Manufacturing industries in Mexico
Mexico is rife with manufacturing across a variety of industries. From aerospace to automotive manufacturing, businesses internationally are tapping into Mexico's resources to save money and improve operations. While the opportunities are limitless, there are eight industries worth exploring when considering the benefits of manufacturing in Mexico:
Aerospace manufacturing has grown tremendously over the past 15 years. According to PWC, the Gross Domestic Product of the aerospace manufacturing sector in the country grew more than 20 percent each year over the past five years. A large part of this growth is attributed to the country's open trade policies, and the industry generated a total of $3,183.7 million between 1999 and 2014.
Beyond open trade, the boom in this industry is thanks to the government's investment in its growth as well as the country's educated workforce. The Mexican government has taken major strides toward encouraging manufacturing activity, starting with its decision to sign on to NAFTA followed by a series of reforms. The Maquiladora system, which provides companies more control over the cost and transport of expensive aerospace manufacturing materials, coupled with the high number of engineers the country produces each year, means the sector is likely to grow for years to come.
Guaymas and Empalme are two excellent locations for aerospace manufacturing in Mexico.
Automotive manufacturing has lead the way in Mexico's economic growth over the past ten years, driving more than $20 billion in investments. Location is a primary reason so many auto companies have chosen to move their operations to Mexico. The country is strategically located close to the U.S., and its western ports allow OEM manufacturers and Tier 1 and Tier 2 suppliers to export goods to Asia, Australia and New Zealand. As a result, Mexico provides a desirable supply-chain solution for manufacturing countries across the world. In fact, many Chinese automakers have moved their production to Mexico to deliver their products to high-end markets more efficiently.
Today, automakers including Chrysler, Ford, General Motors, Mazda, Honda, Nissan, Toyota and Volkswagen all have a major manufacturing presence in the country. More recently, Fiat Chrysler announced plans in September to shift a large portion of its car production to Mexico. Automakers considering manufacturing in Mexico should explore Saltillo as a location to get started.
Medical Device Manufacturing
According to Mexico's Ministry of Economy, the Boston Consulting Group and ProMexico, Mexico is the fifth largest medical device exporter in the world, the second-largest market in Latin America and the leader supplier to the U.S. In 2010 alone, the sector reported exports totaling $5.798 billion and an average growth of 12 percent each year over a five-year period. Further, BMI predicts there will be a compound annual growth rate of 13.8 percent in Mexico between 2013 and 2018, which will bring the medical device market to $6.9 billion by 2018.
Mexico has positioned itself to experience sustained growth in this industry for years to come. For manufacturers considering Mexico for their medical device production, Guaymas boasts a robust workforce with experience in this particular field.
Appliances are also driving manufacturing in Mexico, as businesses move to the country to tap into skilled labor that can produce quality products at a low cost. Refrigerators, ranges, washers, dryers and other common appliances are all manufactured and assembled there, accounting for more than half of the retail value that comes from their sale in the U.S. As Boston Consulting Group predicted, appliance manufacturing could grow 19 percent by 2017.
Electronics manufacturing is a major industry in Mexico that has garnered $14 billion in investments over the past 15 years. Electronics manufacturers need look no farther than Jalisco, Guadalajara, which is home to more than 380 specialized component suppliers, 14 electronics manufacturing services companies and 12 OEMs. The state exports roughly $150 billion in finished goods annually, and the sector as a whole employs more than 50,000 Mexican workers. The Mexican government's dedication to investing in infrastructure and education will allow the industry to thrive long-term.
The energy manufacturing sector is an emerging industry in Mexico that presents massive potential to manufacturers worldwide. For 75 years, Mexico's energy sector was run by a state-owned monopoly, Pemex. However, in December of 2013, the country reformed its constitution and adopted legislation that eliminated Pemex and opened its energy sector to private participation.
More recently, The U.S. approved limited crude oil trading with Mexico, an important step in the country's efforts to boost economic productivity by opening its energy markets and improving fuel efficiency. The energy manufacturing sector is expected to see continued growth, with over 2.5 million open jobs over the next 10 years.
While it may not be the first industry companies think of when considering manufacturing in Mexico, furniture production is an important sector in the country. In fact, Mexico's Federal Telecommunications Institute reported furniture manufacturing grew 11 percent in the third quarter of 2015. Positioned strategically next to the U.S., one of Mexico's biggest furniture export markets, manufacturers in this industry have much to gain by expanding their operations to the country. Furniture companies continue to see the advantages of manufacturing in Mexico. In October 2015, Ethan Allen Interiors began construction on a $15 million, 300,000-square-foot facility to double the size of its upholstery manufacturing operation in Mexico.
The final industry worth noting is HVAC manufacturing. The heating and cooling industry is growing as more manufacturing in Mexico and the country's middle class continue to grow. The more new homes, factories and office buildings are built, the greater the need for installed HVAC units.