Showing posts with label employment. Show all posts
Showing posts with label employment. Show all posts

Sunday, May 3, 2015

Jaguar: 'Mexico a Strong Option for Land Rover Plant'


go to original
May 1, 2015

Land Rover's Range Rover Vogue and Range Rover Sport are top sellers in the U.S. and could possibly be produced at a new Mexico factory because it would be tied to the U.S. market, ChamaSrour said.
 

























Mexico City - Jaguar Land Rover is considering building a plant in Mexico, following other luxury car makers lured by cheap labor and free trade agreements.

Mexico is a "very strong option" for Jaguar Land Rover to invest in, possibly more than $500 million, said Joseph ChamaSrour, Jaguar director general for the brand in Mexico. "Three years from now it could be interesting to have a plant in North America, and Mexico would definitely be a very strong candidate because of the cost of labor, the logistics and the expertise of the whole supply network," he said in an interview in Mexico City.

Jaguar, owned by India's Tata Motors Ltd., would tread a well-worn path to Mexico, Latin America's top vehicle producer, which has already wooed Germany's premier luxury brands. Last year, BMW AG committed $1 billion to start turning out 150,000 cars in 2019, following Volkswagen AG's Audi and Daimler AG's Mercedes-Benz in deciding since 2012 to build cars in Mexico.

Last month Toyota Motor Corp., the world's best-selling automaker, said it will spend about $1 billion to begin producing Corollas in 2019 in Mexico, its first car factory in the country as it ends a self-imposed freeze on new plants following the financial crisis. Hyundai Motor Co. may also build a factory in the country, its managing director in Mexico said earlier this month, joining a roster of other Asian manufacturers including Nissan Motor Co. and Honda Motor Co.

Automakers are flocking to Mexico to take advantage of a low-wage yet highly experienced labor base, and export access to the U.S. and other countries through the North American Free Trade Agreement.

Land Rover's Range Rover Vogue and Range Rover Sport are top sellers in the U.S. and could possibly be produced at a new Mexico factory because it would be tied to the U.S. market, ChamaSrour said. He didn't rule out producing Jaguars at the plant.

Original article

Wednesday, April 29, 2015

México: A Preferred Place for Investors

by Murry Page
28 Apr 15
mazmessenger.com


According to a recent survey of 25 countries by the international consulting firm A.T. Kearney, México ranks number 9 of the countries in which investors want to put their money. México moved up from the 12th position it held in last year’s survey. The survey revealed that México’s approval of major structural reforms boosted the confidence of investors.

The sectors of the Mexican economy that attracts more interest from foreign investors are mainly those related to structural reforms in the energy sector and telecommunications.

The advance in the rate of foreign capital entering the country is due to several circumstances, such as the strong industrial and manufacturing integration with the United States, as well as the monetary policy implemented in México for years.

Ricardo Haneine, partner at A.T. Kearney, said, “Monetary discipline is what has distinguished México and that has given stability and has enabled it to maintain and reduce the volatility that has been in currency markets by the strengthening dollar.”

The confidence index of foreign direct investment for 2015 from A.T. Kearney puts the United States in the lead, followed by China, United Kingdom, Canada,Germany, Brazil, Japan and France.
In the Americas, México is ranked fourth, after the United States, Canada and Brazil.

(from Televisa News)

Monday, April 27, 2015

Tata’s Jaguar Sees Mexico as Strong Option for Land Rover Plant

bloomberg.com

Jaguar Land Rover is considering building a plant in Mexico, following other luxury car makers lured by cheap labor and free trade agreements.

Mexico is a “very strong option” for Jaguar Land Rover to invest in, possibly more than $500 million, said Joseph ChamaSrour, Jaguar director general for the brand in Mexico.

“Three years from now it could be interesting to have a plant in North America, and Mexico would definitely be a very strong candidate because of the cost of labor, the logistics and the expertise of the whole supply network,” he said in an interview in Mexico City.
Jaguar, owned by India’s Tata Motors Ltd., would tread a well-worn path to Mexico, Latin America’s top vehicle producer, which has already wooed Germany’s premier luxury brands. Last year, BMW AG committed $1 billion to start turning out 150,000 cars in 2019, following Volkswagen AG’s Audi and Daimler AG’s Mercedes-Benz in deciding since 2012 to build cars in Mexico.

Earlier this month Toyota Motor Corp., the world’s best-selling automaker, said it will spend about $1 billion to begin producing Corollas in 2019 in Mexico, its first car factory in the country as it ends a self-imposed freeze on new plants following the financial crisis. Hyundai Motor Co. may also build a factory in the country, its managing director in Mexico said earlier this month, joining a roster of other Asian manufacturers including Nissan Motor Co. and Honda Motor Co.

Automakers are flocking to Mexico to take advantage of a low-wage yet highly experienced labor base, and export access to the U.S. and other countries through the North American Free Trade Agreement.

Land Rover’s Range Rover Vogue and Range Rover Sport are top sellers in the U.S. and could possibly be produced at a new Mexico factory because it would be tied to the U.S. market, ChamaSrour said. He didn’t rule out producing Jaguars at the plant.

Sunday, April 26, 2015

You May Say 'Hola' to Your New Car as Mexico Ramps Up Auto Production

nbcnews.com


American motorists are used to driving imports. Brands like Toyota, Volkswagen and Hyundai account for a solid majority of the U.S. market. But before you say "konnichiwa," (hello) to that new Honda Fit you might want to take a closer look.
       
Most of the models sold by Japanese brands these days are actually built in North America — and a growing number of those are coming from plants south of the border. When it comes to automotive manufacturing, Mexico's production base is growing nearly as fast as China's. Most of that is earmarked for export, notably to the U.S.
Toyota this month announced plans to build its first major assembly plant in Mexico, at a cost of $1 billion. The company's North American CEO Jim Lentz said the new plant is part of a "strategic re-thinking of how and where we build our products."
       
Just last month, Volkswagen AG said it would invest $1 billion to expand its sprawling assembly complex in Puebla, a couple hours from Mexico City. And Ford Motor Co. is expected to soon announce a $2.5 billion investment to boost the capacity of its various Mexican operations, including two assembly lines and an engine plant.
       
A quick rundown of the list of major global makers reveals that few have not already begun investing in Mexico. Those who have yet to set up shop are racing to open up their first plants - a list including Toyota, Kia, Audi and Mercedes-Benz.
       

'Spectacular growth'

 
Even before the latest plans were revealed, automakers from around the world had committed to investing $20 billion in the Mexican automotive production base over the last five years, according to the Mexican Automobile Industry Association, or AMIA.
       
"The growth in production and in exports has been spectacular," Eduardo Solis, the trade group's president, said earlier this year. "The growth reflects the confidence the industry has in our country."
 
There are a variety of reasons why Mexico's auto industry is booming. Sales are on fire; local demand is increasing at almost double the rate of the U.S. automotive recovery. That said, Mexicans are expected to purchase less than 1.5 million vehicles this year, hardly enough to justify the huge spate of investments.
       
"The growth in production and in exports has been spectacular."


The bulk of the rapidly growing production base is targeted for export -- about 2.9 million of them this year, AMIA forecasts, with 70 percent headed for the U.S.   
        
Manufacturers benefit from extremely low labor costs, generally about $10 an hour for wages and benefits, or 20 percent of U.S. costs. But they also take advantage of the fact that Mexico has negotiated free trade agreements with 54 countries, more than any other nation except Israel.        
 
"Mexico is a great place to make a reliable investment," said President Enrique Pena Nieto as he helped Nissan dedicate its third assembly complex, in Aguascalientes, in November 2013.
 
Like the majority of the Mexican auto plants, it focuses on small vehicles which can become much more competitive thanks to low labor rates. Along with the Nissan Sentra, Mexican plants roll out models like the Honda Fit, the Volkswagen Golf, Chevrolet Cruz and, in a couple of years, the compact Toyota Corolla which is currently being assembled in Canada.
       

Change coming

 
But that is about to change. As part of a growing partnership between Daimler AG and the Renault-Nissan Alliance, the German automaker will help set up a second assembly line at Nissan's Aguascalientes plant. It eventually will produce both Mercedes-Benz and Infiniti models.
 
"Our biggest project yet, it takes our partnership to the next level," noted Dieter Zetsche, the Daimler CEO and head of the Mercedes brand, during a joint news conference held with Nissan's chief executive Carlos Ghosn.
       
Audi, meanwhile, is setting up a plant of its own an hour away from its mainstream sibling Volkswagen's facility in Puebla. The luxury maker is optimistic: "We may even double production" in the near-future, suggested Audi AG Board Member Berndt Martens during a tour of the partially completed site.
       
The launch of new luxury models has raised concerns about whether Mexican assembly plants can match the quality of lines in the U.S., Europe or Asia. But data from the likes of J.D. Power and other research firms has shown little to no quality gap.
 
And that means that the growth of Mexican auto imports will likely only to continue expand in the years ahead.

U.S. company plans 1st Mexico-built plane

Russian helicopters are among the aircraft on display at this week's fair.
factory in Mexicali
 
 
Mexico’s first Aerospace Fair this week was the site for the announcement of another first: an airplane to be built entirely in Mexico.
 
United States aircraft manufacturer Spectrum Aeronautical announced it will invest US $300 million in a factory to build one of its executive jets. Construction will begin in two and a half years on the Mexicali, Baja California, plant, whose production is expected to be 200 aircraft per year, said Spectrum CEO Linden Blue.
 
The plane will be an executive model with up to eight seats and a maximum speed of 815 km/h.

During the fair’s opening ceremony on Wednesday, President Enrique Peña Nieto announced that Mexico’s goal is to be in the top 10 in aerospace investment by 2020. The country is currently No. 14 in terms of production and last year the industry generated exports valued at $6.4 billion. The 2020 target is $12.5 billion.

The president observed that aerospace export revenues have increased by 26% compared with 2012, making Mexico the sixth largest aircraft parts supplier to the United States, the world’s largest market, surpassing Brazil, China, Israel and Italy.

Peña Nieto noted there are over 300 aerospace companies in 18 states in Mexico, nearly five times more than there were 10 years ago.

To help meet the country’s growth target, Mexico’s state development bank had an announcement of its own.

Bancomext CEO Enrique de la Madrid said in a statement the bank plans be a part of the aerospace expansion through a financing program to help the industry take off. The new program will be similar to ProAuto, a joint project of the bank and several federal government agencies that provides credit to domestic auto parts firms that supply the auto makers.

De la Madrid said the automotive and aerospace sectors are priorities for the bank although it remains committed to expanding funding and support to all companies involved in manufacturing regardless of sectors.

More firms will be looking to grow because the bank expects a migration of production and investment from China to Mexico in the next few years.

“The reality that exists in Mexico is that the manufacturing sector remains the engine of exports and is an increasingly important player in the supply chain of North America, the world’s largest economic zone,” said the banker.

The Aerospace Fair wraps up tomorrow with an air show. It is being held at the air force base in Tecámac, State of México.
Source: Milenio (sp)
 
- See more at: http://mexiconewsdaily.com/news/u-s-company-plans-1st-mexico-built-plane/#sthash.42XJuW4N.dpuf

México Ranks #14 as Happiest Country in the World

 by Murry Page
25 Apr 15
mazmessenger.com


According to the new World Happiness Report 2015, the 10 happiest countries are Switzerland, Iceland, Denmark, Norway, Canada, Finland, Netherlands, Sweden, New Zealand, and Australia. México ranked number 14 in the survey of a 158 countries, just ahead of the United States, which came in at the 15th spot.

The unhappiest country in the world was Togo, followed by Burundi and Syria, according to the 2015 report.

Jeffrey Sachs, Director of the Earth Institute at Columbia University said that the aspiration of any society is that each of its members can flourish in their abilities. He added, “This report provides evidence on how to achieve social welfare. It is not only about money, but about justice, honesty, trust and good health.”

(from El Sol de Mazatlán)

Friday, April 24, 2015

Mazatlan: The good times are back

www.examiner.com
Bob Shulman
April 13, 2015

Cruise ships will make 110 stops at Mazatlan this winter.
Cruise ships will make 110 stops at Mazatlan this winter.
Mazatlan Tourism
 
Mazatlan is on a roll. A double-digit roll, actually.
 
That’s amazing, because just a few years ago, this veteran Mexican vacationland was in a slump. Too many beds, for instance, were going guest-less in the tropical palaces lining the city’s Pacific beaches. Bars and restaurants were feeling the pinch, too, as fewer and fewer jets were delivering passengers to Mazatlan’s international airport. Even worse, the only people on the city’s cruise docks were dockworkers, there being no cruise ships – that’s right, none – docking there.
 
So what happened to turn Mazatlan’s tourism business around? Like close to a 20 percent upturn in airport passenger arrivals. And a jump in hotel occupancy rates of better than 17 percent. What’s more, a whopping 110 cruise stops are on the books for the winter of 2015/2016, each expected to put an average of 3,400 shore-going passengers in Mazatlan’s shops, bars and restaurants for a day.
 
“We didn't just sit around hoping business would get better,” said the state’s Secretary of Tourism Frank Cordova. “We made a lot of changes to upgrade security and to dramatically improve the visitor experience.”
 
Officials have pumped more than US$50 million into tourism-related projects around Mazatlan over the past few years. You’ll see the results just as soon as you step off the plane at the city’s spruced up international airport – they spent US$8 million there alone -- or off the gangplanks on its renovated cruise docks.
 
Later, as you check out the 180 blocks of the town’s Historic District, you’ll see more of the investment at work as you mosey around hundreds of facelifted mansions, art galleries, sidewalk cafes, museums, jazz clubs, boutique hotels and even a restored neo-classical opera house.
 
Chances are you’ll wind up at the historic area’s crown jewel, the painstakingly restored Plaza Machado. Lined by trees and iron benches and on three sides by outdoor restaurants, the block-long plaza is the cultural center of the town, enjoyed by Mazatlecos and tourists alike – as it’s been for close to 200 years.
 
Hotel developers have been busy, too. Overnight visitors can now bunk down in some 13,000 rooms around town, just a shade less than the inventory of Mexico’s super-resort at Los Cabos and nearly twice the count of the Riviera Nayarit in the next state down the coast. What’s more, there’s talk of six new hotel-resorts on Mazatlan’s drawing boards, expected to be announced shortly.
 
Cordova noted it’s now a lot easier to get to Mazatlan, whether on newly opened highways from other parts of the country or on increasing numbers of jetliners landing at the airport. And in yet another project, a new road from the airport will shortly make it much faster to get to the main hotel zone.
 
Among other jaw-droppers awaiting future tourists will be a US$9 million “Sports City” planned to feature a professional football stadium with bleachers for 8,000 fans, an Olympic-size swimming pool and a skating rink. Rounding out the sports attractions will be three volleyball courts, a racquetball court and four multipurpose courts.

Goodyear expected to announce new factory

The company is nearly as famous for its Blimp as it is for tires.
 
A new US $550-million tire factory will be announced tomorrow in Mexico City, Reuters reported this morning.
 
Goodyear Tire & Rubber Company said last May it was planning a new consumer tire plant for North America to serve replacement and original equipment markets in North and Latin America. Initial production capacity was to be six million passenger and light truck/SUV tires per year.
The company declined to comment on the report of tomorrow’s announcement, which came from two sources familiar with the plans, Reuters said.

The factory is expected to be built in the state of San Luis Potosí and begin operating in 2017. It would be the company’s first in North America in 25 years, since it opened a factory in Napanee, Canada, in 1990.

Headquartered in Akron, Ohio, Goodyear has facilities in more than a dozen countries.
Tomorrow’s announcement would be the third in just over one week. Toyota Motor Corp. and Ford Motor Company last week announced assembly plants worth $1 billion and $2.5 billion, respectively.

Source: Reuters (en)
 
- See more at: http://mexiconewsdaily.com/news/goodyear-expected-to-announce-new-factory/#sthash.1ADaPlcc.dpuf

Thursday, April 23, 2015

Mexico moves up in copper production

Buenavista copper mine in Sonora.
Record copper production last year by mining conglomerate Grupo México propelled Mexico into 10th place on the list of the world’s top copper producers.

Mexico moved up one from 2013, bumping Indonesia out of the No. 10 spot, with total production increasing 11% to 522,000 tonnes, according to the latest annual copper survey by Thomson Reuters.
 
Grupo México-owned Southern Copper, with operations in Mexico and in Peru, finished the year as the fifth-largest copper producer in the world with output of 665,000 tonnes, the same ranking it held last year.
 
Chile is the world’s biggest producer by far, with production last year totaling 5.7 million tonnes. China was second with 1.6 million.

Southern Copper’s record-breaking output was attributed to the US $1.38-billion investment it made last year in its controversial Buenavista mine in Cananea, Sonora, where a devastating toxic spill took place last August.

The company was fined 23 million pesos for releasing 40,000 cubic meters of copper sulphate solution into two rivers.

Source: El Financiero (sp)
 
- See more at: http://mexiconewsdaily.com/news/mexico-moves-up-in-copper-production/#sthash.237udklU.dpuf

Mexico lures in auto plants

thenews.mx

Car companies are accelerating plans to build factories in Mexico. AP PHOTO/PAUL SANCYA
Car companies are accelerating plans to build factories in Mexico. AP PHOTO/PAUL SANCYA

Labor costs, few tariffs attract foreign business


BY TOM KRISHER AND CHRISTOPHER SHERMAN
The Associated Press

DETROIT – Mexico has become the most attractive place in North America to build new automobile factories, a shift that has siphoned jobs from the United States and Canada, yet helped keep car and truck prices in check for consumers.

In the past two years, eight automakers have opened or announced new plants or expansions in Mexico. Just last week, Toyota announced a new plant in Guanajuato to build the popular Corolla, work now done in Canada, while Ford unveiled plans for Mexican engine and transmission factories.

Low labor costs and fewer tariffs are the swing factors. A worker in Mexico costs car companies an average of $8 an hour, including wages and benefits. That compares with $58 in the United States for General Motors and $38 at Volkswagen’s factory in Tennessee, the lowest hourly cost in the United States, accord- ing to the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan. German auto workers cost about $52 an hour.

Mexico also trumps the United States on free trade. It has agreements with 45 countries, meaning low tariffs for exporting globally. That, along with low labor costs, convinced Audi to build an SUV factory in the state of Puebla. The German automaker will save $6,000 per vehicle in tariffs when it ships a Q5 to Europe, compared with building the same vehicle in the United States, says Sean McAlinden, chief economist at CAR.

Audi also sells the Q5 in the U.S., where tariffs on cars built in Mexico were dropped under the North American Free Trade Agreement.

The cost savings also should allow automakers to add expensive fuel-saving features to meet stricter U.S. government gas mileage requirements without raising car prices. Two-thirds of cars made in Mexico are shipped to the United States.

While Mexico’s auto industry booms and workers welcome the above-average wages, they are speaking out more loudly about working conditions.

Mexican auto production more than doubled in the past 10 years. The consulting firm IHS Automotive expects it to rise another 50 percent to just under 5 million by 2022. U.S. production is expected to increase only 3 percent, to 12.2 million vehicles, in the next 7 years.

Automakers now have 18 factories in Mexico, many built in the past 10 years. In four years, five more will be built, moving the country from the world’s seventh-biggest auto producer to fifth.

The shift means jobs that could have gone to the United States or Canada went south. The number of auto-making jobs in Mexico has risen almost 40 percent since 2008, from 490,000 to 675,000 last year, according to government and industry statistics. During the same period, U.S. auto manufacturing employment grew 15 percent to near- ly 903,000.

Toyota’s new plant will create 2,000 new jobs, while Ford’s $2.5 bil- lion investment will add 3,800 jobs.

For Mexican workers, the plants “originally appear like marvelous places because you can earn a salary in exchange for good work,” says Huberto Juárez, a professor at the Center for the Study of Economic and Social Development at the Autonomous University of Puebla.
Some Japanese automaker plants start workers at 90 to 150 pesos per day, or $6 to $10, Juárez says. Others, such as Volkswagen, have paid more than double that. Juárez says Mexico’s auto-making wages are now below China, but better than Mexico’s minimum wage of $4.50 per day.

There is pressure to improve working conditions at Mexican factories. Last week, three former Mazda factory workers publicly complained of injuries and of being worked longer than legally allowed. A union official announced protests in support.

Even so, Juárez says workers probably will stay put. “The big threat is always going to be unemployment. That’s why they stay. Because you leave there and where are you going to go?”
Initially, automakers with Mexican factories faced quality problems due to an unskilled work force. But companies with longtime factories in Mexico, such as Ford and Nissan, have resolved those issues, according to McAlinden.

Despite shipping costs, it’s still cheaper to build cars for the United States in Mexico, McAlinden says.

A U.S.-built Chevrolet Sonic subcompact costs about $700 more to make than a comparable Mexican-built Ford Fiesta, McAlinden says. That’s even with a labor agreement at the Sonic factory in Michigan that allows 40 percent of the workers to be paid lower wages than longtime union employees.
 
The United Auto Workers complain that companies building in Mexico are taking advantage of “slave-like” wages. “American manufacturing workers could have had good paying jobs that respect basic human dignity,” says UAW President Dennis Williams.

Still, the auto industry’s investments aren’t limited to Mexico. Automakers poured $46 billion into improving U.S. factories from 2010 to 2014. U.S. auto-making employment grew 37 percent during that time.

Ford pointed out that 80 percent of its annual North American investments are in the United States, where spending “will continue at about the same sizable level going forward.”

Car buyers should see benefits from lower costs in Mexico. U.S. government fuel-economy requirements call for raising mileage of the new car fleet to average 54.5 miles per gallon by 2025. The technologies needed, including turbocharged engines and multi-speed transmissions, are costly. And with gasoline just over $2 per gallon, buyers don’t want to pay extra. So McAlinden says moving engine and transmission production to Mexico makes sense.

Monday, April 6, 2015

Mexico's Manufacturing Sector Continues to Grow

stratfor.com

Summary

Mexico's economy has performed well relative to other major Latin American economies in recent years, largely because of its thriving manufacturing sector. Unlike Brazil and Argentina, whose manufacturing sectors are slumping, Mexico has continued to see solid growth because of its integration with and dependence on the U.S. market. Although low global oil prices will put pressure on Mexico's economy, the performance of the manufacturing sector — especially in high-end manufacturing — will be a key driver of Mexico's economic growth this year and beyond.

Analysis

In the late 1980s and early 1990s, Mexico underwent a profound economic and political reorganization. The economy liberalized, culminating in the North American Free Trade Agreement. Major state-owned companies privatized, transforming Mexico from a closed economic and political system into an export-oriented industrial economy. As a result, trade increased between Mexico and the United States, and a manufacturing belt sprung up at the countries' shared border. From 1990 to 2000, Mexican trade became even more closely tied to the United States. In 1990, the United States accounted for 69 percent of all Mexican trade; by 2000, it accounted for nearly 80 percent.
But at the turn of the century, China's special economic zones became cost-competitive alternatives to

Mexican factories. Mexico responded by making more valuable products, such as automotive, aeronautical and electronic products. Thus, even though clothing exports dropped 43 percent (from $7.6 billion to $4.3 billion) between 2002 and 2012, automotive exports increased by 152 percent ($27.9 billion to $70.3 billion) and electronic exports increased by 73 percent ($43.3 billion to $74.9 billion) over the same period. Asian alternatives to high-end products notwithstanding, these Mexican products remained cost-competitive because of NAFTA.


Mexico's Primary Intermodal Networks and Population
   
Moreover, rising wages in China have once again shifted the equation in global manufacturing. Average manufacturing labor costs in Mexico are now almost 20 percent lower than in China, whereas in 2000, Mexico's labor costs were 58 percent more expensive than China's. There is also an important regional distinction that should be taken into account. A significant portion of U.S. export-oriented middle- and high-end manufacturing takes place in northern Mexico, especially around Monterrey, which is major steel producing area where GDP per capita exceeds $40,000. The electronics industry is also important and contributes greatly to the economy of northern states like Chihuahua, Baja California and Tamaulipas. On the other end of the spectrum, low-end manufacturing of goods like clothing and textiles is continuing to expand in southern Mexico, in cities like Campeche and Veracruz, making this particular region a beneficiary of China's growing labor costs.

Since the implementation of NAFTA in 1994, Mexico's real GDP climbed by about $383 billion to nearly $1.3 trillion. This growth, which placed Mexico second in Latin America and 15th in the world in terms of GDP, rose primarily because of the advantages that come with Mexico's proximity to the United States. Mexico has planned its economic strategy around these advantages, which include short transport distances to the world's largest consumer market and low wages compared with those of the United States — low wages that have spurred investment in manufacturing (with the United States as a leading investor) for decades. The manufacturing value-added sector now makes up 18 percent of Mexico's GDP.

The Manufacturing Sector's Current Status

This orientation toward the U.S. market and the diversification of Mexico's manufacturing production has benefited the country significantly in recent years. While Brazil and Argentina (which, along with Mexico, make up more than 80 percent of Latin America's manufacturing output) have seen a slump in their manufacturing sectors due to both countries' slowing economies and growing restrictions within their Mercosur trade bloc, Mexico has performed much better. In large part this is structural: Mexico has been much more open in its economy and supportive of free trade than Brazil or Argentina, which have followed a protectionist import-substitution model. The South American countries' overall trade with the United States is also much lower than Mexico's. As a result, Mexico's manufacturing output increased by 3.4 percent in the first nine months of 2014, while Brazil and Argentina's contracted by 1.8 and 2.4 percent respectively.

Several subsectors are driving this manufacturing growth, most notably in high-end manufacturing, such as the automotive, plastics and aerospace industries. Mexico's auto sector has been particularly strong, experiencing double-digit export growth every year since 2010. The plastics industry, which is valued at more than $20 billion per year, has averaged 13.4 percent growth in exports over the past five years. Meanwhile, Mexico's small but burgeoning aerospace industry based in the central state of Queretaro has grown even faster in recent years.

On the lower end of manufacturing, there has also been steady growth, though not as rapid as in much of Mexico's high-end manufacturing. Exports of textiles have averaged 9 percent growth over the last two years, while clothing exports have averaged 3.5 percent growth. This suggests that the high-end sectors concentrated in northern Mexico are more attractive within the country's manufacturing sector and are larger, both in terms of growth and absolute value, than the low-end sector in southern Mexico.



 

Outlook and Broader Implications

One of the factors impacting Mexico's economic growth this year will be the accelerating U.S. economic recovery, although growth for the first quarter of the year is likely to be small. As mentioned previously, a substantial portion of Mexico's manufactured goods are exported to the United States, and U.S. demand for these products will increase as long as the U.S. economy continues to build momentum. Mexico's manufacturing output is projected to increase between 4 and 4.5 percent for 2015 and 2016, and the Boston Consulting Group expects that the manufacturing sector could add between $20 billion and $60 billion to Mexico's economy through 2018.

All of the subsectors that have performed well in recent years are also projected to continue strong growth in the coming years. The growth rate for plastics is expected to accelerate to 6 percent in 2015, while the automotive and aerospace sectors are projected to sustain strong growth for the next several years. Machinery and appliance manufacturing could also see strong growth, and exports of textiles and carpets are likely to continue to see moderate growth.

However, some less positive factors will also affect Mexico's economic performance. Although Mexico's security situation has not significantly harmed the country's manufacturing growth, water availability in the country could become a long-term constraint in manufacturing development. Falling oil prices and a difficult global economic environment have also put more immediate pressures on Mexico's economy. Crude petroleum is Mexico's largest export. Because of lower global oil prices, Mexico's central bank recently cut its growth outlook for this year from 3-4 percent to 2.5-3.5 percent. Meanwhile, the peso fell by 13.1 percent during the course of 2014 and has fallen another 1.4 percent in 2015.

Low global oil prices also have important regional ramifications. From a manufacturing perspective, low oil prices can be a boon, especially for manufacturers of goods such as plastics and machinery.

On the other hand, low oil prices add to employment problems and push wages down in Mexico's primary oil-producing zones, which are low-end wage zones in the country's south. For Mexico's state finances, this is a broader problem, and there is no short-term fix. The government thus will have to rely on tax reform to close the gap somewhat until Mexico's energy reforms begin benefiting the energy sector. But overall, the strong performance and growth prospects of Mexico's manufacturing sector, particularly high-end manufacturing, will continue to boost the country's economy for years to come.

Toyota to build new Plant in Guanajuato, Mexico

theyucatantimes.com

Toyota Motor is planning new Chinese and Mexican factories, ending a freeze on plant construction to better compete against Volkswagen and other global rivals.

The Japanese automaker will make an announcement later this month.

It expects to spend some 150 billion yen ($1.25 billion) on the new facilities, opening them in 2018 in China and 2019 in Mexico. Together, they will boost Toyota’s annual production capacity by up to 300,000 vehicles.

These will mark the first new Toyota factories since a Thai facility that opened in 2013, when the company halted plant construction to focus on honing profitability.

The Chinese plant will be built in the city of Guangzhou, where Toyota has a joint venture with Guangzhou Automobile Group, and make the Yaris subcompact. It will churn out up to 100,000 cars a year. Eyeing the growing demand for autos among the middle class in China, Toyota aims to raise its market share there from 4% by offering more small cars.


Yaris
Toyota will make the Yaris subcompact at the new Chinese plant (Photo: nikkei)


In Mexico, Toyota’s factory in the state of Guanajuato will have a maximum output capacity of 200,000 cars a year. The plant will operate around the clock, building a new version of the Corolla sedan for North America. A Canadian factory that now builds Corollas will instead make bigger vehicles. Toyota sees low Mexican production costs helping it achieve more competitive pricing in the U.S., where it holds a 14% market share.

The new factories will require 40% smaller initial investments compared with 2008 outlays. Toyota has cut setup costs by reducing assembly line steps and using stripped-down production equipment. The new plants will be able to retool for different models in a few days, as opposed to nearly a month at older facilities. Such cost-saving adaptations should help them maintain profitability even when output drops sharply.

Until around 2008, Toyota had added 200,000 to 300,000 vehicles of new capacity a year, propelling its global expansion. But this buildup created fixed costs that left it exposed to the crash in automobile demand that followed the global financial crisis. Stung by a full-year operating loss, Toyota announced a three-year freeze on plant construction starting in fiscal 2013. It has since concentrated on boosting earnings capacity and has something to show for it: group operating profit for the just-ended fiscal 2014 is seen coming in at an all-time high.

Once the new factories are up and running, Toyota’s worldwide production capacity will reach 11 million vehicles.

Source: http://asia.nikkei.com/

Monday, March 23, 2015

Secretary of Labor Moves to Standardize Minimum Wage

by Murry Page
21 Mar 15
mazmessenger.com


Following their meeting, Alfonso Navarrete Prida, the Secretary of Labor, business leaders and workers told reporters that effective April 1 that the minimum wage in Area B, which includes the state of Sinaloa, will be increased from 66.45 to 68.27 pesos a day.

This is the first step toward having one minimum wage for the country, instead of the current minimum wage for area A and another minimum wage for area B.

The Secretary of Labor said that if economic conditions permit, they expect the minimum wage in Area B to be increased again in October of this year by 1.83 pesos in order to bring the minimum wage to 70.10 pesos per day, which is the same as that for Area A.

(from Azteca Noticias)

Monday, March 16, 2015

Sinaloa Adds 24,000 Jobs in February, 2015

 by Maureen Dietrich
16 Mar 15
mazmessenger.com


With the addition of 24,431 jobs in February this year, Sinaloa reached a total of 474,406 workers registered with the Instituto Mexicano del Seguro Social, an annual increase of 5.4 percent in formal employment.

The number of new jobs registered in February is more than double the number registered in the same period last year which was 11,890.

(from Noroeste)

Thursday, March 12, 2015

OECD: México’s has 3rd Lowest Unemployment

by Murry Page
11 Mar 15
mazmessenger.com

The Organization for Economic Cooperation and Development (OECD) reported that for the month of January of this year México had the third lowest unemployment rate of all member countries. It ranked only behind Korea and Japan.

According to information released by the OECD, México’s unemployment rate for January stood at 4.4 percent, up 0.1 percent from the prior month, but well below the OECD average of 7.0 percent for January.

The rate of unemployment among Mexicans between the ages of 15-24 dropped to 8.3 percent in January from the 8.8 percent reported in December. The unemployment rate for those 25 and older rose to 3.5 percent from the 3.3 percent seen in December.

The rate of unemployment for Mexican women was 4.4 percent, while the rate for Mexican men stood at 4.3, both unchanged from last December.

The five OECD countries with the lowest unemployment rates were Korea (3.4 percent), Japan (3.6 percent), México (4.4 percent), Iceland (4.5 percent) and Germany (4.7 percent).

(from Azteca Noticias)

Wednesday, March 11, 2015

Heineken announces Chihuahua brewery

New Heineken brewery for Meoqui.
New brewery for Meoqui.
News

 

An announcement today by the beer maker Heineken means economic diversification for the Chihuahua municipality of Meoqui: the state’s fourth largest producer of milk will become the largest producer of beer.

Cuauhtémoc Moctezuma Heineken announced the investment of 7.5 billion pesos, or US $480 million, to build a new plant in the municipality located in the center of the state, about 60 kilometers from the city of Chihuahua.
 
It’s not the first time Meoqui has celebrated the arrival of a brewery. Cuauhtémoc Moctezuma, before it became part of Heineken in 2010, began the process of building there in 2007 but later abandoned the project, even after the state put up 100 million pesos to develop infrastructure.

The new brewery will produce 5 million hectoliters annually for the domestic and United States markets, employ 500 people and bring to 27 the number of plants it operates in Mexico. It is the biggest single investment ever made in the state of Chihuahua, said Gov. César Duarte Jáquez.

Company CEO Marc Brusain said Chihuahua was selected for its geographic location, the quality of the water and the level of law enforcement.

Today’s announcement was made at Los Pinos, the official home of President Peña Nieto, in conjunction with the company’s 125th anniversary.


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Heineken is the world’s third largest brewer. Its most popular brands in Mexico are Sol, Indio and Tecate.

In January competitor Grupo Modelo, maker of Corona among other brands, announced plans to build a new brewery in Mérida, Yucatán. Its initial production will total 5 million hectoliters.
A hectoliter is the equivalent of about 122 million 12-bottle cases.

Source: Milenio (sp), Tiempo (sp)
 
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Tuesday, March 10, 2015

Energy Industry Investment Expected to Start Flowing into Mexico in Late 2015

laht.com

MEXICO CITY – The funds generated by the auctions of rights to the first 23 oil fields being offered to investors, estimated at $21 billion, should start flowing into Mexico by the fourth quarter of this year, Energy Secretary Pedro Joaquin Coldwell said Monday.

“These are investments not in the hundreds (of millions) but in the billions of dollars,” Coldwell told Radio Formula.

The first contracts in Round One will be granted starting on July 15, with signing of the deals taking place “around August, September at the latest, and the investments will start arriving in the fourth quarter of this year,” the energy secretary said.

The Mexican government is offering 23 of 169 blocks in the first two phases of Round One, opening the door to private investment in the energy industry after 76 years of state control.

The first phase of Round One includes 14 shallow-water exploration blocks in a 4,222-sq.-kilometer (1,630-sq.-mile) area off the coasts of the southeastern states of Veracruz, Tabasco and Campeche.

The government estimates that $16.7 billion in investment will flow into these fields over the next five years, creating 168,000 jobs.

The nine remaining fields to be awarded are located in a 281-sq.-kilometer (108-sq.-mile) area off the coasts of the southeastern states of Tabasco and Campeche, and contain reserves estimated at 671 million barrels of oil equivalent.

These fields are expected to attract $4.48 billion in investment and lead to the creation of 44,000 jobs.

“Much investment is flowing into Mexico right now,” Coldwell said, citing the national pipeline system currently under construction as an example.

President Enrique Peña Nieto’s energy industry reforms opened Mexico’s oil and gas sector to private investment for the first time since 1938.

Expectations, however, have been dampened by the plunge in oil prices.

The government said in January that it would cut public spending by $8.02 billion, or 0.70 percent of the gross domestic product (GDP), in an effort to deal with the effects of falling crude prices.

The cuts include a reduction of about $4 billion in the budget of state-owned oil giant Petroleos Mexicanos, or Pemex, forcing officials to hold off on several planned projects, including deepwater exploration.

Friday, March 6, 2015

VW plans $1 billion investment in Mexico to support Tiguan output, report says

autonews.com


MEXICO CITY (Reuters) -- Volkswagen AG will unveil plans next week to invest around $1 billion in Mexico to expand its Puebla assembly plant, a person familiar with the matter said on Thursday.

The investment, aimed at supporting production of the Tiguan compact crossover, is due to be unveiled on Monday and is expected to generate about 1,900 jobs, the person said.

As of December, total investment in the auto sector in Mexico had reached $19 billion under President Enrique Pena Nieto, who took office two years earlier, the government says.

Volkswagen, which opened its sprawling Puebla plant in 1964, last year produced 475,121 vehicles out of about 3.2 million autos manufactured in the country, data from the Mexican Automotive Industry Association show.

Mexico is the seventh biggest manufacturer of autos and the fourth largest exporter in the world, according to AMIA. More than 80 percent of those vehicles are destined for sale abroad.

Total auto production increased 27 percent last year, compared to 2013, and AMIA has predicted that Mexico will produce more than 5 million vehicles by 2020.

Mexico - best known for tequila - is now a berry powerhouse

tthenewstribune.com
McClatchy Foreign Staff
March 6, 2015
 

— Mexico, already the world’s third-largest exporter of blueberries, raspberries, blackberries and strawberries, is searching for ways to get U.S. consumers to throw more fresh blueberries into the pancake batter and heap more raspberries onto their fruit salads.

As long as U.S. and other foreign consumers wolf down berries, Mexican proponents of the industry say, the surge will continue. And that’s more than just an agricultural oddity in a land better-known for fields of blue-green agave and patches of cactus. The growth of the berry industry has had major consequences on regions long afflicted by high unemployment and drug-related violence.

The industry, which didn’t exist less than two decades ago, employs more than 100,000 people and reaps nearly $1 billion a year. And it’s still emerging from its adolescence.

“We’re starting some huge growth,” said Javier Trujillo Arriaga, Mexico’s senior federal plant health director. “It’s been spectacular, absolutely spectacular.”

“It’s likely the industry will employ 200,000 people in five years,” added Mario Steta Gándara, former head of the National Association of Berry Exporters, a trade association that began only five years ago.

Berry cultivation isn’t the province only of huge industrial farms. Similar to coffee farms, berry operations vary in size.

“You can have the 500-acre or 600-acre guy, but you also have people making a decent living on 5 acres,” said Steta, who’s general manager of Mexico operations for Driscoll’s Berries, a fruit giant based in Watsonville, Calif., with more than a century in the berry business.

The story of Mexico’s berry industry begins in distant lands – California and Chile – where fruit farmers encountered a number of difficulties ranging from water shortages to high shipping costs and inadequate access to migrant workers. So growers looked elsewhere.

“I worked in raspberries for 10 years in Chile,” said Sergio Vargas, a Chilean who’s a partner in Berries Paradise, an exporter with a logo that describes the concern’s products as “a piece of heaven.”

He and his Mexican partner have 1,500 acres of blueberries and raspberries under cultivation in neat rows under open-sided plastic covers. The fields are in the southern highlands of Jalisco state along the Pacific coast.

“We started at zero in 2008,” Vargas said. “It’s cost a lot to learn how to grow blueberries here. . . . We’ve had a sharp learning curve.”

They’ve settled on a variety of blueberry known as Biloxi, a name taken from the city in Mississippi, which is adapted to the warmer temperatures and milder winters of Mexico.

Unlike in the United States, the blueberry bushes don’t drop their leaves here, and the growing season is from November to May, or longer. Harvests are smaller per acre but “it’s still a good business,” Vargas said.

Most of the berry farms are 4,000 to 5,200 feet above sea level, an elevation that blunts the fierce heat that beats down along the coast. While strawberries are grown widely in Mexico, other berries are largely limited to Jalisco, Michoacan and Colima states, all of which border the Pacific, since that’s where the necessary refrigerated supply chain is centered.

The regions traditionally had been home to much different kinds of plants. When foreign growers came to the areas of Jalisco where berries now flourish, they found sugarcane. In neighboring Michoacan, berries took over from avocado plantations.

Trujillo, the government crop official, said major sugarcane growers would hire only 50 people to tend 25,000 acres. That same acreage for berries, he said, employs 2,000 people to tend the bushes and harvest the fruit by hand.

Mexico’s largest berry producer is Driscoll’s, the California concern. Its chief executive, Miles Reiter, a third-generation berry man, came to Mexico around 1995.

“A worker . . . in California invited Miles to a wedding in Jalisco in the middle of winter,” Steta said. “He came, he saw the environment . . . and he wondered if it was not the right environment for berries.”

Reiter quickly determined that bushes and vines would sprout from the soil, but he kept his plan low-key for a number of years, quietly doing trials in Mexico in the late 1990s. Then conditions in California pushed him to action. An anti-immigrant mood made it harder to get field labor there to harvest his berries.

“California’s challenges are really providing an opportunity for Mexico. Labor and immigration are really big issues. You do not have the labor to harvest these crops in California,” Steta said.

The berry industry’s growth has been so rapid that hurdles have arisen. At some times of the year, the country lacks refrigerated trucks to move berries, which have a shelf life of about 45 days. Better laws are needed to protect proprietary varieties. And capital costs are high. Rather than coming from seeds, the vines and bushes must be propagated from roots and stems, usually brought from the U.S. and elsewhere.

Two dozen companies now belong to the berry exporters’ association, and those that have mastered the supply chain note proudly how quickly their berries get plucked from the vine or bush, sent to cooling chambers, then on to refrigerated trucks.

“These trucks,” said Daniel Partida Salazar, as he stood on a shipping dock for Sunbelle, another grower, “go directly to the United States. When the doors shut here, they don’t open again until Chicago.”

When Mexico-grown berries show up on U.S. supermarket shelves, few consumers notice the provenance.

“The same brands that U.S. consumers are used to seeing on supermarket shelves – like Driscoll’s, like Naturipe, like Dole – are sourcing (their berries) in Mexico now,” said Mario Andrade Cárdenas, a grower from Michoacan state who’s the head of the berry exporters’ association.

“Today, Mexico is the principal source of berries for the United States outside of U.S. production,” he said.

But growers here seek to diversify. While 80 to 90 percent of exports head north, growers also air-ship to Europe, North Africa, the Middle East and East Asia.

“The consumption of berries just keeps growing. People are eating them for all their anti-oxidant properties, their high fiber and their beneficial effects,” said Casimiro Dávila, purchasing chief for Hortifrut, a Chilean company with major investments in Mexico.

Dávila said Mexico had cut sharply into Chile’s global berry-market share.

“Mexico just killed Chile in production of blackberries and raspberries,” he said, “because the cost of air shipment was so high.”

Mexico now produces 30 percent of the world’s blackberries.

Berry growers here have met defeat in only one area: convincing Mexicans themselves to eat more berries. Mexicans eat less than a tenth of what’s eaten in the United States, where per capita consumption of fresh berries tops five pounds a year.

Read more here: http://www.thenewstribune.com/2015/03/06/3673004_mexico-best-known-for-tequila.html?rh=1#storylink=cpy

Thursday, March 5, 2015

Diageo has plans to grow tequila brand

 
Don Julio, now owned by Diageo
       Don Julio, now owned by Diageo.drink spirits

 

Spirits maker Diageo has announced plans to invest US $400 million in Mexico over the next five years.

The company has just completed the purchase of the half of Don Julio tequila it didn’t already own, a deal it made with José Cuervo last fall. Part of the deal gave Cuervo full ownership of Bushmill’s Irish whiskey.

Diageo CEO Ivan Menezes said yesterday, in conjunction with a visit to the United Kingdom by President Peña Nieto, that its spending in Mexico will be designed to grow the Don Julio brand. The amount of the investment includes its acquisition costs (a figure that wasn’t revealed), new production facilities, water treatment, agave farming and a new heritage center in Atotonilco, Jalisco, where Don Julio is based.

Menezes said Mexico “is a country of enormous opportunity and will form an important part of Diageo’s future.” The firm has estimated its investment will create about 200 direct jobs, and about the same number of indirect jobs in the first three years.

In Mexico Diageo is best known for its blended whiskey, Johnnie Walker, of which it sells a million cases a year. Sales of Red Label soared 40% in 2014, partly as a result of a campaign called Keep Walking Mexico.

Worldwide, its most famous brands are Smirnoff vodka, Johnnie Walker, Captain Morgan rum, Baileys liqueur, J&B whiskey, Tanqueray gin and Guinness, the Irish stout.

The company’s general manager in Mexico, Erik Seiersen, said in an interview last week that it is exploring producing more of its brands here along with investing in mezcal. It also plans a big boost in tequila production, from the current 640,000 cases a year to as many as 2 million, which would mean doubling the amount exported.

Source: Press and Journal (en), El Financiero (sp)
 
- See more at: http://mexiconewsdaily.com/news/diageo-plans-grow-tequila-brand/#sthash.uVQKgzgh.dpuf