Mexico could be the Latin American nation to benefit most from nearshoring.

René Alberto Mendoza, national president of the Mexican industry supply chain CAPIM, announced that in the coming months a rebound in Foreign Direct Investment (FDI) is expected as a result of nearshoring and the T-MEC.
With the cut as of February of this year, not including the announcement of Tesla’s investment in Nuevo Leon, he indicated that the approximate amount of FDI in the country reached 2.5 billion dollars.

Mainly with the announcements of BMW in San Luis Potosi, which is equivalent to 872 million dollars; Noah with 100 million dollars and Brembo with 36 million dollars, both in Nuevo Leon; while Nestle announced 41 million dollars in the State of Mexico and Bic in Coahuila with 70 million dollars.

“On February 23, the Bank of Mexico announced that 23% of manufacturing companies with more than 100 employees increased their production,” he stated.

Mendoza added that according to the Inter-American Bank (IDB), Mexico could be the Latin American nation that benefits the most from nearshoring, with a potential to obtain up to 35.3 billion dollars.

“It basically means 30% of Mexico’s auto parts production, so you can see what a great business opportunity this is,” he said.

He pointed out that new companies coming to Mexico require infrastructure, supply chain, labor, services and logistics.

And he estimated that in the next few years exports will increase by more than 78 billion dollars, almost 80% of current auto parts production.

He pointed out that in 2022, Mexico, the United States and Canada imported 93,702 billion dollars from what is called “third countries” in terms of the Agreement.

“That is what the Treaty previously allowed them, which was 40%, now with the increase to 75% of regional content, imports will have to be reduced by 25% for purchases made in Mexico, the United States and Canada,” explained the expert in supply. Mendoza pointed out that the new business opportunities in North America for the automotive sector will amount to more than 32,970 million dollars per year.

“That is 35% of what Mexico is currently exporting in auto parts,” said the CAPIM executive, who stressed that it is important to take advantage of new business opportunities through the supply chain.

Source: Somos Industria

The Mexican Aerospace Industry Federation indicated that the country is attractive to aircraft manufacturers because of its proven experience.
Luis Lizcano, executive president of the Mexican Federation of the Aerospace Industry (Femia), stated that 15 aircraft, airplane and helicopter parts manufacturers from the United States and Europe are looking to expand their operations in Mexico or come to the country to invest in production lines due to the nearshoring phenomenon.
“There are companies that are considering and are doing their due diligence and site selection study to stay in Mexico,” said the executive at the end of the presentation of the International Technology and Manufacturing Fair (FITMA), to be held from June 20 to 22, 2023 at the Citibanamex Center in Mexico City.

“Right now in the pipeline we should have more or less 12 or 15 projects of different sizes and colors, more or less, to stay in Mexico, coming from North America or Europe,” he said.

Source: Forbes Mexico 

At least 10 Mexican states are participating in the Hannover Messe in Germany from the Mexico Pavilion; states such as: Guanajuato, Jalisco, Puebla, Nuevo León, Aguascalientes, Querétaro, San Luis Potosí, Chihuahua, Tabasco and Tamaulipas.

In this 2023 edition, the fair’s theme is: “Innovation makes the difference”, and is focused on industrial technology and advanced manufacturing, showcasing the latest innovations and developments in areas such as automation, robotics, energy, mobility and information technology.

The objective is that through the Ministry of Foreign Affairs (SER), various alliances and meetings will be held between representatives of each state, with businessmen and authorities from Germany, in order to propose projects and attract new investments.

The international event, the most important industry showcase in the world, brings together world industry leaders to share knowledge and present the latest innovations in technology, automation, robotics and engineering systems.

The states were represented by the heads of the secretaries of economic development, mayors and governors, as well as some businessmen from these regions in order to make their presence felt with projects and investment opportunities for Mexico.

In the case of Jalisco, they presented the public policy called: Jalisco Tech Hub Act, to representatives of the Indonesian embassy, guest country at the Hannover Fair, and to senior officials of the German company Bosch.

On the agenda are meetings with companies developing software, virtual reality and artificial intelligence (AI) for remote access, control and support of computers and other technological devices.

They will also seek advice with the central agency responsible for promoting the economy and science in Germany and Latin America and with the Mexican Embassy in Germany to detect opportunities in the global scenario and increase productivity in companies.

The representation of Puebla is present for the second time in this fair and it is Olivia Salomón, from the Ministry of Economy who heads the delegation and will seek to promote the attraction of high-tech investments in the entity, as it has a strong workforce and supply in this sector.

They will also seek to promote opportunities in sectors such as the automotive and textile industries.

The state of Nuevo Leon will continue to take advantage of the benefits offered by nearshoring, as at least 72% of this activity is captured by the state, so the delegation met with the Mexican embassy in Germany, where they stressed that the work and investment projects in road infrastructure, customs and services, was a key piece for companies like Tesla and its network of suppliers to invest in the state.

For its part, Aguascalientes strengthens commercial ties and increases the attraction of projects of German origin, being this the third ally country in terms of foreign investment in the state for 804.5 million dollars and the generation of more than 6,000 permanent jobs.

Queretaro shows its industrial capabilities by having two meetings with German companies, one of them from the automotive sector, and the other is already installed in the state; however, there is interest in expanding its operations to train talent in the automotive sector. They will also have a meeting with the German university near Hannover in order to have academic exchange and training programs.

In addition to the confirmation of Bullsafe for 175 million pesos and the generation of 200 jobs.

San Luis Potosí is taking advantage of the opportunities that will open up after the BMW Group’s investment of 1.5 billion euros for an electric vehicle plant. The logistics project in this state was also discussed, with a view to becoming the best in Latin America, with an investment of 18 billion pesos in infrastructure.

Chihuahua sought to strengthen commercial ties with the participants and attract more projects from Germany, which ranks third in foreign investment in the state for 804.5 million dollars, in addition to the fact that the companies from this country that have settled here generate 6,000 permanent local jobs.

Tabasco strengthened opportunities in the energy sector, as this entity has a wide range of projects related to it, in addition to the specialization of the labor force of the entity.

Tamaulipas in this event led to connections and collaboration opportunities to boost economic development and investment in the state.

Source: Mexico Industry 

TOLUCA – ZF announced an investment of 39.6 million euros to build a manufacturing plant in Toluca, focused on the production of components for electric passenger vehicles.

The new plant will have high-capacity assembly lines for manufacturing, just-in-sequence front and rear axles and suspension modules for electric passenger vehicles.

The investment will be distributed through 2024, generating close to 150 new jobs over the next two years, while increasing the current plant footprint in the state by approximately 8,000 square meters.

“As the automotive industry evolves to become more electrified, automated and connected, our manufacturing capabilities are evolving as well, and we are very excited to establish this new state-of-the-art manufacturing facility in Toluca,” said Dale Chon, ZF Group Vice President of Automotive Chassis Technology for the North America Region.

Last year, the company invested more than 46 million euros to increase production of control arms, stabilizer bar arms and steering ball joints at another complex, also located in the city of Toluca.

ZF currently has 18 sites in the country, manufacturing chassis, steering, brakes and other components. In addition, Tier 1 opened a new Research and Development and Shared Services Center in Monterrey in 2022 and is building a plant at the same site to begin production of advanced electronics and safety devices in 2023.

Source: Mexico Now 

The auto parts manufacturing sector is the main recipient of nearshoring investments, with 37%; followed by the furniture industry, with 18%; machinery and tools, 15%; electronics and household appliances, with 15%; high tech, with 8%; pharmaceuticals, with 5%; and plastics, with 1%, according to information from the National Auto Parts Industry (INA).

It also informed that 40% of the total relocation of plants in Mexico corresponds to Chinese origin, 20% to the United States, 11% to Japan, 9% to Germany and 8% to South Korea, among others.

“Regarding the investment announcements made in our country, which amount to 15 billion dollars in the Mexican automotive sector alone, the manufacturing of batteries for electric cars, chassis, transmissions, automotive interiors, aluminum rims, mold and tooling manufacturing, electrical components, plastic injection parts, engine parts and line expansion,” said Alberto Bustamante, general director of INA.

Source: Mexico Industry

At least 20 Dutch companies are evaluating moving their operations from China to Mexico, mainly to the Bajío region, to secure their investments in the long term.

“With what is happening in China, companies want to leave. Many companies with Dutch capital are there and are now evaluating whether to move to Mexico or to other countries,” said Steven Büter, manager of the Business Office of the Embassy of the Kingdom of the Netherlands.

He informed that some of the factors for which companies are considering relocating are the relocation of production chains, the war between Russia and Ukraine, and the Treaty between Mexico, the United States and Canada (T-MEC).

These companies belong to the manufacturing, retail, agricultural, service and corporate office sectors. Querétaro, for example, is about to receive an investment of 1 billion pesos from the agri-food sector, which will generate 500 jobs. This brings the total number of Dutch capital companies installed in the state to 75, and investment is expected to continue to increase.

“The interest of the Netherlands in Querétaro continues to grow and even more with the war between Russia and Ukraine, they are analyzing where to locate their investment so that it is safe in the long term and they see Mexico as a good option, a reliable partner that gives results to Dutch companies,” he said.

Source: Mexico Industry 

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