Between the bustling electronics plants in Mexico’s Pacific state of Baja California and the humming textile factories in the languid Caribbean air of the state of Yucatan, Mexico’s 31 states and its federal district make products daily that are used around the world.
Each state has its own industrial story, based largely on history, location, population, natural resources and infrastructure. The states compete constantly for the influx of foreign direct investment, which averages between $13 billion and $15 billion a year nationally, to create jobs and boost the standards of living.
Most taxes in Mexico are levied at the federal level, which means states are limited in the tax incentives they can offer to attract foreign investment.
Aside from waiving payroll taxes, offering market research and cutting red tape, state economic development offices put work force training programs on the table when negotiating deals with manufacturers.
Wages can differ within Mexico, with the highest wages paid at factories near the U.S. border, where the competition for workers is the strongest. The further from the border, the lower the wages can become, with some exceptions.
Of the 31 states, 20 can be considered industrial leaders — Aguascalientes, Baja California, Chihuahua, Coahuila, Durango, Guanajuato, Jalisco, the state of Mexico, Morelos, Nuevo Leon, Puebla, Queretaro, San Luis Potosí, Sinaloa, Sonora, Tamaulipas, Tlaxcala, Veracruz, Yucatan and Zacatecas.
States such as Guanajuato, Sonora and Coahuila capture, if not the breadth of diversity between the states, the contrasts between them. Guanajuato is using its educational resources and location to position itself as a logistics center in Mexico, while Sonora is using its automotive base to expand into aerospace. Coahuila is growing its vehicle manufacturing base.
Guanajuato Offers Many Population Areas
Hilly and mountainous, Guanajuato is home to 5 million people, the sixth largest state in Mexico. It is one of the central highlands states, a colonial area where several turning points in the nation’s history occurred.
A famous attraction in its capital city of the same name is a museum of mummies, but Guanajuato’s economy is hardly dormant. Guanajuato has come alive with 304 new business investments between 2000 and 2006 worth $5.6 billion.
The investments have led to 69,000 new jobs for the work force of 2 million statewide. Seventy percent of the investments came from foreign companies, mainly those in North America, Europe and Asia.
Whereas many Mexican states offer one, two or three cities with clusters of industries, Guanajuato has 14 cities with populations of more than 100,000. With higher educational and vocational facilities in each city, the state has a highly developed source of educated and trained workers, both in skilled labor and management ranks.
Most of the industrial development has occurred alongside the two main highways that crisscross Guanajuato. Highway 57, the NAFTA highway, crosses Guanajuato on its way to Mexico City, Texas and beyond, while Highway 45 stretches from the port of Veracruz to El Paso, Texas.
The biggest industrial development in Guanajuato occurred when General Motors Corp. built an assembly plant in Silao in the mid-1990s. GM recently announced a $600 million expansion of the plant, which adds 1,000 more jobs and more suppliers.
The cluster of automotive suppliers in Guanajuato already includes American Axle Manufacturing, Continental Teves, Delphi, Monroe, RYOBI, ThyssenKrupp, Elay, U.S. Manufacturing, Hutchinson, CIE Automotive, VCST Industrial Products, Tenneco and Aventec.
Guanajuato aspires to additional industrial development by increasing its logistics capacity.
The state is situated one day’s truck distance from the Pacific ports at Manzanillo and Lazaró Cardenas, as well as from the Gulf of Mexico ports at Tampico and Altamira.
As more Asia-made, U.S.-bound freight enters Mexico at Pacific ports, the freight needs more staging areas in Mexico. Guanajuato has made its bid with the Guanajuato Inland Port.
The inland port can shift freight between trucks, aircraft and rail because it operates next to rail lines and Guanajuato International Airport.
The 2,470-acre, $100 million inland port includes an inland customs house, intermodal cargo terminal, free trade zone, a private industrial park and an air cargo platform.
The free trade zone designation allows cargo to be serviced in bonded zones free of import/export and value-added taxes if the cargo eventually is exported from Mexico.
The air cargo platform currently handles 20,000 tons a year, but that is only 30 percent of its capacity. The runway is 2 miles long.
Sonora Attracts Aerospace Companies
In contrast to Guanajuato’s mountains and valleys, Sonora is sea and desert. Both states have one industrial factor in common — an automotive assembly base.
Ford Motor Co. chose Sonora’s capital city, Hermosillo, in 1986 for a stamping and assembly plant. Ford expanded the plant with a $1.2 billion investment earlier this decade.
The models made there are Ford Tracer, Escort, Focus ZX3 and Fusion; Mercury Milan; and Lincoln MKZ. The plant produces 305,000 vehicles per year.
Top-tier auto suppliers in Sonora include Magna, Flex-n-Gate, Martinrea, Delphi, Faurecia and Grupo Antolin.
Sonora, with a population of 2.4 million, wanted to diversify beyond the automotive industry, however, and has successfully attracted companies in the aerospace industry.
The state’s geographic position helped, especially the 750 miles of coastline along the Sea of Cortez and the 368 miles of common border with the United States.
Sonora has five international airports, 22,500 miles of highway, six ports of entry with the United States and a deepwater seaport at Guaymas. The state’s 43 industrial parks operate in 17 cities. The top industrial cities are Hermosillo, Guaymas/Empalme, Nogales and Obregon.
The aerospace companies that have taken advantage of Sonora’s location and industrial base include Goodrich, ITT, ESCO Turbine Technologies, ESCO Integrated Manufacturing, Parker Hannifin and BAE Systems.
During one eight-month period in 2004, the state attracted $1.8 billion in new foreign industrial investments. The influx resulted in 20,000 new jobs.
Coahuila Grows Vehicle Manufacturing Sector
Coahuila accounts for a 318-mile stretch of the U.S.-Mexico border, adjacent to Texas. About 95 percent of Mexico’s coal reserve is found in Coahuila, making it Mexico’s top mining state.
But there is also a growing vehicle manufacturing industry there, as well, with two major assembly plants — one operated by General Motors and the other by DaimlerChrysler, with a second DaimlerChrysler plant pending — two engine facilities and a car transmissions plant.
Freightliner LLC will add to the trend with a new $300 million truck manufacturing plant in Saltillo, the capital city of Coahuila.
Dedicated to the production of Freightliner and Sterling trucks, the new facility will provide additional capacity to accommodate Freightliner’s long-range product planning, including an expected upturn in industry demand by 2009, said Chris Patterson, president and CEO of the Portland, Ore.,-based company.
The 1 million square foot facility will be located near the existing DaimlerChrysler plant, which offers opportunities for synergy such as the extension of a supplier park and railroad terminal, Patterson said. Freightliner is part of DaimlerChrysler’s Truck Group.
The plant is expected to create about 1,600 jobs directly, as well as an additional 1,100 supplier jobs.
Company executives worked with federal and state officials in Mexico to bring the project to fruition.
“This will be a tremendous economic boost to Coahuila and will become a force to consolidate the expansion of the automotive cluster in the state,” said Humberto Moreira, governor of Coahuila.
Mexico’s industrial story is bigger than three states. Extrapolate Guanajuato, Sonora and Coahuila into 31 states and the picture comes together, state by state.
