04Mar

Advantages of Manufacturing in Mexico in 2021

marzo 4, 2021 Jesus Aguirre

Mexico presents advantages for manufacturing companies in 2021

Last year (2020) was a tough one for all industries, including the manufacturing industry, as they had to lead with a significant reduction in income and sales and which led to many changes and need to adapt. Among the top industries affected are the automotive and aerospace industry, and service industries such as restaurants, hotels, etc.. Nevertheless, 2021 is a more hopeful year for most industries, including manufacturing.

The opportunities for the manufacturing industry in Mexico for this year

The pandemic challenged all industries, but it also presented an opportunity to analyze costs, ways of improvement, and to overcome changes. Which has led companies to search for alternatives, make better use of their resources and cut costs.

In which Mexico through its high skilled labor and competitive labor costs can play an important role.

Furthermore, the US and China trade conflict is still ongoing, as even though after several negotiations and that U.S. – China phase 1 trade deal was signed on January 13^th, it cut some U.S tariffs on Chinese goods in exchange of China agreement to expand purchases of certain US good and services and address some U.S objections on intellectual property practices. But still, some of the imposed tariffs remain unchanged.

Therefore, additionally to the abovementioned, the challenges caused by Covid-19, the increased labor costs in China and the rising tensions in the South China Sea, have raised concerns about manufacturing goods in China and shipping halfway around the world, leading some companies to reconsider where to set up operational manufacturing facilities, and to look for other options including onshoring or nearshoring.

In addition to the fact that the current travel restrictions between U.S. and China due to pandemic have complicated the situation.

Mexico plays an important role in this field, as in 2019 and 2020, Mexico overcame China to become U.S. number one trading partner, and many foreign manufacturing companies have decided to invest in Mexico and establish manufacturing operations in the last years.

Companies have been considering establishing manufacturing operations in Mexico due to the different advantages it offers such as:

Competitive labor costs
Highly skilled labor force
Proximity to US, which due to a similar time zone facilitate communication and travel and which leads to lower shipping costs.
13 Free trade Agreements with 50 countries
Foreign Trade and Tax Incentive Programs, such as the IMMEX Maquiladora Program.

The above-mentioned are some of the advantages Mexico has been offering for manufacturing companies in the last years and which will remain in 2021. These are some of the benefits that had led manufacturing in Mexico to rise in popularity in the last 2 decades.

Start Manufacturing Operations in Mexico in 2021

Are you looking to capitalize on the advantages of manufacturing in Mexico in 2021?

If you are looking to take advantage of the benefits Mexico offer for manufacturing companies, Mexcentrix can lead and support you in the complete process for establishing manufacturing operations in Mexico. Our shelter service offers full administrative and operational support including human resources, payroll, tax and accounting, foreign trade, customs, management IMMEX Program among others. Through our shelter program, our clients can focus on what they do best (production, quality, materials) and let us do what we do best.

Through Mexcentrix services, we ensure 100% compliance with Mexican law and regulations, and our clients can avoid unnecessary problems and costly mistakes. In addition, we offer ongoing consulting to keep our clients updated about any changes in applicable laws and regulations.

Furthermore, our specialized and highly qualified teams have helped our clients during these difficult times due to the pandemic, to implement measures designed to decrease the impact of the economic crisis in their operations and to be able to adapt in the most effective way.

For additional information regarding our services or if you need a cost model for your operations in Mexico, contact us.

Mexcentrix will support your company for a smooth start and running of operations in Mexico.

02Mar

Germany’s Continental to invest 60 million euros in central Mexico

marzo 2, 2021 Jesus Aguirre

German automotive parts maker Continental AG said on Monday it will invest around 60 million euros ($72 million) in expanding a plant in the central Mexican state of San Luis Potosi.

In a statement, the company said it would manufacture brake parts in the 20,000 square meters of new production space. ($1 = 0.8304 euros)

“The decision to locate the manufacturing of these high-tech components at the San Luis Potosi plant is a strong sign of Continental’s confidence in Mexico and especially in the region,” plant manager Victor Hernandez said.

The expansion of the plant, which is scheduled for completion in October 2022, is welcome news for Mexican President Andres Manuel Lopez Obrador, whose unorthodox economic policies have spooked investors.

It also comes as Mexico’s economy recovers from its worst recession last year in almost 90 years and Lopez Obrador hopes the new United States-Mexico-Canada Agreement (USMCA) trade deal spurs new investments and jobs.

Continental said the expansion would create some 350 new jobs over the next three years, on top of the 650 people already employed at the San Luis Potosi plant. (Reporting by Abraham Gonzalez in Mexico City Writing by Laura Gottesdiener and Anthony Esposito Editing by Matthew Lewis)

Source: REUTERS

( https://www.reuters.com/article/mexico-continental/update-1-germanys-continental-to-invest-60-million-euros-in-central-mexico-idINL2N2KZ2GT )

26Feb

Entry into Force of the Declaration of Decrementables

febrero 26, 2021 Jesus Aguirre

FOREIGN TRADE NEWSLETTER

On October 26 of 2020, the Second Resolution of Modifications to the General Rules of Foreign Trade was published in the Official Journal of the Federation (DOF), in which among the most important changes, the declaration of the “Decrementable” concepts is highlighted. .

According to bulletins 17 and 21 dated September 4 and October 12 of 2020, respectively, where the modifications to the VOCE-SAAI M3 Technical Registry Guidelines were reported. The pediment format is modified to add 5 fields for the following:

Decrementable transport
Decrementable insurance
Load
Download
Other decrementables

The previously mentioned, came into force on February 26, 2021. Establishing that it is mandatory the declaration of the amounts by way of decrementables.

Decrementables
The decrementables, also known as non-incremental adjustments or negative adjustments, are regulated in Article 66 of the Customs Law, and refer to the concepts that should not be part of the transaction value, that is, of the customs value.

They will be considered decrementable as long as they are itemized or specified separately from the price paid in the digital tax receipt or equivalent document.

Article 66 of the Customs Law establishes that the transaction value of imported goods will not include the following concepts, provided that they are broken down or specified separately from the price paid:

The expenses incurred by the importer on his own account, even when it can be estimated that they benefit the seller.
The following expenses, provided they are distinguished from the price paid for the imported goods:
- Construction, installation, assembly, assembly, maintenance or technical assistance expenses incurred after importation in relation to imported goods.
- Transportation, insurance and related expenses such as handling, loading and unloading incurred as a result of the transportation of the goods
- The contributions and countervailing duties applicable in the national territory, as a consequence of the importation or sale of the merchandise.
Payments from the importer to the seller for dividends and those other concepts that are not directly related to the imported goods.

The fields that were added to the request form are the following:

Concept

Description

24. Decrementable transport

Registry M3

Field 31

Total amount of expenses paid for the transport of the merchandise, incurred.

25.Decrementable insurance

Registry M3

Field 32

Amount of the total insurance premiums paid for the merchandise.

* This field must be filled in the case of complementary pediments, internal transits to import or international transits made by rail, in which case, printing the name of this field is optional.

26.Load

Registry M3

Field 33

The total amount of the expense paid for the loading of the merchandise, after the assumptions referred to in article 56, section I of the Law.

27.Download

Registry M3

Field 34

Total amount of the expense paid for the unloading of the merchandise, after the assumptions referred to in article 56, section I of the Law.

28. Other decrementables

Registry M3

Field 35

Amount in national currency of the total amounts corresponding to the items that must be decreased at the price paid, (field 14 of this block), in accordance with the provisions of article 66 of the Law.

* This field should not be filled in when it comes to complementary requests, internal import transits or international transits carried out by rail, in which case, printing the name of this field is optional.

Infractions and Penalties

In accordance with Annex 19 of the General Rules of Commerce Exteior, related fields are multables decrementables fields, according to the following article:

Article 184 section III and article 185 section II of the Customs law: The incorrect transmission or presentation of reports or documents with inaccurate or false data or omitting any data, will be sanctioned with a fine of $ 2,010.00 to $ 2,860.00, for each document.

We hope that this information is useful to you. Any questions or comments in this regard please contact us.

26Feb

Latécoère acquires Bombardier’s EWIS business in Querétaro, Mexico

febrero 26, 2021 Jesus Aguirre

France-based aerospace company Latécoère has purchased Bombardier’s Electrical Wiring and Interconnection Systems (EWIS) business in Querétaro, Mexico.

The acquisition has an enterprise value of $45m.

The Querétaro site provides electrical harnesses and sub-assemblies required to produce EWIS systems. It has an estimated annual revenue of approximately $60m.

With this acquisition, Latécoère will be able to serve additional customers, including Airbus Canada, MHIRJ and Avcorp.

Besides expanding its customer portfolio, Latécoère will be able to boost its order book.

As part of a long-term supply agreement reached between the two companies, EWIS from this site will continue to be provided for all Bombardier platforms, including its Global and Challenger aircraft.

Latécoère chief executive officer Philip Swash said: “We are pleased to finalise this acquisition and at the same time enter a long-term supply agreement with Bombardier.

“With this transaction, Latécoère strengthens its industrial presence internationally and increase its proximity to its customers. It also signals our continued participation in the global consolidation of the aerospace industry.”

Following the acquisition, Bombardier’s remaining Querétaro operations will remain unaffected.

The rear fuselage of the Global family of business jets, including the Global 7500 aircraft is manufactured in Mexico.

Bombardier operations and operational excellence executive vice-president Paul Sislian said: “The Bombardier team looks forward to working with Latécoère toward a seamless integration as we continue to build on the successes of both our companies.”

Source: Aerospace Technology

( https://www.aerospace-technology.com/news/latecoere-bombardier-ewis-mexico/ )

22Feb

Volkswagen and Audi to resume production in Mexico after gas shortages

febrero 22, 2021 Jesus Aguirre

The Mexican unit of Volkswagen AG will resume production of its Tiguan sports utility vehicle on Monday evening, the company said in a statement on Sunday, following gas shortages that hit swathes of Mexico last week.

Meanwhile, Audi will resume normal production levels at its plant in Puebla on Monday, after “the supply of hydrocarbons to the industrial sector was guaranteed,” the company said on Sunday.

Volkswagen-de-México-incrementa-su-producción-en-2019-1100×690-c

Source: REUTERS

( https://mexico-now.com/electricity-and-natural-gas-outages-in-northern-mexico-are-causing-big-losses-for-manufacturers/ )

18Feb

THE AEROSPACE INDUSTRY

febrero 18, 2021 Jesus Aguirre

The aerospace industry in Mexico has become one of the nations top industries

The aerospace industry is currently one of the most important in the world and in Mexico. North America is the region with the largest participation, with 51.1% of the total, according to Mexico Industry. In Mexico all the components of an aircraft are manufactured, including engines, cargo doors, fuselages, landing gears and connection system. Mexico ranks as the 14^th largest aerospace manufacturer in the world, according to IHS Markit, and 12^th place worldwide regarding exports of the aerospace industry.

In 2019 the aerospace industry exported a total of $9.5 billion dollars, the main destination country being the United States. Nearly 75% of Mexican aerospace industry’s production is consumed by the USA, and around 20% by Europe.

US imports 75% of all aerospace industry production in mexico

Aerospace Industry in Mexico has grown 14.4% in 15 years

The aerospace sector has reached an annual growth of 14.4% in the last 15 years (Mexico Industry, 2020), becoming one of the nation´s top industries. According to the FEMIA (Mexican Aerospace Industry Federation), aerospace suppliers in Mexico grew from 100 companies in 2004 to over 300 in 2019). By the end of 2020 there were approximately 350 aerospace companies in Mexico.

Out of the total number companies within this sector, according to Verónica Rojas, research professor at the College of Engineering of the Center for Technical and Higher Education, 79% are dedicated only to maquila, 11% to repair and construction of engines and 10% to research and innovation in this area. Showing that Mexico has managed to consolidate itself as one of the main manufacturing centers.

The main states that contribute to this industry are Baja California, Chihuahua, Sonora, Nuevo León and Querétaro; which, due to the great growth in production and demand, have already developed academic programs together with universities and technical institutes that are linked to the needs of that industry. As of 2019 the existence of aerospace companies within the states abovementioned summed a total of 290, divided as follows:

5 states are the biggest players in mexico’s aerospace industry

Mexico’s competitive advantages have brought investment in the aerospace industry

Some of the countries that have already invested in Mexico within this sector are the United States, Canada, France and Spain; which have seen the competitive advantages that the territory has, such as the quality of the workforce, the low cost of production, the geographical position and the commercial agreements that give access to large markets.

Are you thinking of establishing your aerospace company in Mexico? Contact us. Our array of incorporation, shelter services and outsourcing has helped set up several aerospace companies with a successful and timely start of operations in Mexico.

We can support you with the following activities, among many others:

Site selection
Company incorporation
Permits and licenses procurement
Recruiting, training and outsourcing payroll.
Managing all administrative functions, including finance and labor.
Tax and accounting outsourcing
Import and export operations, customs, freight and logistics coordination, among others.

Aerospace Industry In Mexico becomes number 1 in the world

Sources:

18Feb

Electricity and Natural Gas Outages in Northern Mexico Are Causing Big Losses for Manufacturers

febrero 18, 2021 Jesus Aguirre

The electricity and natural gas outages in northern Mexico have generated a loss of US$2.7 billion in just two days, since almost all of the manufacturing operations were stopped, according to INDEX figures.

“The most affected states are Chihuahua, Coahuila, Nuevo Leon and Tamaulipas. Sonora and Baja California are not connected to the national electricity grid; therefore, their situation is kind of different,” explained Luis Hernandez, INDEX president.

In some regions, such as Matamoros and Reynosa, the manufacturing facilities shutdown entirely their operations because those cities have no electricity supply.

“At the end of the day, our losses will be higher because we will have to pay overtime to fulfill our orders and be in compliance with our clients,” said Rosalinda Torres, president of INDEX Matamoros.

INDEX figures show these electricity and natural gas outages are affecting at least 2,600 manufacturing sites in Northern Mexico and more than 1.2 million employees. This temporary or partial shutdown costs US$200 million per hour.

“We have been informed that the natural gas outages will be for high-consumption clients. Manufacturers are in this category and many of them use natural gas as a raw material in their processes and cannot operate without them,” said Fabiola Luna, president of INDEX Juarez.

Hernandez said coordination is key because the Federal Government is not doing its part on this issue. He said the cuts should be programmed; therefore, companies can plan accordingly.

Moreover, the INDEX presidents at Northern Mexico are demanding a regional contact from the Mexican Federal Government in each state to address these issues.

Winter Storm Uri chilled large areas of Texas. As a result, gas pipelines were blocked with ice or their compressors lost power. The Lone Star State prioritize much of the gas available for heating homes and businesses rather than generating electricity.

Texas also stopped natural gas exports to Mexico. Most of the CFE stations use natural gas to generate electricity and this fuel is imported via Texas. INDEX presidents in Northern Mexico said the Federal Government was aware of this situation and neither notify it to the companies nor had reserves to keep the system running.

CFE said its operations were left short as the winter storm in Texas froze natural gas pipelines. It said some private power plants also began shutting down Sunday night. Private plants supply about 80% of power in northern Mexico.

Mexico uses gas to generate about 60% of its power, compared to about 40% in the U.S. Mexico built pipelines to take advantage of cheap natural gas from the U.S., mostly from Texas.

Moreover, CFE said U.S. electricity demand also rose as temperatures plunged across the border, leading to much higher prices. It said gas prices had risen from about US$3 per million BTUs to as much as US$600 in recent days.

Source: MEXICONOW

( https://mexico-now.com/electricity-and-natural-gas-outages-in-northern-mexico-are-causing-big-losses-for-manufacturers/ )

03Feb

Volkswagen Mexico starts production of Engine EA211 in Guanajuato

febrero 3, 2021 Jesus Aguirre

On January 29th, the Volkswagen plant in Mexico installed in Silao, Guanajuato, started the production of the EA211 engine, which will be integrated into the new TAOS, which is produced at the Puebla plant.

It was on November 12, 2020, when Volkswagen de México announced the investment of $233.5 million dollars to produce the new EA211 engine, which would begin at the Silao engine plant, Guanajuato from 2021, today it is already a fact.

‘Volkswagen in México has bravely faced the challenges of 2020, we implemented more than 130 prevention measures within our plants. We prepare the new production lines for the start-up of this new engine. Despite the pandemic, we were able to start with the production of the new vehicle in Puebla, the TAOS. We applaud everyone for this great success, ‘said Christopher Glover, Vice President of Production and Logistics at Volkswagen in México.

The Silao plant had to make various adjustments to carry out the production of the EA211 such as: installation of a new complete engine assembly line, as well as new production lines for Monoblock, crankshaft, cylinder heads and connecting rods.

‘This new engine is integrated into the new Taos, which is produced in Puebla. Our commitment is not limited to making investments, in technology we also focus on the environment. 100 percent of the production in Silao is from renewable sources, ‘said Steffen Reiche, President of the Executive Council of Volkswagen in México.

The manager highlighted that the start-up of production began as stipulated and with excellent quality, he also acknowledged that this result was thanks to the team of collaborators at Silao.

This new component is in addition to the production of the 2.0 liter EA888 Turbo engine, which Volkswagen in México uses for the vehicle assembly lines at the Volkswagen plants in Chattanooga (United States) and Puebla, as well as at Audi México, in San José Chiapas, Puebla.

‘This is a sign of the confidence that this world-class company has in Guanajuato. In addition, there will be a very positive impact for the entire supply sector that is made up for the automotive cluster and a greater economic impact will be reflected in the State, ‘said Diego Sinhue Rodríguez Vallejo, Governor of the State of Guanajuato.

Currently the Silao complex has a production capacity of a thousand engines per day, however with this new launch, it will increase its capacity by around 2,500 engines per day for the following year.

With this new investment, the complex will increase 75 percent of its installed capacity from what it had previously.

The investment of $233.5 million dollars for this new project is part of a historical total amount of the 855 million dollars located only in Guanajuato.

Present at the event were: Christopher Glover, Vice President of Production and Logistics of Volkswagen in México; Steffen Reiche, President of the Executive Council of Volkswagen in México; Diego Sinhue Rodríguez Vallejo, Governor of the State of Guanajuato; Mauricio Usabiaga Díaz Barriga, Secretary of Sustainable Economic Development of Guanajuato and José Antonio Trejo Valdepeña, Municipal President of Silao Guanajuato.

Source: Cluster Industrial

(https://www.clusterindustrial.com.mx/noticia/2991/arrancan-motores-volkswagen-de-mexico-comienza-a-producir-ea211-en-guanajuato)

28Ene

Querétaro starts 2021 with an active aerospace investment portfolio

enero 28, 2021 Jesus Aguirre

Even with the prevalence of the COVID-19 pandemic and the impact it has generated on the local, national and global economy, the state of Querétaro maintains an active list of private investment intentions.

With the beginning of the year, the entity has a portfolio of 27 investment projects that are expected to settle in the state, but whose decision has not yet been defined, according to records from the Ministry for Sustainable Development (Sedesu).

The projects represent an accumulated amount of US$1,536,094 and if they are completed they would mean the incorporation of 13,766 formal jobs, informed the head of Sedesu, Marco Antonio Del Prete Tercero.

Among the projects, 22 correspond to new investments and five to extensions of companies that already reside in the territory; they focus on the manufacturing sector and correspond to both national and international investments.

“The project portfolio is mainly manufacturing, followed by information technology; Mexico, the United States, Japan and Canada are the main commercial partners that are investing in the state,” declared the state minister.

Even though the aerospace industry is one of the sectors most affected by the pandemic, he added, investment projects related to this activity have been completed in the state.

In 2020, 27 investment projects for US$595,784 were completed in the entity, they meant the creation of 5,269 direct job and had to do mainly with the automotive industry (7), information technology (4), aeronautics (2), food and beverages (1), electronics (1), among other sectors (12).

The origin of the investments made the previous year was national capital, Japanese, Canadian, German, American, and so on. And they settled to a greater extent in the metropolitan municipalities of El Marqués (9) and Querétaro (8), in addition to Colón (5), Pedro Escobedo (1), Corregidora (1) and San Juan del Río (1); two more projects have not yet defined their location.

Around the expectations for this 2021, the promotion of investments will be one of the lines of work that the state government draws, together with the continuity of strategies such as linking supply and demand and strengthening the capacities of companies.

Source: Mexico Now

(https://mexico-now.com/queretaro-starts-2021-with-an-active-aerospace-investment-portfolio/)