GENERAL SITUATION IN MEXICO
Weekly Review I August 7 2024
RELEVANT NEWS INDUSTRIES
AUTOMOTIVE
Mexico has become the third-largest automotive exporter globally, with exports reaching $158 billion in the past year, a 22.5% increase that surpasses both Japan and the United States. The European Union leads with $831 billion, followed by China at $170 billion, while Japan and the U.S. are tied at $157 billion. This growth includes exports of light and heavy vehicles and automotive parts. The industry is expected to evolve rapidly with advancements in electric and hybrid vehicles, autonomous technology, and new business models. Over the past decade, Mexico’s automotive exports grew by 90.4%, while China’s surged by 270%. Other notable exporters in 2023 included South Korea ($94 billion), Canada ($63 billion), and the UK ($51 billion). The global automotive industry has faced challenges due to the COVID-19 pandemic, semiconductor shortages, supply chain disruptions, a UAW strike in the U.S., and geopolitical issues.
SOURCE: MEXICO BUSINESS NEWS
The director of the AMIA announced that in 2024, the automotive industry in Mexico is expected to produce between 3.9 and 4 million vehicles, surpassing the 3.8 million units made in 2018. This June, the manufacturing of Toyota’s hybrid Tacoma began, aiming to produce 150,000 electric vehicles in the country this year. June also saw a 3.3% increase in exports, with 295,742 vehicles shipped abroad, contributing to a total of 1.7 million vehicles exported in the first half of the year, marking a 10.7% growth compared to the previous year. Currently, automotive plants are operating at 95% capacity. Overall, the Mexican automotive industry is showing strong performance in 2024, with growth in production, exports, and domestic sales, particularly in the SUV and pickup segments, while facing challenges in adapting to electric vehicle demand and maintaining global competitiveness.
SOURCE: MEXICO INDUSTRY
RELEVANT NEWS INDUSTRIES
Ford Motor Company has announced the appointment of Lucien Pinto as the new President and CEO for Ford in Mexico, Puerto Rico, Central America, and the Caribbean, effective October 1, 2024. Pinto, who joined Ford in 2000, has played a crucial role in improving service excellence and repositioning the brand in the market. He began his career in manufacturing at the Ford plant in Valencia, Venezuela, and has held various important roles, including in Manufacturing Planning and Logistics and Production. Most recently, he served as the Director of Customer Service for the region and led the Marketing and Sales team in Mexico, demonstrating strong growth and talent attraction. Pinto expressed pride in leading a company with nearly 100 years of history in Mexico.
SOURCE: MEXICO INDUSTRY
AEROSPACE
Boeing has appointed Kelly Ortberg as its new President and CEO, effective August 8, succeeding Dave Calhoun amid significant financial losses and safety concerns. Ortberg, a seasoned aerospace executive with over three decades of experience, faces challenges as Boeing reported a core operating loss of $1.4 billion in Q2, driven by ongoing safety issues, including a recent incident involving a 737 MAX 9, and production restrictions imposed by the FAA. Additionally, the defense sector reported a $913 million loss due to cost overruns, prompting a shift away from fixed-price contracts. Ortberg must also navigate potential labor disputes as negotiations continue with approximately 36,000 workers represented by the Machinists union.
SOURCE: MEXICO BUSINESS NEWS
NEWS BY STATE
BAJA CALIFORNIA
Over 100 business leaders from the Baja California Aerospace Cluster attended the Verano Aero event to strengthen commercial ties and promote industry growth. The event highlighted the aerospace sector’s importance as a key job creator and its adaptability to technological trends, with over 125 certified companies and exports exceeding $3 billion in 2022, generating around 40,000 jobs. Attendees included educators and regional leaders, and the event featured recreational activities that fostered community and collaboration, while also encouraging the exchange of ideas and the formation of strategic alliances to support the continuous development of the aerospace industry, crucial for international manufacturing.
SOURCE: MEXICO INDUSTRY
SONORA
Sonora has emerged as a key player in Mexico’s electromobility market, ranking second among northern border states for electric vehicle (EV) sales in the first quarter of 2024, with 79 units sold. Nuevo Leon led with 252 EVs, while Coahuila, Baja California, Tamaulipas, and Chihuahua sold 71, 69, 64, and 56 EVs, respectively. Sonora’s EV sales have dramatically increased from just two in 2021 and one in 2020. Hybrid vehicles remain the most popular, with 332 sold in Q1 2024 alone. Since 2020, Sonora’s dealerships have sold a total of 3,393 hybrids, 278 EVs, and 146 plug-in hybrids. Chinese brands dominate the market, with 31.3% of dealerships being Chinese and 59.37% of all automotive brands sold in Sonora being Asian. Sales in Hermosillo and Ciudad Obregon rose by 7.4% in the first five months of 2024. EV and hybrid sales fluctuated in recent months, with a notable increase in hybrid vehicle sales in June.
SOURCE: MEXICO BUSINESS NEWS
NEWS BY STATE
NUEVO LEON
KIA’s plant in Pesqueria, Nuevo Leon, has achieved a significant milestone by producing 2 million vehicles in just 8 years and 3 months since its operations began with the first Forte in May 2016. The company celebrated this accomplishment by unveiling its new K4 model, with the event attended by the Governor of Nuevo Leon, Samuel Alejandro Garcia Sepulveda, who emphasized the importance of this achievement for both KIA and the state. In recognition of reaching this production milestone, KIA received the JD Power Award. Sean Yoon, president of KIA North America, highlighted the plant’s strategic importance and its reputation for quality in the global automotive industry. KIA, headquartered in Seoul, South Korea, started operations in Mexico in 2015 and currently employs 2,400 people, further strengthening its presence in the Mexican automotive market with 97 dealerships nationwide.
SOURCE: MEXICO INDUSTRY
NEWS BY STATE
GUANAJUATO
An investment of 2.5 billion pesos has been made for the first phase of the Bajio Logistics Gateway, which will be located in Celaya, Guanajuato. This will be the second dry port in Guanajuato, covering 51 hectares next to the Honda assembly plant. The partnership involves the government of Guanajuato, Guanajuato Puerto Interior (GPI), and Spanish company Grupo Azvi, alongside railway companies Canadian Pacific Kansas City (CPKC) and Ferromex. The project aims to establish the most important industrial logistics node in Mexico, with 23% of the country’s rail cargo currently passing through Celaya. Governor Diego Sinhue Rodriguez Vallejo stated that the project will not only boost the economy but also attract investment and improve transportation by reducing train traffic in the city. He also mentioned the potential for a light rail mobility project, pending further study.
SOURCE: MEXICO INDUSTRY
QUERETARO
The aerospace industry in Queretaro is focused on enhancing the development of small and medium-sized enterprises (SMEs) through the Queretaro Aerocluster. Jose Antonio Velazquez, the cluster’s director, emphasized strategies aimed at helping SMEs grow and become suppliers in both national and international markets. The cluster prioritizes support for these businesses, including access to financing and regulatory training, which are essential for strengthening their position in the industry. Velazquez also noted the importance of developing new business divisions and entering more markets. One of the cluster’s key initiatives is to connect larger companies with startups and SMEs to build a stronger aerospace industrial framework.
SOURCE: EL ECONOMISTA
NEWS BY STATE
SAN LUIS POTOSI
Governor Ricardo Gallardo Cardona of San Luis Potosi visited Mission, Texas, where he emphasized that the expansion of the Anzalduas-Reynosa International Bridge will significantly benefit San Luis Potosi in terms of commerce, economic development, attracting foreign companies, and promoting tourism. Speaking alongside Mission Mayor Norie Gonzalez Garza and McAllen Mayor Javier Villalobos, as well as U.S. officials and local government members, Gallardo highlighted that the project will enhance national and state connectivity, offering families in San Luis Potosi faster access to international markets and improved logistics. He noted that the expansion will reduce transportation costs, attract foreign investment, enhance industrial competitiveness, and facilitate U.S. tourist visits, thereby boosting the local economy. The governor also mentioned that improved infrastructure would strengthen bilateral relations between Mexico and the U.S., fostering better commercial and cultural ties. Local business representatives have expressed enthusiasm for exploring new collaboration opportunities to optimize logistical and commercial operations in the region.
SOURCE: REPORTE INDIGO
NEWS BY STATE
CDMX
The Undersecretary of Foreign Trade, Alejandro Encinas Najera, and the head of the Secretariat of Economic Development of Mexico City (Sedeco CDMX), Fadlala Akabani, signed a collaboration agreement for exchanging information on Foreign Direct Investment (FDI). This agreement aims to facilitate the establishment of investments and provide support to investor countries, enhancing coordination between Federal and State Governments to attract investment to Mexico. As of the first quarter of 2024, Mexico City has attracted over USD 12 billion in investments, with USD 55 billion captured during the current administration, making it the country’s economic engine. The agreement also emphasizes promoting compliance with registration obligations under the Foreign Investment Law and its Regulations.
SOURCE: FORTUNA
STATE OF MEXICO
The Ministry of Finance reported that the government of the State of Mexico maintained healthy finances in the first half of the year, with revenues of MXN 182,753.6 million and expenditures of MXN 163,363.8 million, resulting in a surplus of MXN 19,389.8 million for the first six months of 2024. These figures align with and slightly surpass the estimates in the Revenue Law. The surplus will help manage the second half of the year, as per the Expenditure Law and fiscal expectations. The government achieved 55% of the annual revenue goal of MXN 329,601.9 million, with MXN 274,511 million from federal sources and MXN 2,496.7 million from financing. The analytical revenue report indicated that 20,858.1 million pesos were collected by June 30, out of an estimated MXN 26,952.9 million in taxes for the fiscal year. The state is close to meeting its revenue target, with significant contributions from taxes on expenditures and vehicles.
SOURCE: MILENIO
INVESTMENT NEWS
NORTH
BOSCH
BOSCH opened a new plant in Salinas Victoria, which employ 1,500 people. It has required an investment of 260 million dollars.
TRANE
Trane, an air conditioning manufacturer, announced an investment of 18 million dollars to expand its production plant in Monterrey, Nuevo Leon. The number of jobs has not been disclosed.
CENTRAL MEXICO
HARMAN
With an investment of 115 million dollars, Harman inaugu-
rated its fourth manufacturing plant in Queretaro, where 1,100 new jobs will be created.
LS CABLE & SYSTEM
With an investment of 100 million dollars and the creation of 500 jobs, LS Cable & System Mexico conducted the groundbreaking ceremony in Corregidora, Queretaro. The announcement was made on May 21, 2024.
CDMX
AIR TEMP
Air Temp de Mexico inaugurated a new manufacturing plant for the automotive industry in Uman, Yucatan, creating 250 jobs. The investment amount has not been disclosed.
SOURCES : MEXICO NOW, MEXICO INDUSTRY, CLUSTER INDUSTRIAL
LEGISLATIVE CHANGES AND INITIATIVES
LABOR
• INITIATIVE WITH A DRAFT DECREE TO AMEND THE SECOND AND THIRD PARAGRAPHS OF ARTICLE 48 OF THE FEDERAL LABOR LAW
Presented by: Sen. Roberto Juan Moya Clemente (- PAN)
Purpose: To increase the payment of back wages by up to six more months when it is proven that the employer has:
Offered any personal benefit, gratuity, or bribe to officials of the Federal Center for Labor Conciliation and Registration, Local Conciliation Centers, or Courts, as well as to third parties in a labor procedure.
Altered a document signed by the worker for a different purpose to incorporate the resignation. Required the signing of blank papers at the time of hiring or at any time during the employment relationship.
Presented obviously false facts in the labor trial, by either party or their representatives, regarding salary, working hours, or the duration of the employment relationship.
Denied access to an establishment or workplace to the bailiff or notifier of the labor authority when they request to carry out a notification or proceeding.
Status: 2024-07-31 - Published in the Parliamentary Gazette.
PRODENSA INSIGHTS
DOING BUSINESS IN MEXICO: LABOR FEASIBILITY ANALYSIS
A Labor Feasibility Analysis is a process that assesses the availability of workers in a specific industry or business. It’s essential for making informed decisions about business operations and expansion plans. Some of the data worth studying includes: skills & qualifications of labor force, current and projected job market considering new companies, cost of labor, competitors to local as well as niche market, and availability of candidates and their educational opportunities. Read the article for review two case studies where a Labor Feasibility Analysis became crucial to making strategic decisions for investments in Mexico.
IMPACTS ON TRANSPORTATION AND LOGISTICS DUE TO THE PARIS 2024 OLYMPIC AND PARALYMPIC GAMES
5 Key Takeaways:
• Large-scale events like the Olympics place immense pressure on global supply chains due to the concentrated demand for goods and services.
• Massive influxes of people and materials during such events create logistical nightmares, including traffic congestion, security delays and infrastructure strain
• While these events stimulate economic growth, they also pose significant challenges for businesses, requiring careful planning and adaptation
• Effective supply chain management, including advanced technologies, diversification, and contingency planning, is crucial for navigating event-related disruptions
• There is a global trend toward more sustainable practices in large-scale events, and logistics companies have a role to play in reducing environmental impacts
PRODENSA INSIGHTS
5 FAQS ABOUT TRANSITIONING FROM A MULTITENANT TO A DEDICATED SHELTER
The summary:
• While the initial cost might seem higher upfront, dedicated shelters offer several cost-saving benefits in the long run including the elimination of some vague cost requirements and greater transparency and control over costs in general
• The transition from a multitenant to a dedicated shelter model is a complex undertaking, but an experienced project management team can have it done anywhere from 3 to 6 months in most cases.
• A dedicated shelter model offers more flexibility and control over design and configuration of the space, and infrastructure. Actually, there are many types of operational models that could compliment a variety of business plans in Mexico, not only a dedicated shelter model.
• The transition to a dedicated shelter model doesn’t necessarily require major changes to your workforce or building.
• f you have been operating under a multitenant shelter model for many years, you may be interested in certain areas of support. A flexible shelter provider can support your transition to independence and provide support in an a la carte fashion.
MOST COMMON TRADE DELAYS IN MEXICO
Trade delays are a major challenge in international business. This blog identifies seven primary causes: transportation issues, documentation errors, discrepancies in bills of lading, incorrect value declarations, paperwork modifications, insurance problems, and packaging errors. Each cause can lead to significant delays, increased costs, and customer dissatisfaction. To mitigate these issues, businesses should invest in robust contingency plans, accurate documentation, clear communication, and effective packaging. Addressing these root causes is crucial for improving supply chain efficiency and maintaining customer satisfaction.