Mexico turned a corner in 2004. After maquiladoras, or twin plants, deserted Mexico in favor of China and other lower-wage Asian destinations from 2001 to 2003, Mexico regained its industrial footing in 2004 and started to grow again.
Mexico looks to continue that growth in 2005, only this time it will have momentum on its side as the year begins.
As 2004 comes to a close, about 100,000 net new industrial jobs were added to the foreign export sector of Mexico’s economy, according to the Mexican Export Maquiladora Industry Council.
Gross production at maquiladoras rose to an estimated $88.8 billion this year, compared with $85.7 billion in 2003, according to Global Insight’s Mexico City office.
Direct foreign investment in Mexico will surpass $14 billion in 2004 and is expected to rise to $15 billion in 2005, also according to projections from Global Insight.
“The economy is very simple to project to the future,” said Jill Metcalfe, director of the Mexico City office of Casa San Antonio (Texas), the city’s trade promotion program. “The numbers look very stable. It has been a long time since this stability has happened for this length of time [in Mexico].”
One reason why Mexico’s export industry is growing again is because many companies that once left North America for Asia are returning to Mexico, said Jake Flores, director of the Casa San Antonio office in Guadalajara.
Mexico’s industrial park developers, happy with 2004, are looking forward to an even better 2005.
“We have seen an increase in interest in Mexico this year. We have six new companies coming in, and next year we expect to improve on that,” said Gale Thompson, vice president of operations for Tucson, Ariz.,-based The Offshore Group. “We’re actively working with 80 companies right now. Not all are likely to come, but it is looking very positive for 2005.”
The Offshore Group operates industrial parks in Sonora, a state in northwestern Mexico.
“Activity is picking up,” said Jose Enriquez, director of sales and marketing for American Industries International, based in Ciudad Juarez, Mexico. “The effect of the globalization trend with China has made investors do their homework and analyze options about where they should be. The question is not whether to globalize but where.”
American Industries International operates parks in Ciudad Juarez and Ciudad Chihuahua and, overall, operates buildings and land holdings in 18 locations.
Aerospace and medical devices are two industries that are actively seeking investments in Mexico.
Both industries are looking at Mexico for the same reasons — proximity to the U.S. market, better protection of intellectual property in Mexico than in China, the ease of visiting the offshore manufacturing site for U.S. executives and better supplier networks.
Enriquez agreed that aerospace will come to Mexico in a big way.
“Aerospace is a newcomer with more potential,” he said. “This industry is more complex and elaborate than other industries that have come before. It is more dependent on suppliers.”
David Hendricks is a business columnist for the San Antonio Express-News
Means the article is accessible only to our magazine subscribers.
