Economic Activity in Mexico:

Opportunities and Trends

For over 50 years, Mexico has been an important hub for export manufacturing, especially to the United States. Though much of this industry has developed along the border with the United States for the maquila industry, many international companies worldwide are choosing Mexico to relocate or expand operations for various reasons. These include a desire to diversify their supply chains, decrease dependence on China, and take advantage of Mexico’s young, skilled, productive, and affordable workforce.

With Mexico’s industrial sector making up approximately 35% of its GDP (which includes the automotive, oil, and electronics industries) and manufacturing in Mexico making up 17.2% of its GDP, they are expected to remain as its principal economic activities. In addition, growth in these sectors is expected to keep pace with its most crucial trade ally, the U.S. Though nearshoring opportunities with Mexico’s northern neighbor represents one of the markets with the most potential in the short and medium-term, manufacturing in Mexico is also becoming more attractive for companies from around the world. Its 13 free trade agreements with 48 countries, competitive wages (especially with recent wage increases and supply chain problems in China), and high labor productivity provide unmatched competitive advantages.

In fact, international companies in Mexico highlight that their plants here have exceptionally high productivity levels. In some cases, plants have even achieved 100% efficiency levels after only three months of operations, and companies easily obtain their ISO 9000, NADCAP, or AS900 certifications on the first try. These are some of the benefits provided by Mexico’s availability of a trained and certified workforce that is used to performing in a high productivity environment and in compliance with high quality standards.

Furthermore, in light of recent global events that have revealed the consequences of overdependence on China and a lack of diversification in supply chains, businesses are looking to mitigate possible future risks. As always, Mexico continues to welcome these companies with its young and productive labor force, excellent geographic location for logistics, mature supply chains, and diverse ecosystems in various sectors, including the automotive industry in Mexico and the aerospace industry in Mexico. This strong foundation and long-standing platform for development provide the ideal location for new product investments.

Paving the way for this continued industrial growth in Mexico are large companies with established operations in the country, including Safran and General Motors, both of which have recently made significant investments in expanding not only production but also research and development activities in the country.

The country offers increasing benefits for companies looking to start up operations in Mexico as it continues to open up more trade relations that will contribute to the long-term and stable growth of businesses, the industrial sector, and the overall economy. If you would like to learn more about Mexico’s industry and the advantages it offers for your sector and company, reach out today to request a free business case analysis.

By Alma R. Ortega López | Institutional Relations | American Industries Group®

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