Benefits of offshore manufacturing in Mexico

Are you planning to start up operations in Mexico but you are not sure about the benefits or risks?
Mexico it's one of the most competitive countries in the world due to its macroeconomic and political stability, low inflation, economic growth and low labor costs. Here are the main benefits of taking your manufacturing company to Mexico:

• Ubication: it has a proximity to large markets in the US and Latin America. In fact, Mexico has a 3,000km border with the US, which allows for low transportation costs to the North American market. There are 52 access points between the US and Mexico.
• Skilled labor: skilled, available and affordable workforce; up to 80% in labor cost savings. Also it has high technology training centers.
• Cost savings: tariffs savings due to Mexico's Free Trade Agreements with 46 countries and also there is no VAT and no income TAX.
• Shelter services program: they have a developed "soft landing" culture to help international manufacturers to start up operations in Mexico with fast-track, risk-free shelter programs.

Some key manufacturing industries in Mexico are:

• Aerospace
• Automotive
• Medical
• Electronics
• Home Appliances
• Textile

In conclusion, Mexico has an open economy that guarantees access to international markets through a network of free trade agreements. The country boasts a strategic geographic location and competitive costs to service global markets, as well as a highly-skilled, young workforce.

If you want to know more information about manufacturing in Mexico or planning to start up operations, visit the next website: http://www.americanindustriesgroup.com/ 

How is the automotive industry in Mexico 2018

After a year of record figures in exports and vehicle production, and a fall in sales volume, uncertainty and low sales expectations in the US are emerging as the main challenges for the sector. I'm going to share with all of you some more information about the automotive industry in Mexico and what is the forecast for 2018.

A panorama of contrasts was what the national automotive industry in Mexico experienced during 2017. On the one hand, according to figures from the Mexican Association of the Automotive Industry (AMIA), the production and export of light vehicles registered historical levels, while, on the other hand, the national sale of light vehicles showed a negative variation.

What reasons could we find behind this contrasting behavior? On the one hand, the annual increase in production and exports of light vehicles during 2017 (8.9% and 12.1%, respectively, according to the AMIA) is due in large part to the opening of new assembly plants.

Specifically, we are talking about two new plants - KIA and Audi -, a result of foreign direct investments from years ago, which during 2017 began to manufacture cars in a consistent manner and which generated a rise in production levels. At the other extreme, behind the low sales of light vehicles in the country, which according to data from the AMIA and the Mexican Association of Automotive Distributors (AMDA) was 4.6% in relation to the previous year, we found several factors.

One of them is the increase in fuel prices, as well as the constant rise in the inflation rate, which has led many people or companies to stop their investments until they know how much they would be affected by these concepts.

Other important aspects that have impacted vehicle sales is the uncertainty generated by the renegotiation of the North American Free Trade Agreement (NAFTA) and the electoral day that our country will live next July - which can make people decide to postpone their purchasing decisions-, as well as the levels of exchange rate -capable of increasing the price of the units-.

In this context, the natural thing to ask is: what should the automotive industry do to counteract these effects? The answer is to offer more attractive financing schemes, according to the particular needs of the current consumer, mainly, of the millennials, one of the sectors most reluctant to make this type of acquisitions.

This new offer from the industry would undoubtedly help alleviate a little the uncertainty generated by the other factors mentioned and, in some way, help maintain the levels of sales of light vehicles in Mexico.

So, what is the forecast for Mexico manufacturing in 2018?

In terms of production, it is most likely that during 2018 we will observe levels very similar to those of last year, stable levels in which, however, we could see effects due to the reduction in the expectation of national market sales. American.

The United States represents the main destination of light vehicles manufactured in Mexico and, during 2017, according to the report of Ward's Automotive, they registered a decrease in their sales levels of 1.9% compared to the previous year.

If the US market reduces its expectation of domestic sales, this will cause some of the brands established in Mexico to adjust their manufacturing levels in some models, which would directly impact the Mexican production figures.

However, there are new investments in our country, which will start producing vehicles during the next years (2019 and 2020), which could compensate this situation in the long term.

Although 2018 will not be a spectacular year for the Mexican automotive industry, it will be a good year, a year of important challenges in which all the players in the sector must work together to maintain the levels achieved during 2017.

Unsafe but not depressing things will come this year for the industry. However, the automotive industry is one of the most important in the country because Mexico offers different competitive advantages to international companies that wish to start operations in Mexico. If you want to know more information, you can visit the next website: www.americanindustriesgroup.com 

Source: Deloitte