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Manufacturing in Mexico is still expanding

A large and expansive underground garage is filled with many vehicles.
04 Mar 2014

Mexico eased up a little on its one year high in manufacturing growth on February, according to Reuters. It finished the month with a HSBC Mexico Manufacturing Purchasing Managers Index reading of 52, decreasing slightly from January's reading of 54. However, any reading above 50 indicates that a country is expanding.

"This result suggests growth moderation in the manufacturing sector, which is consistent with the latest weak exports results," said Sergio Martin, chief economist at HSBC in Mexico.

The majority of manufacturing products in Mexico (80 percent) are sent to the U.S., which has also seen slow growth due to the poor weather conditions this winter.

Mexico: A strong country
It was reported earlier this month by USA Today that Mexico is still on track to beat Japan and Canada as the No. 1 exporter of cars to the U.S. In 2014, it is estimated that Mexico will export 1.7 million cars to the United States. That is about 200,000 more than Japan will export. By 2015, Mexico will be exporting more cars than the current leader, Canada.

"It's a safe bet," said Eduardo Solis, president of the Mexican Automotive Industry Association. "Mexico is now one of the major global players in car manufacturing."

According to USA Today, Manufacturing in Mexico is cheaper to offshore to than China, and companies have certainly responded to that by expanding to Mexico and building factories there.

Some companies have begun building parts in Mexico and assembling the finished cars in the U.S.

"There was a realization that there were some structural issues that had to be resolved in the auto industry to make it more competitive again. Moving parts, not all of the production, to Mexico was a good way to deal with that," said Christopher Wilson, an expert in U.S.-Mexico economic relations for the Woodrow Wilson International Center for Scholars.

Although the strength has dampened a little since January, Mexico is still expanding due to the low cost manufacturing it presents to foreign investors.

The Offshore Group: You Manufacture ... We Do The Rest.

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