manufacture of automatic lines for treatment and electro-finishes for corrosion protection, decorative or functional.

During the inauguration and in his participation, Ahmet Bozkurt, General Director of the company, thanked Querétaro for allowing him to settle in the entity, explaining that he sees in the state a strong commercial ally to cover the North American market. In addition, he assured that the company will seek the welfare of all Queretanos and that its intention is to empower suppliers to be business partners for them and other companies.

In his speech, Marco del Prete Tercero, Head of the Secretariat of Sustainable Development of Querétaro (Sedesu), reported that there are countries that already see in Querétaro a new home and that the triumphs are in the small details that lead to better jobs for the families of the state. He mentioned that Boce is an important company because its teams will help improve the production processes of new plants that are coming to the entity. He assured that, from his position, he would see how to effectively support more companies to promote local supply.

Reference

Anónimo. (30 de Septiembre de 2022). Cluster Industrial. Obtenido de Boce se instala en Querétaro con inversión de 1.5 millones de dólares: https://www.clusterindustrial.com.mx/noticia/5345/boce-se-instala-en-queretaro-con-inversion-de-1-5-millones-de-dolares

Mexico is fashionable in Singapore, says Francisco Rios, a member of the Board of Directors of the Singapore-Mexico Chamber of Commerce.

Mexico would become the manufacturing center for 5 companies from Singapore, who study investing in the construction of factories and will move their production lines from Asia to the Bajio and other regions of the country.

“Of the 7 companies (based in Singapore), which came a month and a half ago (to know the Mexican market), I think there were 5 that do not have a presence in Mexico and are evaluating (investing), while the other two are evaluating expansion,” reveals Francisco Ríos, member of the Board of Directors of the Singapore-Mexico Chamber of Commerce (SgMxCham).

Singaporean companies are very interested in jumping on the bandwagon and the trend of nearshoring, manufacturing and the reconfiguration of the industry globally, says the founder of the business chamber to Forbes Mexico.

“Today it is no longer enough to be on the other side of the world (Asia), some production processes need to be here in Mexico,” says the representative of the business organization, which was presented on September 20, 2022, to Singaporean and Asian investors in Singapore.

The relocation, known as nearshoring, of Asian companies is due to the intention of complying with the new rules of the Agreement between Mexico, the United States and Canada (T-MEC), as well as no longer paying high transport prices and no longer depending on the maritime industry. Also shield themselves from the disruptions of supply chains caused by the Covid-19 pandemic and Russia’s war against Ukraine.

About 20 days later, they inaugurated the new headquarters of the Singapore-Mexico Chamber of Commerce at the facilities of Interplex, a Singaporean specialized manufacturing company with operations in different cities of Mexico, led by Alessandro Perrota, founding member of the Chamber. And just this week it was presented in Mexico.

Luis Coronado, EY partner and Global Tax Controversy leader, is listed as president of SgMxCham, and Agustín García López, Mexico’s ambassador to Singapore, is the honorary president.

“(The founding of SgMxCham arises because) we have seen that over the last decade, relations between Mexico and Singapore at the governmental level and at the commercial level have been growing,” says Franciso Ríos.

He recalls that governments have created new commercial avenues such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Free Trade Agreement between Singapore and the Pacific Alliance, as well as Singapore rose as an associate member of the Pacific Alliance.

“We are in a very good moment to add a tool to this whole (commercial) ecosystem, as well as help the private initiative to get good partners on the other side of the world,” he says.

The idea is to have as members companies from Singapore, Southeast Asia with operations in the country formed by 73 islands and Mexican to make synergies and investment partnerships, says the founder of the Singapore-Mexico Chamber of Commerce.

Also, the mission of the Chamber is to follow the trend and help companies see those opportunities, which are being created and talk better about the areas with others.

“We have started with a major effort in Singapore of companies that are based there, that want to look at Mexico and need a little more help to look at Mexico and register within the Chamber.”

In 2023 we will have a very solid base of companies in Singapore and Mexico, and we are not alone in attracting companies to SgMxCham, he points out.

“There are other associations that we work with very closely, such as the COMCE (Mexican Council of Foreign Trade) here in Mexico, the Latin American Association and the Latin American Chamber in Singapore.”

Francisco Rio points out that nearshoring is one of the topics of interest for the associates, even after the creation of the Singapore-Mexico Chamber of Commerce the first business mission was carried out in the Bajío.

“There were 7 manufacturing companies from Singapore, which came to Guanajuato to the Hannover Messe of Mexico and Latin America. Then a group of Mexican companies also went to the Hannover Messe Singapore event, “says the director of Group COO (LATAM) and SEA Group.

A couple of the companies, who participated in the trade mission in Guanajuato, have investments and factories in Mexico, so “they want to see how they can grow them more,” he says.

At the moment, Singaporean investors are brought by their own customers, who are part of the manufacturing chain in Mexico and are “looking to be served much faster and have a much closer relationship with their own suppliers,” adds Francisco Ríos.

Additionally, there is a modernization of the industry in Mexico, which is accompanied by all the global trends of industry 4.0: “There we think that some of the solutions that come from Singapore could be very interesting.”

There are about 5 billion dollars in the bilateral balance of Mexico and Singapore, one of the highest in Latin America and there is a diversification of products.

Mexico and Brazil are Singapore’s two major trading partners in Latin America, although it depends a little on the year on commodities and things are changing a bit, he says.

“The government of Mexico sees the government of Singapore as a partner on the other side of the world and we are also convinced that the government of Singapore sees Mexico as a partner on this side of the world.”

“In Singapore, Mexico is all the rage, as in September a replica of Chichen Itza was installed in the Gardens By The Bay, which is one of the most interesting places in Singapore today.”

In addition, there was the emergence of a large number of Mexican restaurants, some more authentic and others less authentic, he clarifies.

“Definitely, Mexicanism is gaining more momentum in Singapore,” says the representative of the Singapore-Mexico Chamber of Commerce.

References

Hernández, E. (November 23, 2022). Forbes. Retrieved from Nearshoring: About 5 Singapore companies consider building factories in Mexico: https://www.forbes.com.mx/nearshoring-unas-5-empresas-de-singapur-evaluan-construir-fabricas-en-mexico/

Ambu opened its largest plant in Ciudad Juárez, Chihuahua, allowing the company to scale production and ensure greater proximity and supply of products to North America.

This factory has a total capacity of nearly 30,000 square meters; and after a period of unsettled global supply chain landscape, being able to secure growing manufacturing capacity is imperative.

The new plant is a strategic step in being closer to the North American market by having a more sustainable and flexible approach to supply chain constraints, enabling cost-effective transportation and better supply of products to customers.

Britt Meelby Jensen, CEO of Ambu, said that the opening of the new site in Mexico is an important milestone for the company. And delivering innovative, high-quality products to customers is the priority and has been a key focus area during Covid-19 and global supply chain disruptions. 

“Our investment in the new Mexican plant is a strategic decision to secure future production capacity, which will increase our flexibility and proximity to customers in North America and thus ensure a reliable supply of products.”

REINFORCED MANUFACTURING IN RECORD TIME

In less than two years, the new manufacturing plant in Mexico has been built . The foundation stone was laid in March 2021 and the first products, the SPUR resuscitators, were shipped to the United States.

At the plant, Ambu  will produce single-use endoscopes  within the four main segments of endoscopy: pulmonology, urology, ENT and GI , as well as parts of our anesthesia portfolio. In addition, the company anticipates the creation of a total of 3,000 new jobs, as production increases in the coming years.

Today, Ambu  owns and operates manufacturing facilities in China, Malaysia, the United States and Mexico, totaling nearly 100,000 square meters of production space on all continents. In addition, the new plant has an additional 20,000 square meters for future expansion.

SOURCE: Mexico Industry