Mexico Manufacturing Shines on North America

January 29, 2014

January 29th, 2014 — Cisco is the latest major U.S. company to move a portion of their advanced technology operations to Mexico. Mexican President Enrique Peña Nieto and Cisco CEO John Chambers announced from Davos, Switzerland that Cisco’s plans for manufacturing in Mexico would be increased.

During 2014, Cisco will invest up to $1.35 billion, both directly and indirectly, to expand the Cisco Networking Academy program, the Cisco Support Center and the expansion of manufacturing advanced technology products.

Mexico manufacturing has been growing since the NAFTA treaty 20 years ago. Companies around the world now routinely use their Mexico facilities as advanced technology centers. The products by these facilities are exported to more than 90 countries, making Mexico a growing force for advanced technology manufacturing.

It was recently announced that Mexico’s manufacturing sector growth is outperforming that of the United States and most other countries worldwide. The growth is expected to continue at this pace for the next three to five years. Most of this growth is a result of foreign investment.

The greatest concentration of manufacturing growth is in the automotive manufacturing region of Guanajuato and other “Bajio” region states, such as Aguascalientes and San Luis Potosi. Nissan will soon open its $1.2 billion expansion in the State of Aguascalientes. Both Honda and Mazda will open new assembly plants in Guanajuato, Mexico during 2014. Audi will begin construction on their new assembly plant in Puebla by the end of the year.

Other auto brands, such as BMW and Toyota, are currently considering new facilities to be built in the region. Perhaps the real story of central Mexico’s growth, however, can be found in the supply chain of the automotive industry. Over the next two years, up to 400 automotive suppliers are expected to expand into Mexico.

Automotive manufacturing is growing every year in Mexico. It is now the eighth largest producer of light vehicles, surpassing production by France and Spain. The country’s automotive sector now accounts for 4 percent of the Mexican national gross domestic product and 20 percent of manufacturing output. It is forecasted that production will reach 3.7 million units by 2015.

There are 18 production complexes for light vehicles in 11 Mexican states, performing activities including assembly, armoring, casting and stamping of vehicles and engines. There are now more than 48 car and light-truck models produced in Mexico. In 2011, 15 percent of the light vehicles were exported to Latin America, mainly Brazil, Argentina, Columbia and Chile. The European Union bought approximately 10 percent of the exported light vehicles in 2010.

There are also 11 commercial vehicle manufacturers and two engine manufacturers for heavier vehicles, the world’s sixth largest producer. In 2010, Mexico was counted as the leading provider of commercial vehicles in the U.S., having 85 percent of the import value in that segment, which exceeded that of Canada.

The future of Mexico manufacturing appears to be bright. Labor in Mexico is being prepared to provide a skilled workforce for any manufacturing business. Spending on infrastructure and power needs to supply plants are continuing to be planned by the Mexican government to make sure that the nation continues to be a part of the bright future of the economy of the Western Hemisphere.