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Content was last updated for relevancy and accuracy on January 7, 2020.
Manufacturing in Mexico continues to grow across most industries, both in size and sophistication and is the 12th largest exporter in the world.
Despite the changes and uncertainty of NAFTA being re-negotiated as the new United States-Mexico-Canada Agreement (USMCA), the major manufacturing industries in Mexico are expected to see continual growth. Respective governments have streamlined certain regulations which allow businesses to establish operations in Mexico with little difficulty. Furthermore, preferential tariffs and free trade agreements have forged comparable production costs with an efficient infrastructure for transporting goods with little to no tariffs.
Mexico’s large, diversified labor pool continues to grow across most manufacturing industries, both in size and sophistication. Mexico’s large, diversified labor pool and its proximity to the United States, coupled with wage and transportation inflation in China, is driving the largest Mexico manufacturing expansion over the past twenty years. There is now a highly skilled, and educated workforce that can excel in all the major industries in Mexico.
Although many industries are moving their manufacturing to Mexico, the most prominent industries in Mexico are the automotive, aviation and aerospace, medical device, apparel and textile, and consumer products industries.
The automotive manufacturing industry in Mexico has played a crucial role in the economy over the past decade, attracting some of the world’s largest assemblers like Chrysler Fiat, Ford, GM, and Toyota to name a few. Mexico is also South America’s largest automotive manufacturer with an annual production of close to 4,000,000 units. It is estimated that 82% of these units are exported.
At the most recent Automotive Logistics Mexico conference, the executive president of the Asociación Mexicana de la Industria Automotriz (AMIA), Eduardo Solis, reported that the automotive manufacturing industry had been, “growing significantly” as it now represents 20.2% of the GDP, second to the food industry at 20.7%. Furthermore, Solis claimed that net revenue for the Mexican automotive industry is set to surpass $77m.
In the late sixties, the Mexican Government’s Maquiladora Export Program (now known as the IMMEX Program) began laying the foundation for this industry. It is mostly responsible for expanding industrialization, employment opportunities and most importantly, allowing the importation of goods to be assembled and exported without import duties or taxes. Aerospace companies have taken advantage of these manufacturing opportunities in Mexico.
The aerospace manufacturing industry in Mexico is a top performing sector and an excellent example of overall growth according to Export.gov:
A ProMexico 2018 report has revealed that the medical device manufacturing industry in Mexico continues to experience favorable growth. Over the past few decades, some 641 medical device manufacturers have leveraged nearshore operations along the U.S./Mexico border regions, which is responsible for adding around 156,831 to the workforce and over $9.05 billion annually in exports.
Factors that contribute to this industry’s growth include:
As Mexico’s fourth-largest manufacturing industry, the apparel/clothing, and textile manufacturing, accounts for 3.7% (1.3% in textiles and 2.4% in apparel) of Mexico’s manufacturing GDP.
Learn more about Mexico’s textile industry and their clothing manufacturing industry.
Many consumer products are being manufactured in Mexico now as well. As manufacturing costs continue to rise in China, manufacturers are moving their operations to Mexico for a variety of cost-efficient reasons. This also includes electronics manufacturing. Consumer product manufacturers have also seen the value in establishing shelter corporations and leveraging the IMMEX Program (formerly known as the Maquiladora Program) which allows for duty-free importation of raw materials.
Gone is the day of only simple assembly and low-tech manufacturing in Mexico. Now the country is attracting large, multinational manufacturers from virtually every industry. Industries in Mexico now vary across all sectors of business. In fact, Tijuana, Mexico now claims the largest concentration of medical device manufacturers in all of North America, and Mexico is now the fourth largest producers of automobiles in the world.
Regardless of your company’s size, industry or level of sophistication, NAPS can help determine if manufacturing in Mexico is a good fit for your organization through the development of a detailed financial, operational and logistical feasibility study.
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