As the leading exporter of medical equipment and devices to the United States and home to over 223 companies manufacturing medical devices, as well as other medical supplies and medication manufacturers, the country’s already well-developed industry has been rapidly scaling up production in recent months to meet the sudden increase in demand due to the COVID-19 pandemic. This, combined with other geopolitical factors that were already causing growth in the sector, have resulted in consequent boom in industrial real estate Mexico as manufacturers grow and look for new and larger facilities to allow them to meet production demands.
For several decades, the medical devices industry has been one of the fastest-growing sectors in the country and has long played an important role in international markets. It was already predicted to increase U.S. exports by $6 billion dollars over the last few years, growing from $9 billion in 2018 to $15 billion by this year, number which it is sure to surpass due to an increase in requests for not only ventilators (which has grown from an annual demand of 700 to approximately 2000), but also masks, hand sanitizer, disinfectants and other antibacterial products, disposable overalls, thermometers and generic medication.
There are several factors that have been contributing to this significant expansion in Mexico’s medical supply sector: in addition to recent changes due to the pandemic, including breakdowns in supply chains and increased demand, the ongoing trend in manufacturing aimed at making supply chains more agile, diverse and less dependent on China, and the new USMCA trade agreement, were already promoting more investment and growth in the industry. Having come into effect on July 1 of this year, NAFTA 2.0 as it is also known, not only provides greater certainty for investors in all sectors, but also includes several provisions aimed at fostering growth in the medical devices industry by streamlining processes for importing medical and pharmaceutical production and harmonizing and enhancing regulatory compatibility.
In addition to these factors, Mexico is also poised to move up the value chain due to its geographical advantage, ability to offer better quality guarantees than its competitors, and the fact that standards are already very closely aligned to those in the U.S. Though this expansion will likely be more gradual than in other industries, such as the automotive industry Mexico and the aerospace industry in Mexico, due to the complex equipment required to manufacture these high-tech devices, everything is in place to allow it to become a world leader in the industry. In order to ensure this, it will also be key for the country to work on closing the skills gap through the formation of alliances between manufacturers, governments and higher education institutions.
All of this growth has also resulted in major increase in demand for industrial real estate Mexico, with the medical devices industry showing a year over year increase of 20.3% in industrial space occupied just in the first quarter of 2020. With all these factors at play, now is the perfect time to look at site selection in Mexico and the advantages of using shelter services in Mexico to take advantage of all that Mexico has to offer as this expansion continues.
By Sandra Malottky | Chihuahua Regional Director | American Industries Group®
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