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Mexican tire industry signals strong manufacturing outlook

The focus of the picture is on the front left tire of a red automobile.
17 Jan 2014

A recent report from TechSci Research demonstrated the growth of manufacturing in Mexico and a positive outlook for the tire market, which in many ways is connected to the already strong auto industry, extending into the next several years. In fact, the report, "Mexico Tire Market Forecast and Opportunities 2018," indicated the total value of the Mexican tire market will prospectively reach $8 billion by 2018.

Growing demand for automotive components
The report found that the Mexican tire market grew 19 percent between 2009 and 2012, which is one of many factors leading to the anticipated figures. Also driving the demand for increased tire production is the fact that the nation is pushing forward a fairly ambitious agenda in vehicle manufacturing.

"[S]ales of both passenger cars and heavy commercial vehicles grew at double-digit rates the last three years," according to Tire Business.

In addition to an increasing internal demand for automobiles, Mexico is also an important trading partner for a variety of international manufacturers. Taking advantage of a highly-skilled labor force, multinational trade agreements and a highly effective supply chain, many companies have begun expanding to Mexico to augment their production facilities and expand into new markets.

Strong international partnerships spur growth
In addition to participating in the North American Free Trade Agreement, Mexico has welcoming trade agreements with several countries throughout Latin America and the rest of the world, TechSci research director Karan Chechi told Tire Business. Mexico has more than 230 bilateral agreements, in addition to 122 multilateral agreements, with 44 countries globally. These deals bolster the country's future as a manufacturing and economic power, adding to positive economic forecasts.

Meanwhile, the government-run oil firm Petroleos Mexicanos recently revealed plans to construct the nation's first plant capable of solidifying sulfur, according to Global Post. Running at a cost of $38 million to build the facility, the proposed plant will potentially be able to process 360,000 tons of oil, said Pemex CEO Emilio Lozoya.

This effort will require significant investments in Mexico's infrastructure to ensure components and materials are delivered effectively to meet the standards established by the oil company. The connection to the tire industry can be found in the fact that sulfur is used in the production of tires, as well as a number of other products. By expanding into sulfur-derived goods, Mexico will be able to continue reaching new markets, such as China, India and Brazil.

As Mexico has become a prime destination for companies looking to offshore manufacturing of automotive supplies and assembly, the country has a number of opportunities to grow. Because of the strengthening market for vehicles, tire production has also benefited. Mexico's internal demand for cars and commercial vehicles due to moderately low levels of automobile ownership supplements foreign investment in manufacturing in the country.

International manufacturers with aims to expand their market reach, reduce labor costs and employ an educated labor force have numerous prospects by offshoring production in Mexico.

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