Mexico Industrial real estate boosts the competitiveness of the manufacturing sector

 

Today, manufacturing is not just about making physical products. Changes in demand, the nature of the products themselves, new manufacturing technologies, and digital and networked supply chains generate fundamental changes in the business models of traditional manufacturers.

According to the Deloitte study, “The Future of Manufacturing; making things in a changing world ”, customers demand customization and adaptation as the line between consumer and manufacturer is blurred.

The addition of sensors and connectivity turn “dumb” products into “smart” and, increasingly, into platforms and even into the field of services. As technology advances exponentially, barriers to entry, commercialization, and learning erode. Meanwhile, the border between manufacturers and consumers is increasingly blurred.

Current technology begins to allow production in small quantities to be feasible, on request, according to the explicit need of the client. In this context, intermediaries that create value through the maintenance and movement of inventories are less and less necessary.

In addition, the fourth industrial revolution or Industry 4.0, is here to stay. The convergence of the physical world and the digital world, together with the application of advanced technology in the production line, is going to substantially change the playing field of the manufacturing industry.

At Deloitte, they help capture value in this new competitive environment. This new window offers opportunities, but also challenges that strain the ability of companies to survive in a digital, technologically intense and connected world.

Manufacturing in Mexico:  at the forefront in manufacturing competitiveness

It is expected that by 2020, Mexico will occupy the seventh position in terms of manufacturing, surpassing the United Kingdom and Taiwan, and being preceded by South Korea.

Our country is part of the North American Cluster, led by the United States and also made up of Canada. The cluster receives the highest levels of investment and has a strong energy profile, as well as top-notch talent, infrastructure and strong clusters dedicated to innovation, anchored in the United States. Mexico complements this group with more than 46 commercial agreements, competitive labor costs and its proximity to the United States; all together makes Mexico the ideal destination to establish its production centers.

All this has made Mexico one of the largest producers of electronics and their parts, machinery and accessories, ships, and an automotive powerhouse.

Bruno Juanes, Head of Innovation and Manufacturing, commented that the manufacturing world is facing its fourth industrial revolution, which will merge the physical world with the digital one. As a result of this, innumerable opportunities and threats will be generated for traditional business models. "The role of the incumbent manufacturer will be questioned by new technology-based players and will have to adapt to go from generating value through the production of objects, to capturing value from increasingly complex ecosystems and further away from their current role."

Such is the case of the Bic company, located in Cuautitlán Izcalli, State of Mexico, which produces 2 billion writing instruments per year, of which 80% are exported to 47 countries. Mario Berra, VP of Manufacturing for Mexico and Latam, and responsible for the Edoméx plant, said that His investment plans in manufacturing are to continue growing the plant in the Mexican territory. “The export rate is above 50% of what is produced to the 46 countries and just under 50% of the product is what remains in Mexico. The investment does not necessarily have to be reflected in new openings, but in terms of innovation, machine efficiency and optimization of operations ”.

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Mexico manufacturing generates three out of every 10 jobs in Jalisco

Maquiladora and manufacturing companies are the main employers of the industrial sector in Jalisco, since around 384 thousand 345 people receive a salary from this branch, according to figures from the Association of Maquiladora and Manufacturing Industries of the West (Index), based on a study released by the Ministry of Economic Development (Sedeco) in 2016.

This figure represents 27.2% of the total jobs generated by the various Industrial Chambers of the State, which means that three out of every 10 jobs in the Jalisco industry belong to manufacturing companies. Of this total number of jobs, 182 thousand are workers in companies with a program for the Promotion of the Manufacturing Industry, Maquiladora and Export Services (Immex). These employees earn an average of 12,500 pesos per month, 30% more than a worker who does not work in these companies.

Federico Chávez, president of Index Occidente, also announced that the maquiladoras established in Jalisco represent 43% of exports (18 thousand 800 million dollars), and 40% of imports (30 thousand 494 million dollars), in addition to receiving 36% of the State's Direct Foreign Investment, according to the data of the Sedeco study.

They ask for greater security

Security is the primary issue to be resolved by the current and the next governor of Jalisco, Chávez considered, speaking about the fundamental issues that candidates for the state Executive Power must resolve.

Another important issue for the State, according to Index Occidente, is to improve mobility, in addition to making the second runway at the Guadalajara International Airport

Chávez also asked to give continuity to the public policies implemented by the Ministry of Innovation, Science and Technology (SICYT) headed by Jaime Reyes, who, according to Index, has played a fundamental role in promoting the electronics industry in Jalisco.

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automotive industry Mexico: Jalisco's manufacturing industries will be the first to return, anticipates governor

 

Companies in the secondary sector (manufacturing) and agroindustries, which stopped their production due to the health contingency, will be among the first to operate again in the State; the governor advanced. He reported that no later than Thursday he will present the details of the state plan to reactivate the economic sectors and anticipated that the activities will return to adapt to protocols and prevention measures.

The head of the state Executive Branch explained that the plan includes a calendar with different phases that will define how and when the various sectors of the state economy will operate again.

We are not discovering the black thread either, it has been said that for the greater margin of supervision of its operation, one has to start with the industry, the secondary sector, and the primary sector as well, the agro-industry and the countryside; they are going to have important advances. What is going to take the longest is the issue of tourism, paradoxically one of the sectors in which we are going to have more economic effects is the one that will take the longest to be able to reactivate ”, he explained.

The state president explained that as part of that plan it is contemplated to apply special measures for mothers and fathers, with children of school age, because the minors will remain at home with the determination to close the school year remotely. He added that they also review the issue of nurseries and how they will operate again.

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Industrial real estate Mexico: manufacturing in Mexico begins to grow

The Governor of the State, Enrique Alfaro Ramírez, met with executives of transnational manufacturing companies with the aim of proposing scenarios that contribute to lessen the economic impact in this sector that, as a consequence of the coronavirus pandemic, could be generated in the event of a total stoppage of activities.



In Jalisco alone, this sector generates more than 600 thousand direct and indirect jobs and has a record of 396 companies operating in the National Council of the Maquiladora and Export Manufacturing Industry (INDEX), and the president referred to the need to generate a joint action proposal, so it was agreed to establish a working table between the State Government and company managers.


During the meeting held at Casa Jalisco, César Castro Rodríguez, national president of INDEX Occidente, stressed that this sector represents 11 percent of formal employment before the IMSS in Jalisco, 44 ​​percent of the transformation industry in Jalisco, represents 61 percent of state exports, and for this year, despite the pandemic, an investment of 142 million dollars is projected.

Government and manufacturers seek to lower economic impact by Covid 19.


                             

Jalisco's manufacturing sector generates more than 600 thousand jobs in the entity where there is a record of 396 companies affiliated to the National Council of the Maquiladora and Export Manufacturing Industry (INDEX), who held a meeting with the governor this Monday morning, Enrique Alfaro Ramírez to search for the common strategy to lessen the economic damages caused by the Covid 19. Alfaro Ramírez explained the measure of the Emergency Button as an instrument that would be applied in case the indicator of hospital occupation reaches 50 percent or is a weekly record of 400 infections per million inhabitants.

However, he said that at this time the level of hospitalization remains stable and the rate of infections remains within the established range. Through a statement, the State Government indicated that said meeting was with the objective of generating a proposal for joint action, so it was agreed to establish a working table with the managers of IBM, Sanmina, Continental, Flex, Foxconn, Latam, Jabil, Plexus, ZF, as well as the INDEX, INDEX DE OCCIDENTE, CANIETI and CADELEC. During the meeting held at Casa Jalisco, César Castro Rodríguez, national president of INDEX Occidente, stressed that this sector represents 11 percent of formal employment before the IMSS in Jalisco, 44 ​​percent of the transformation industry in Jalisco, represents 61 percent of state exports, and this year, despite the pandemic, an investment of 142 million dollars is projected.

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Mexico Manufacturing Today: Re-Opening of Essential Activities

Despite quarantine and stay-at-home measures still in place in Mexico and across the globe aimed at containing the spread of the coronavirus pandemic, plans are being carried out to gradually reopen several key areas of industry in accordance with strict protocols, with a priority placed on activities deemed as essential. Though governments across the world have varying definitions of what is considered as “essential,” as well as different restrictions on commerce, and a wide range of requirements in place in the face of constantly-changing health situations, they are all developing and implementing new strategies to resume economic activities in phases, and with this, begin to mitigate the effects of the pandemic on industry, national and international economies, and global supply chains.  

 In Mexico, with increasing concern regarding the impacts of the executive order in effect since March 24 shutting down all non-essential activities on international companies in Mexico, as well as its business partners in the US and across the globe, especially the automotive industry Mexico, the government has recently decided to expand its definition of essential activities to include the automotive, construction and mining sectors. This means that as of May 18, these businesses are allowed to partially reopen to begin developing and implementing safety and health measures that will allow them to fully reopen as of June 1. It is important to keep in mind that this information, and all changes to the definition of essential service and any industry-specific restrictions, depends on both the health situation in each area of Mexico, as well as market and supply chain demands, and as such, are subject to change at any time.

 Prior to this, and similar to the US, Canada, and other countries, only activities and services related to the operations of infrastructure (tollway operation and road maintenance), transportation services (air, rail, maritime, port and federal road transportation), communication, courier and post services, healthcare and paramedic services, supermarkets convenience stores, gas stations, hardware stores, construction (in some areas only for critical projects), and logistics and government social programs, were deemed as essential, and therefore allowed to continue operating. All other companies were required to either allow their employees to work remotely when possible, or place them on paid leave until restrictions are lifted.

Automotive manufacturing Mexico: Quebec's largest trading partner in LATAM, says minister

During her visit to the country between March 12 and 15 of this year, Quebec's Minister of International Relations, Nadine Girault, met with federal government political representatives, including Foreign Secretary Marcelo Ebrard, to define areas of cooperation between the two countries for the next two years, as well as to strengthen the diplomatic relationship of years with the Mexican government.

And it is that only in 2017, Quebec's exports to Mexico manufacturing  amounted to 1,755 million dollars, which makes Mexico the third largest international client in the French-speaking territory and its largest commercial partner in Latin America, according to data shared by the Girault team, recently elected in October 2018.

Currently, the Canadian province and Mexico are subject to 19 international agreements that involve the education, culture and art sector, the care of the environment, commerce, science and technology and for the new government to which Girault belongs, the Mexican and Canadian economies they complement each other and must continue to work together to boost the aerospace, creative and automotive industries.

To date there are 700 companies originating in Quebec that have started business with Mexico and 70 other large companies, also Québec, including Trans-Pro Logistics, Exo-S and Bombardier, installed in the country, which have invested around 6 billion dollars in Mexico, according to figures shared by Minister Girault.

He also took the opportunity to ensure that one of the objectives of his government is to encourage SMEs, both from Quebec and Mexicans, to export more products and in greater quantities, “because large organizations already know how to do it, they have the money, the size , seniority, contacts and support from its investors, ”said Girault.

"The Mexican people are so enthusiastic and eager to do business," said the minister and said that although "it is still too early" to give investment estimates and how many businesses will arrive in Mexico, said our country is and will be part of the five most important priorities for Quebec, and vice versa. ”

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The Aerospace Manufacturing Mexico and the take-off of productivity.

The aerospace manufacturing Mexico has also discovered the advantages that Mexico has in today's global manufacturing landscape: a convenient geographical position, numerous free trade agreements, a promising demographic bonus and a highly skilled workforce. In this text the opportunities and challenges that this sector has in our country are broken down.

Mexico has managed to consolidate itself as one of the main manufacturing centers in the Western Hemisphere thanks to a series of comparative advantages with which it has as its privileged geographical position, an open economy with an important network of trade agreements, a large population composed mostly of young people of working age, a competitive and skilled workforce, abundant energy and natural resources, as well as a worldwide recognized macroeconomic stability.

Thanks to this, in 2014 our manufacturing exports reached 337 thousand 289 million dollars and represented 85% of the total exports of that year. In this sense, our country exports 65% more manufactures than all of Latin America together and participates in several sophisticated sectors such as automotive and electronics. In addition, Mexico is a growing player worldwide in the aerospace sector.

Currently, the global aerospace industry is going through one of its best moments, which constitutes one of the most relevant opportunities for Mexico in order to increase the national content of its exports and thereby generate the quality jobs that thousands of Mexicans require .

Read :Start up manufacturing services in Mexico: Mexico could become manufacturing power in 2020

Global overview of the aerospace sector

Globally, one of the most dynamic and fastest growing industries is aerospace. According to the International Air Transport Association, in 2016 there will be around 3,600 million plane trips in the world, about 800 million more than those registered in 2011. According to this Association, between 2012 and 2016, the Passenger traffic on flights will grow on average 5.3% per year. On the other hand, the international cargo service will grow on average 3% per year to reach 34.5 million tons in 2016, 4.8 million tons more than in 2011.

By 2032 it is predicted that the fleet of aircraft, both passenger and cargo with a capacity of ten tons, will be 36,556 aircraft, which implies a significant increase if it is considered that there are currently about 18 thousand ships in commercial service.

Single-aisle passenger aircraft, commonly used by low-cost airlines, represent the largest segment of new orders and in the next 20 years are expected

20,240 deliveries of this type of aircraft. For the same period, it is projected that the demand for double-aisle aircraft will amount to 6,780 new orders, while those for cargo will increase to 500.

Mexico exports 65% more manufactures than all of Latin America together and participates in several sophisticated sectors such as automotive and electronics

Also, the companies producing the sector seek to reduce fuel consumption in new aircraft, in order to meet the demands of operators, which must lower their costs in the face of growing competition between airlines.

Within this context, Mexico is positioning itself globally as an important player for the main aerospace companies that must increase their competitiveness. This sector represents one of the main opportunities that our country has to take advantage of its comparative advantages and its important industrial development in order to increase the national content of our exports, generate more and better jobs, and increase the country's level of productivity.

Aerospace sector in Mexico

Currently, in Mexico there are more than 300 companies in the aerospace sector. Of these 80% are manufacturing, while 20% offer design and engineering services, as well as maintenance, repair and operations (MRO).

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