Electronic Industry Plug & Succeed
Mexico is an important electric and electronic device producer. The country manufactures high-demand products worldwide, including cell phones, video game gadgets, computers and televisions. Numbers speak for themselves: over 730 manufacturing plants related to the electronic industry, 709 companies dedicated to the electric industry and 197 electric-appliance companies; thousands of jobs across the country and millions of dollars in exports and Foreign Direct Investment (FDI).
lectronics is one of the fastest growing industries in Mexico in terms of export potential and employment generation. Currently, Mexico is the second largest supplier of electronic products to the US market, which comprises audio and video, telecommunications, computer equipment and its parts. There are over 730 manufacturing plants related to the electronic industry in Mexico, located mainly in the northern region, in the states of Baja California, Chihuahua and Tamaulipas. Eight out of the 10 worldâ€™s largest manufacturing service suppliers operate in
COVER Feature ELECTRONIC Industry
Mexico, including firms such as Flextronics, Jabil Circuit, Celestica and Sanmina SCI. Between 2003 and 2009, Mexican electronic industry exports registered an average annual growth of 17.1%. In 2009, the sector’s exports, which added up to 59.6 billion usd, represented 30% of Mexican non-petroleum exports and the industry’s production ammounts to approximately 6.7% of the country’s GDP. In 2010, the sector exported 71.4 billion usd, 20% more than the previous year. The US is the most important market for electronic products manufactured in Mexico. It operates 83% of the sector’s exports, followed by Canada with 6%. Other important destinations for electronic products manufactured in Mexico are the Netherlands, Colombia and Finland. Mexico’s electronic industry is all about technology. The manufacture of computer components and products is a widespread activity of the sector in the country. Companies producing items such as modular circuits for telephony equipment, processing units, computer equipment, telephone switching apparatus or laptop computers, have been operating in Mexico since the 1970s. These businesses are now present in several Mexican cities, generating jobs, attracting new investments and fostering the development of the sector’s production and supply chains. Over the past decade, the industry has made significant progress and products now include everything from systems that can be used for brain-scanning as well as 3D animation, or for financial system planning and multinational corporations’ strategic work. Guadalajara is probably one of the preferred destinations for transnational companies that manufacture electronic products. Firms like Burroughs and Motorola were the first to discover and make the most of the city’s advantages. In the 1970s, both companies established maquiladora plants, giving birth to what 20 years later would become the Mexican Silicon Valley. Today, the Guadalajara cluster –with companies such as IBM, Flextronics, Sanmina, Jabil, Intel and some of the world’s software giants– offers clear advantages when compared with other development nodes in Mexico and Latin America. Other regions, such as Estado de México, have kept their focus on mobile telephony
with the presence of companies such as Ericsson and Pantech. Currently, Mexico is the third largest exporter of cell phones. In 2009, exports of mobile phones manufactured in the country reached 9.84 billion usd.
Success in Full HD TV manufacturing industry has become a high-tech cluster within the electronic industry scene in Mexico. The market for new technology TV screens has grown rapidly in the last years, in order to meet the US’ demand. Today, the production of high-tech TV screens
has displaced that of Cathode Ray Tube (CRT) televisions and has reached up to 91% of the total annual production of TV manufacturers in Mexico. Flat screen TVs represent around 25% of Mexican electronic industry annual exports. In 2009, Mexico was ranked the largest exporter of flat screen TVs in the world, above countries like China, Germany and the US, reaching 15.6 billion usd –which represented 26.3% of the sector’s total exports that year. In 2010, the total value of flat screen TV exports was 17.4 billion usd, 12% growth compared to 2009.
Products made in Mexico include microwave ovens, coffee makers, juice extractors, dishwashers, air conditioning vacuum cleaners, plasma televisions, blenders, refrigerators, mixers, washers, dryers and irons.
Thus, this is the cluster generating the highest manufacturing output in Mexico. Most of the manufacturers of these products are located along the Mexico-US border. The large expanse of these manufacturing plants convert many of companies in veritable industrial parks, as their premises include services such as clinics, child nurseries, canteens and sports facilities. A map generated by the Ministry of Economy, marking the location of the most representative industries, shows that around 61% of the audio and video electronic industries are located in Baja California. Companies such as Samsung, Sony, Sanyo, JVC and Pioneer have established operations in the Tijuana and Mexicali cluster, which generates the highest manufacturing output of flat screen TVs and audio and video systems. After the Baja cluster, Ciudad Juรกrez, Chihuahua, is the second largest producer of TV screens in Mexico. In that border city operate 26% of the TV and audio and video systems manufacturing companies established in Mexico.
From Mexico to Your Home Mexico is at the forefront of the production of domestic electric appliances which are recognized for their quality and sold around the world. Products made in Mexico include microwave ovens, coffee makers, juice extractors, dishwashers, air conditioning vacuum cleaners, plasma televisions, blenders, refrigerators, mixers, washers, dryers and irons. Mexico is the second largest exporter of refrigerators and freezers with a separate exterior door, vacuum cleaners with a 1,500 W power and electric water heaters. In 2010 this sector grew 11.37%. Expected growth for 2011 is 5.4% and, according to experts, the Mexican electric industry could grow at a 4% annual rate during the following seven years. There are 709 companies dedicated to the electric industry and 197 electric-appliance companies in the country. There are a total of 78 white goods manufacturing plants in Mex-
COVER FEATURE ELECTRONIC INDUSTRY
ico, all well distributed among the states. The industry generates about 35,000 direct jobs and 110,000 indirect jobs. Such has been the proliferation of white goods manufacturing in Mexico that if we were to look into homes in the US and Canada, we would find that most of its electrical appliances –washer, dryer, range, refrigerator, vacuum cleaner and microwave oven– were made in Mexico. In 2009, Mexico’s exports in this sector reached 16.55 billion usd, while the period between January and October 2010, added 17.8 billion usd, having the US and Canada as the main markets, followed by Colombia, Venezuela and Saudi Arabia. International firms like Electrolux, ABB, Areva, Mitsubishi Electric, Condumex, GE and Delphi, among others, are established in Mexico. For most companies, North America represents an attractive share of the domestic elec-
trical appliance market. For example, Mexico, the US and Canada represent 27% of over 47.4 billion products that LG sold in 2007. The company’s three plants in Mexico supply 90% of LG products sold in Mexico and 80% of those sold in the US. LG also manufactures for Latin America, which represents 10% of the company’s total sales worldwide.
Home to Technology Between 2000 and 2010, FDI in the electronic sector registered a total of 20.55 billion usd, concentrating on the production of informatics process equipments and spare parts for communication devices. In 2010, FDI totaled 1.3 billion usd. Meanwhile, FDI in the electric industry totaled 8.65 billion usd between 2000 and 2010. FDI focused on electric accessories and materials, as well as in electric-appliance production and assembly. During 2010, FDI in this industry reached a total of 360 million usd.
So why Mexico? Without a doubt, proximity to the world’s largest market for electronic and electric devices explains exports and FDI growth rates in that sector. Also, manufacturers are unanimous when they say that Mexico’s skilled workforce, strategic location, large suppliers and supply chains and logistics are the main reasons for locating in the country. Mexico is the country with the lowest industry component manufacturing costs, being 18.2% above other countries such as Canada, the Netherlands, the UK, France, Germany and Japan, according to Alix Partner’s OutsourcingManufacturing Cost Index 2010 and to KPMG’s Competitive Alternatives 2010 report. Because of this and due to Mexico’s young growing talent –each year, 114,000 students of engineering and technology-related fields, graduate from Mexican universities– electric and electronic industries have had an important development in the country. n
Delta Display Orion Hitachi Ichia JVC King Cord Mex LG Matsushita Merry Tech Mitsubishi Pioneer Samsung Sanyo Sharp Sony Thomson Wistron BenQ Kodak Delphi Amphenol ADI Systems Philips Kyocera Rectificadores Internacionales Vigobyte Coums Bose Skyworks Panasonic
Toshiba Philips Thomson Kenwood Asus Keytronics Tatung Lite on Enlight Foxconn Honeywell ECMM Elcoteq Jabil Circuit SMTC Delphi Elamex Plexus Altec
White Westinghouse Xerox Siemens Flextronics Volex Texas Instruments
Alcatel Motorola Volex Molex AMO Amphenol
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ESTADO DE MÉXICO
Ericsson Alcatel Pantech Scientific Atlanta Olimpia AMP Sony
Pioneer Kodak SCI – Sanmina Celestica Elcoteq AFL Nippon Denso Axa Yazaki
Philips Sony Jabil Circuit Celestica Nokia Lucent Technologies Fujitsu Condura Delnosa Delco Matsushita Delphi Keytronics Tyco
IBM HP Hitachi NEC Lucent Technologies Kodak Siemens MTI Electronics Solectron Flextronics Jabil Circuit SCI Sanmina ECMM Benchmark Technicolor Universal Scientific Motorola Cumex
The Geography of the
ESTADO DE MÉXICO MORELOS
Photo & Printing
Electronic Contract Manufacturing
Audio & Video
CHIHUAHUA Electrolux de México Electrolux Home-Products
Digital Appliance Controls Dometic MX Honeywell Manufacturas IMW de México Jabil Circuit de Chihuahua Plexus Electrónica NUEVO LEÓN LG Electronic Monterrey
Industrias Acros Whirlpool Carrier México Oasis Latinoamérica Panasonic Home Appliances York Aire
Criotec ESTADO DE MÉXICO LG Electronics México Calentadores Magamex Koblenz Eléctrica
Maytag Mexico Appliance Products
Tutco de México Black & Decker de Reynosa
Hamilton Beach/Proctor–Silex de México
Industrias Man de México
Turmix de México
Gillete de México (Braun) Industrias Técnicas Mexicanas (Lenisco) Philips Mexicana Sunbeam Mexicana (Sunbeam, Osterizer, Oster and Mr. Coffee)
COVER FEATURE ELECTRONICS INDUSTRY GUANAJUATO
Industrias Acros Whirlpool
Mabe (T-Fal, Krups, Moulinex, Romenta)
Grupo Industrial Saltillo (Calorex, Cinsa)
Samsung Electronics México
Hamilton Beach Proctor Silex
Sunbeam Oster de Acuña
Servilamina Summit Mexicana
Aparatos Eléctricos Acuña
SAN LUIS POTOSÍ
Mabe Sanyo Compressors
Industrias Acros Whirlpool
Jabil Circuit de México AGUASCALIENTES Texas Instruments
SAN LUIS POTOSÍ
ESTADO DE MÉXICO
32 Minor appliances
24 Major appliances
78 Manufacturing plants
from Mexico to Your Home
Electronics is one of the fastest growing industries in Mexico in terms of export potential and employment generation. Currently, Mexico is...