08Dic

Marelli North Carolina USA is moving operations to Mexico

diciembre 8, 2020 Jesus Aguirre

A manufacturer with a long history in Lee County is closing its Sanford plant and moving the operation to Mexico, a move that means more than 300 local layoffs.

Marelli North Carolina USA, a subsidiary of Italian automotive part maker Marelli, is permanently closing the site, ceasing all production in the second half of 2021. In a layoff notice filed with state officials last week, the company said the closure means job losses for 329 employees.

The plant is located at 2101 Nash Street, southeast of downtown Sanford.

“The automotive industry is facing a number of prolonged challenges,” the company’s general counsel, Michael Monday, said in the WARN notice provided to the North Carolina Department of Commerce. “Vehicle volumes are trending downward, exacerbated by Covid-19 while the introduction of new technology from non-traditional suppliers is forcing Tier 1s to review their operations to increase competitiveness.”

To compete, the firm needs to stay ahead of those trends, Monday said in the notice.

“As part of Marelli’s ongoing strategy to strengthen its market position, we will relocate our US-based powertrain manufacturing operations to Saltillo, Mexico,” he adds. “This move will increase efficiency, enabling the company to become more cost competitive while meeting customer demand.”

The plant has been an institution in Sanford for more than 40 years. Inaugurated in 1976, the plant produces automotive powertrain technologies.

Over the decades, the plant evolved from producing carburetors to modern powertrain systems, including intake manifolds and engine control systems for automobiles, motorcycles, power sports and industrial engines.

Marelli didn’t immediately return a request to comment on the situation.

Source: The Business Journals

(https://www.bizjournals.com/triangle/news/2020/12/07/marelli-sanford-close-layoffs-auto-parts-jobs.html)

01Dic

Overview of the Automotive Industry in Mexico

diciembre 1, 2020 Jesus Aguirre

The automotive industry in Mexico began in 1921, with the arrival of the first Buick assembly plant; continuing with Ford Motor Company in 1925 and General Motors in 1935. The industry has grown exponentially, both in sales, export, and production of vehicles and auto parts, expanding the manufacturing in Mexico business.

Nowadays the automotive industry is a key sector for the Mexican economy; it represents 3% of Mexico’s GDP and a 16% participation of the manufacturing GDP. It is currently the 7th world producer of light vehicles, the 3rd largest exporter of vehicles, and the 4^th largest exporter of automotive parts; the main destination countries USA, Canada, and Germany.

Mexico is one of the main countries with the highest investment in this sector. Unlike other countries with CKD production (Vehicles completely assembled from components supplied by another plant), production in Mexico is 99% CBU (completely built-up) which means, finished products ready to sell in the domestic market or for export without the need to require assembly after finished.

Main reasons for automotive companies manufacturing in Mexico

Mexico’s 12 free trade agreements with 46 countries. USMCA plays an important role within this sector.
Mexico counts with an extensive and developed network of Tier 1, Tier 2, and Tier 3 suppliers as a result of the 30 automotive OEM plants located in Mexico. Furthermore, 24 states of Mexico have the presence of automotive supplier companies.
Competitive and qualified labor force.
Mexico has a great strategic geographic location. Its short distance from countries with high car sales, such as the United States, is an important consideration for companies manufacturing in Mexico.

Main facts about light vehicle production in Mexico

In Mexico, there are 22 companies affiliated with the Mexican Association of Automotive Industry (AMIA), which had a total production of light vehicles from January to October 2020 according to 2,465,439 vehicles. As it can be observed in the following graph General Motors, Nissan, FCA Mexico, and Volkswagen count with the highest production.

It is important to mention that 2020 mainly due to its current situation of COVID-19, has recorded a lower vehicle production compared to 2019, a year in which there was a production from January to October of 3,288,589. According to Deloitte, in April and May 2020 the industry reported its lower level of production in history. And according to Statista it has been projected that the production of light vehicles in Mexico will decrease by 23.7% in 2020.

Out of the total vehicles produce from January to October 2020, over 85% are exported, with a total of 2,119,022 light vehicles exported within this period. 80% of these exports were headed to the United States, followed by Canada with 6% and Germany with 5.8% of total exports.

The main companies that led the above-mentioned exports are being General Motors, FCA México, Nissan, and Volkswagen, as can be seen in the graph below. While the brands with the least export were premium brands such as BMW Group and Mercedes-Benz. The export of vehicles in Mexico represents 17% of total exports.

As above mentioned, due to the current pandemic situation Mexico’s automotive industry has been affected and production of vehicles and auto parts has decreased. According to Deloitte, with information from HIS Markit, it is expected that the level of production in Mexico in 2019 and sales is reached again in 2024, due to its sales reduction in the USA and other countries.

Are you thinking of settling in Mexico? Mexcentrix can help you. We assure you a successful and timely start of operations while providing strategic guidance in order to help your company reach its goals.

25Nov

Ikea plans to open its Mexico City store early next year

noviembre 25, 2020 Jesus Aguirre

The first brick-and-mortar Ikea store in Mexico is scheduled to open in the first quarter of 2021 in Mexico City, although the company’s recently opened online site is already busy from unexpected demand.

“We are excited to open Ikea in Mexico only three years after the decision was made to enter the Mexican market, especially under the tough Covid-19 conditions in Mexico City,” said Ikea Mexico retail country manager Malcolm Pruys in a press release. “It took significant collaboration and support across the Ikano Group and the retail business to make this possible. We now look forward to opening the first store early next year,”

Ikano Group is a corporation that operates franchised Ikea stores in Singapore, Malaysia, and Thailand. A conglomerate with businesses across several industry sectors, it announced in August that it plans to build a 100,000-square-meter manufacturing plant in Ramos Arispe, Coahuila, for mattresses and sofas to be sold in North American Ikea stores.

Ikea store manager Annie Chandler told the newspaper El Financiero that the new physical store will be an anchor in the Encuentro Oceania mall, currently under construction in a former industrial zone in the Moctezuma Section 2 neighborhood in Venustiano Carranza.

Originally, the brick-and-mortar store was meant to open before the online one, but Covid-related issues forced the company to open the online site first. The website opened with a soft launch with no publicity as the company wanted to get to know the Mexican market and work out long-term details like the kind of vehicles it would use in its delivery fleet.

But customers found the site anyway. Within two days, the company was overwhelmed with orders from all over Mexico.

“We launched in a very discreet manner because we hoped to grow slowly,” Pruys told Forbes México. “There was a 1000% more demand than predicted, for which we were not prepared.”

The online site is currently dealing with the unexpected avalanche of orders with only about 150 customer service employees. The website warns customers that deliveries could be delayed up to 15 days.

Meanwhile, plans proceed slowly but surely to install the brick-and-mortar store in the Encuentro Oceania mall. The shopping center, which will have 85,000 square meters of commercial space available, will contain green spaces and will involve the renovation of the Romero Rubio Metro station and sidewalks in the neighborhood, said Galo Rosello, legal director for Pulso Immobiliario, the development company building the over 500-million-peso (US $25-million) project.

According to the Ikea website, the brick-and-mortar store is expected to create around 350 direct jobs and more than 1,000 indirect ones.

Mayor Claudia Sheinbaum recently announced that the mall will also host one of the 300 Pilares community centers she plans to open by 2021 to revitalize community life and reduce crime.

Source: Mexico News Daily

(https://mexiconewsdaily.com/news/ikea-plans-to-open-its-mexico-city-store-early-next-year/)

24Nov

Jesús Octaviano Aguirre, nuevo presidente de index San Luis Potosí

noviembre 24, 2020 Jesus Aguirre

La Asociación de empresas Manufactureras de Exportación de San Luis Potosí A.C. (index San Luis Potosí) será representada durante los próximos dos años por el nuevo presidente Jesús Octaviano Aguirre, quien seguirá trabajando para impulsar a las compañías maquiladoras e industria manufacturera y servicios de exportación de la entidad.

“Han hecho muy buen trabajo y yo vengo a tomar un gran reto, lo que vengo a aportar es la experiencia y conocimiento que tengo en el sector, ser un enlace y representar al gremio, así como, las relaciones que ha logrado a nivel industria, gobierno, tanto local, como nacional e internacional”, compartió.

Actualmente, index San Luis Potosí está conformada por más de 30 empresas manufactureras de exportación de talla mundial y cuentan con cerca de 15 alianzas estratégicas con diferentes instituciones y empresas de servicio del sector manufacturero de exportación, así como, convenios de colaboración con gobierno.

“Identificaremos entre todo el equipo cuáles son las oportunidades que tenemos y nos enfocaremos en eso, la intención no es querer hacer algo que cueste mucho esfuerzo y tenga poco resultado, realmente es ser objetivos en lo que se puede lograr, con sus limitaciones y panoramas mundiales, no es el momento más fácil para crecer, pero la asociación tiene oportunidad de hacerlo ante las adversidades, sobre todo, porque somos un porta voz del sector”, aseveró el presidente.

Como parte de los impulsos al sector IMMEX en la entidad, el presidente señaló que es de suma importancia la actualización constante y eventos de capacitación, mismos que han destacado a index San Luis Potosí como el principal proveedor especializado en el programa.

“Lo que queremos primordialmente es crecer el número de socios en un 15% en los próximos dos años y también aumentar los servicios que damos como seminarios, capacitación y entrenamiento”, dijo el ingeniero.

Asimismo, darán seguimiento a proyectos y programas que faciliten la actividad de las empresas y a los acuerdos que se promueven con el propósito de encontrar posibles soluciones a problemas específicos de los socios.

jesus-octaviano-aguirre-nuevo-presidente-de-index-san-luis-potosi-4565

Fuente: México Industry

(https://mexicoindustry.com/noticia/jesus-octaviano-aguirre-nuevo-presidente-de-index-san-luis-potosi)

20Nov

How to incorporate a company in Mexico from abroad without problems

noviembre 20, 2020 Jesus Aguirre

Start a business in Mexico. Incorporating a company is simple with a shelter company.

Incorporating a company from abroad is a complicated task if you do not count with personnel in Mexico with know-how and experience in this process and who can submit all the paperwork required before the authorities. As each country count with different processes and regulations for company incorporation, it is important to learn beforehand about the process to know what to expect.

Mexico allows foreigners to incorporate and operate companies in Mexico without limitation in most cases, some activities in Mexico are restricted for foreigners. The main steps for incorporating a company in Mexico are:

Determining the type of entity. The 3 most frequently used corporations in Mexico are:
Sociedad Anónima (“S.A.”).
Sociedad de Responsabilidad Limitada (“S. de R.L.”)
Sociedad Anónima Promotora de Inversión (“S.A.P.I.”)

Contacting an expert is always important to receive advice on which type of entity is best for your company, in some cases even incorporating a company is not needed for establishing operations in Mexico, therefore it is always important to contact the experts to receive advice on this topic.

Outsourcing in Mexico - Mexcentrix - Shelter Company

Following on determining the type of entity, the company must determine the corporate name of the new entity, which must be authorized by the Ministry of Economy.
Once the name of the new entity is authorized the company shall proceed with the drafting of the bylaws, which must include among others:
- Name of the company and its address.
- Object of the company: You should include the corporate purpose and the main activities of your business in detail, and every other activity related to the business that you will carry on.
- Name and data about shareholders/ partners, including the number and percentage of ownership. Under Mexican law, all three abovementioned entities must have at least a minimum of two shareholders/ partners.
  
  The data that will be requested for the shareholders/ partners is the following:
  - Date and place of birth
  - Nationality
  - Address
  - Main occupation
  - Age
  - RFC and CURP (if applicable)
- The partners must appoint the corporation’s management (either a Board of Managers or a Sole Manager).
- Name of the Statutory Auditor (Comisario)
- Rules on profit distribution
- Powers of attorney granted to individuals: When the new company has foreign shareholders/ partners it is important and recommended to appoint someone in Mexico to appear before the public notary and perform other administrative tasks before the authorities. If the power of attorney is granted to a foreigner, it must be apostilled/ legalized in the country of origin. Afterward, it must be translated to Spanish by an official translator and notarized in Mexico.
- Characteristics and organization of annual partners/ shareholders meeting.
- A social capital and nationality chapter must be included when the shareholders/ partners are foreigners.
- Causes and procedure for dissolution or liquidation.

Bylaws signature

The signature of the by laws must take place in Mexico, in the State where the company has been incorporated. Incorporating shareholders must appear personally or represented by an attorney-in-fact before the Notary to incorporate the company.

The new company must have a physical address in Mexico for incorporations purposes which can be subsequently changed.

Additionally, if it’s the case a copy of organizational documents duly notarized and certified by Apostille or legalized, must be provided.

Registration Before Authorities
Once incorporated, the first step is to register the new company before the Public Registry of Commerce (Registro Público de Comercio).
Afterwards the company must be registered in the Tax Administration Service (SAT) in order to obtain its tax id (RFC).
If the company counts with foreign shareholders/partners shall be registered before the National Registry of Foreign Investments (RNIE)
As most companies hire employees they should register before before the Mexican Institute of Social Security (IMSS) and the Institute of National Housing Fund for Workers (INFONAVIT).

Depending on the business activities of the company it may need to obtain additional registrations before different government agencies.

At Mexcentrix, depending on the nature of your company, we can get your company running in as few as 30 business days with a cost-effective and flexible shared business services plan.

Do you still have doubts? Feel free to contact us, we have helped several foreign companies through out the incorporation process in Mexico to start operations.

30Oct

Amazon announces $100 million logistics investment in Mexico

octubre 30, 2020 Jesus Aguirre

Amazon.com Inc AMZN.O said on Thursday it has invested $100 million in opening new warehouses in Mexico, including its first shipping centers outside the populous capital area, in a bid to offer faster deliveries.

The new sites include two so-called fulfillment centers – one near the northern city of Monterrey and another near the central city of Guadalajara – as well as a support building in the State of Mexico, just outside Mexico City.

Amazon also opened 12 delivery stations, bringing its total to 27 across the country, it said.

“The construction of a solid infrastructure network allows the company to stay closer than ever to clients, and thanks to that, it’s possible to offer fast deliveries,” Amazon said in a statement.

Monterrey and Guadalajara are the two biggest metropolitan zones of the country after the sprawling Mexico City area.

The new facilities represent 69,000 square meters (742,710 sq ft) altogether and create 1,500 direct and indirect jobs, Amazon said.

Amazon in total now runs five fulfillment centers, two support buildings and two classification centers in Mexico, where it launched its marketplace in 2015.

Enrique Alfaro, the governor of Jalisco state that is home to Guadalajara, said the new local warehouse would help more small and medium sized businesses ship their products faster and at lower costs.

Amazon is also striving to make inroads in Brazil, where it recently opened its fifth and biggest fulfillment center in the country, with 100,000 square meters (1,076,391 sq ft).

In both countries, which are the biggest economies in Latin America, Amazon is vying with local rivals for shopper loyalty, despite its ranking as the world’s biggest online retailer.

Source: Reuters

(https://es.reuters.com/article/us-amazon-mexico/amazon-announces-100-million-logistics-investment-in-mexico-idUSKBN2770G2)

30Oct

Siemens to invest US$14 million in Mexico

octubre 30, 2020 Jesus Aguirre

The innovation firm Siemens will invest US$14 million in Mexico between 2020 and 2021, mainly focused on innovation and development, Alejandro Preinfalk, president and CEO of the firm in Mexico, Central America and the Caribbean said in a statement.

Preinfalk stressed that at least a third of said investment will be allocated for research, since Mexico has important programs regarding motors and electrical systems.

“We are also working on automation and digitization systems, as well as manufacturing systems in the cloud,” he said.

For his part, Marco Cosío, vice president of Siemens’ Smart Infrestructure division for Mexico, Central America and the Caribbean, stressed that they will also expand their production capacity in Mexico, adding new product assembly lines that are made outside North America.

“It is to increase the capacity in switches, also to have more digital lines thinking of bringing products that are made abroad (…), for that reason we are expanding our hiring of personnel,” said the manager, noting that 1,500 people have already added in four months.

Cosío added that by 2030 they will be neutral in carbon emissions worldwide; “In Mexico these measures are already being taken, one of them is energy efficiency.”

Source: MexicoNow, El Financiero

(https://mexico-now.com/siemens-will-invest-us14-million-in-mexico/)

30Oct

Manufacturing in Mexico vs China

octubre 30, 2020 Jesus Aguirre

Choosing Between Mexico vs China for Manufacturing

The manufacturing industry has been growing exponentially, therefore, lately, companies within this sector seek to move or expand their production to other locations, looking for a more cost-effective location, taking into account, among others: labor costs, supplier network, logistics. In order to find the location that best supports their growth strategy. Let’s compare the manufacturing in Mexico vs China.

China and Mexico are considered low-cost manufacturing countries, therefore they are most of the time considered as an option for nearshoring or offshoring. So which country could be the best option for your company to settle in?

In this document, we will focus highly on the best option for US manufacturing companies. According to a PwC study, currently, US manufacturers have been considering transferring their production to Mexico, moving it from China, as they can reduce operating costs, on average, by an additional 23% (PWC, 2020).

According to this same study, PWC taking into account the operating cost of a hypothetical product, estimated producing it in China was 27% less expensive than producing in the US, and as in Mexico logistics and tariff and fees costs are much lower companies could save the additional 23% before mentioned.

Mexico vs China - Manufacturing Operations Cost

Main factors that could impact the operating costs in manufacturing in Mexico vs China.

Mexico vs China: Labor cost

Within the most important factors taken into account when performing analysis for expansion of operations is the labor cost. One of the main competitive advantages of Mexico and China is their low labor cost. Which according to Statista the average manufacturing labor cost per hour in China is 6.5 USD per hour with an increase of 13% from the previous year. While in Mexico it is 4.82 USD per hour, with an increase of only 4% from 2019 (Statista, 2020). Which shows a trend of a higher increase in wages in China compared to Mexico.

The above mentioned year per year increase has also been impacted by the MXN – USD exchange rate, the devaluation of the MXN peso against the USD in the last years have reduced the effective labor rate inflation.

It is important to take into account that the manufacturing labor costs for both countries are just an average as a means of providing insight, as labor costs will vary per region, workforce skills, and level requirements, among others.

Furthermore, the minimum wage in Mexico is $123.22 MXN per day in almost all regions of the country, except in the Northern Border which is $185.56 MXN per day with an average minimum wage per month of $220.9 USD compared to $368.5 USD in China.

Lastly, Mexico is considered to have greater productivity with 48 hours work week compared to a generally 40-hour workweek, in which after this overtime must be paid.

Mexico vs China: Tariffs and taxes

Due to the US-China trade war, the US has imposed tariffs on more than $360 billion of Chinese goods. Although this year a tariff agreement was signed, and the U.S. agreed to lower tariffs on $120 billion of Chinese goods to 7.5%, tariffs are still higher than in Mexico, and it is also important to take into account that some of the most challenging issues weren’t solved.

On the other side, the United States- Mexico- Canada Agreement (USMCA), allows goods to be exported and imported between the US and Mexico free of tariffs under specific conditions.

Furthermore, Mexico counts with foreign trade incentive programs such as IMMEX, VAT and IEPS Certification, PROSEC, Rule 8^th. One of the most common is the IMMEX Program which is an instrument that allows the temporary import of goods that are used in an industrial process or service, to produce, transform or repair foreign goods imported temporarily for subsequent export, without paying VAT and countervailing duties, and deferring or not paying General Import Tax.

Mexico vs China: Logistics

One of the most known competitive advantages is Mexico’s favorable geographic location, due to its proximity to the United States and its access to the Atlantic and Pacific. In regard to goods being shipped to the United States, according to Mexico Business, Mexico counts with an 80% logistics time advantage due to its proximity to the U.S., and 75% logistics cost advantage over China. Thus making Mexico a better option when deciding manufacturing in Mexico vs China.

Mexico vs China: Supply Chain

All the mentioned factors affect the supply chain cost structure. Therefore, it is important to take into account when analyzing supply chain sourcing. According to the before-mentioned PwC study, through an analysis taking into account labor content and Product Value density, based on $450 billion of manufactured goods imported from China to the US in 2019, 20% of those goods could achieve cost efficiencies if nearshore to Mexico (18%). (PWC, 2020).

Comparison table Mexico vs China

As a summary from the above-mentioned discussed factors, pleased find below a comparison table of manufacturing in Mexico vs China:

Are you thinking of moving or installing your manufacturing to Mexico?

Mexcentrix offers high-value, cost-effective and flexible shelter services and outsourcing that will get your operation in Mexico highly functional at a lower cost and successfully producing within a shorter timeframe than you can achieve on your own—all while significantly reducing the risks associated with a start-up. Contact Mexcentrix for a feasibility study or cost estimation today!

23Oct

FreightCar America to move production to new factory in Mexico

octubre 23, 2020 Jesus Aguirre

Rail equipment manufacturer FreightCar America will shift all manufacturing to Mexico as part of moves announced Monday. The company has completed purchase of its partner’s 50% interest and now is sole owner of its new Castanos, Mexico, plant where it all railcar manufacturing will be based by February 2021. The company will close two U.S. plants. It secured a $40 million loan with a global investment firm, and will add a member of that firm as one of two new members of its board of directors. The other new member will be Jesus Gil, general manager of the Castanos facility and a veteran of the railcar industry who has managed operations for two of FreightCar America’s primary competitors. It will hold an online special meeting of stockholders to complete the loan funding by late November. “We exit a prolonged period when our business was hampered by high costs, sustained losses and a generally challenged competitive position,” company president and CEO Jim Meyer said in a press releas “We now enter a new chapter, where our business will be supported by a single new production facility designed specific to our needs, a highly experienced and cost competitive workforce, and a significantly enhanced competitive profile that includes a $25 million reduction in annual fixed costs achieved through the closures of our two facilities in Cherokee, Ala. (‘Shoals’), and Roanoke, Va

22Oct

Motherson Sumi Systems signs pact to acquire Bombardier’s Mexico-based electrical wiring biz for US $10 mn

octubre 22, 2020 Jesus Aguirre

Auto component major Motherson Sumi Systems on Tuesday has signed an agreement to acquire the activities of Electrical Wiring Interconnection Systems (EWIS) performed at Bombardier Transportation’s manufacturing site in Huehuetoca, Mexico (BT Ensambles México).

MRS is part of the Motherson Rolling Stock Division which designs and manufactures electrical cabinets, power packs and electrical distribution systems for leading rolling stock manufacturers.

The transaction includes the transfer of assets, employees and inventories, on a debt-free and cash-free basis and is valued at around US $ 10 million approx, the auto component maker said in a release. The transaction is subject to customary closing events and expected to complete in Q4 FY20-21, it added.

Vivek Chaand Sehgal, Chairman, MSSL said, “Our focus is always on adding value to our customers’ supply chain and catering to their requirements. This is another step forward in that direction. We are further strengthening the relationship with Bombardier under the global partnership agreement and our collective strength will position us as a preferred solutions provider to our customers in the rolling stock business.”

“The acquisition of the business will enable us to be a truly global partner to our customers as we get the opportunity to serve them in the North American market”, said Andre Gerstner, President, Rolling Stock Division, PKC Group.

According to Jim Vounassis, Chief Operating Officer, Bombardier Transportation “Bombardier Transportation aims to enhance its adaptability and agility to changing market conditions, in order to continue to increase its competitiveness and improve its global footprint. This divestiture is in alignment with our global transformation strategy of reducing the activities to our core- and integrating competencies.”

Source: ET Auto.com

(https://auto.economictimes.indiatimes.com/news/auto-components/motherson-sumi-systems-signs-pact-to-acquire-bombardiers-mexico-based-electrical-wiring-biz-for-us-10-mn/78773246)