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Mexico creates US jobs, US Mexico partnership, Mexico manufacturing US jobs

4.9 Million US Jobs at Stake in Mexico

Mexico creates US jobs, US Mexico partnership, Mexico manufacturing US jobsBy Adina Moloman

Mexican trade accounts for approximately 4.9 million jobs in the US. Unfortunately, leaders on the US political front are not always cognizant of the facts governing this highly complex partnership between the two North American countries. Mexico creates US jobs, but those jobs depend on upon a system of cooperation that could disappear without care for a better understanding of this unique relationship.

Political Mischaracterizations

Listening to US political rhetoric leaves one with a general fear that Mexico is taking away US jobs. Some of the measures being called for include:

  • Imposing 35% tariffs on Mexico
  • Blocking remittances to Mexico from workers in the US
  • Building a border wall to stop the influx of Mexican immigrants
  • Abrogating NAFTA

In addition to be unrealistic and misleading, these mischaracterizations of the economic situation in North America overlook the fact that Mexico creates US jobs. 4.9 million US jobs depend on a healthy relationship and cooperative partnership with the manufacturing country. The threat is that remarks and intentions expressed in recent, national politics in the US could spark a trade war with Mexico and China. And this sort of a trade war could cost the US up to 4.8 million jobs here at home, according to a study recently released by the Peterson Institute of International Economics.

How Mexico Creates US Jobs

According to a project by the Woodrow Wilson Center’s Mexico Institute, approximately 4.9 million US jobs depend on trade with Mexico. Mexican manufactured goods typically use approximately 40% of their inputs from US manufacturers. In Chinese goods, that number is 2%, and in the European Union, it’s only 2%. Because Mexico has duty-free access to US products, the country relies heavily on US-made parts to produce the finished product. This means Mexico’s gain is also a gain for the US.

This a real and tangible link between the two countries. In 13 US states, at least 100,000 net manufacturing and service jobs come from trade with Mexico – and that number is over 300,000 in several states. Each and every minute, over $1 million USD in trade crosses the US-Mexican border, accounting for an annual trade total of nearly $600 million USD. This is dramatically higher than the rate of US trade with the rest of the world.

Political discussions of how to improve the jobs situation in the US should keep in focus the fact that Mexico creates US jobs. Politicians should note that approximately 57,000 US companies employing 4.9 million workers depend on a healthy and ongoing trade partnership with Mexico.

medical device, medical device manufacturing, tijuana manufacturing

Tijuana Medical Device Manufacturing Growing

By Adina Moloman

Mexico has a well-established memedical device, medical device manufacturing, tijuana manufacturingdical-device manufacturing industry, but growth trends in Tijuana and Baja California are growing at exceptional rates, resulting in new investment and optimism for the Latin American country’s economic future.

Tijuana Leading Baja in Medical Device Manufacturing

While Mexico has facilities manufacturing medical devices throughout the state of Baja California, Tijuana stands out as the clear leader within the region. The border city is 44 of the 69 medical device plants in the state. And Tijuana alone employs nearly 42,000 workers in the industry, within a state that employs approximately 54,000 in medical device production.

For three decades, the border town has been an active player in the industry, and now hosts numerous companies producing innovative and vital products ranging from artificial respirators to catheters to catheters to electronic devices. Some of the world’s leading companies supplying medical devices to the world take advantage of Tijuana’s ideal manufacturing and business climate, from Augen to CareFusion to Flextronics to Lancer Orthodontics. And this list is growing rapidly.

  • Foreign direct investment (FDI) certainly reflects this strong growth, and new investments in Tijuana are announced regularly. A couple of the more recent foreign investments announced for the medical device industry in Tijuana include:
  • French firm, Essilor, is currently putting the finishing touches on a new production facilities.
    Greatbatch Medical has invested US $35 million for the purpose of moving three additional production lines to the region.

Growth Drivers

Currently, the value of manufactured for the medical device industry in Mexico sits at an impressive $1.5 billion USD. And according to a recent study, this output will reach more than $2.1 billion USD by 2020. Tijuana and the state of Baja California lead the nation when it comes to the manufacture of devices and products related to the medical and healthcare industries, but they are not alone in propelling Mexico forward on this front. The other regions also contributing to Mexico’s success in medical device manufacturing are:

  • Chihuahua
  • Jalisco
  • Mexico City and the State of Mexico
  • Morelos
  • Nuevo Leon
  • Tamaulipas
  • Sonora

There are several factors driving this continued growth in Mexico, from low energy costs to low labor costs to the country’s enviable trade agreements in place with much of the world. And in Tijuana and Baja California, the growth drivers include:

  • Baja California’s low logistics cost
  • The region’s low labor rates
  • Tijuana’s proximity on the border to the vast consumer market in the US
  • Rising production costs in other areas
Make Mexico Great Again

Baja California’s 2015 Asia Investment Trade Mission

Tijuana ManufacturingBy Adina Moloman

Source: SEDECO

The Baja California state-Asian countries economic and trade relationship continues to steadily expand. Economic diplomacy is at the core of the Baja California Government’s international engagement. During the last ten days of July 2015, the Baja California Governor, together with a short delegation of other state leaders and economic organizations representatives visited a few Asian countries bringing together activities in trade, growth, investment and business.

Baja California’s 2015 Asia investment mission kicked off on July 22 in China, and then traveled to Taipei, Taiwan, to Seoul, South Korea and Tokyo, Japan.

In Taipei, Taiwan they hold meetings with potential investors and trade bodies where they focused on promoting the Baja California Maquiladora Sector especially the beverage and food industry, automotive and clean energy projects that create jobs in Baja California.

Baja California delegates were also provided with market briefings and had exclusive meetings with key decision-makers and prospective sector partners especially in the aerospace and medical industry during pre-scheduled and tailored one-on-one business reunions and plant visits in Tokyo, Japan.

In Seoul, the delegates from the Baja California state established strategic connections, strengthened existing relations, promoted the region products and services especially from the automotive and electronic sector, explored opportunities for new investments, and sourced potential suppliers.

The Baja California Governor soon after the promotion activity during the Asian investment tour announced the first confirmation project investment from the Asian region. QuanShen, a Chinese apparel company, will invest $25 million to install a sporting goods production facility in Tijuana, Baja California. So far the delegates informed that the project will be developed in several phases and the new Tijuana Manufacturing plant is expected to begin operations in early 2016. The new plant initiating their manufacturing in Mexico is expecting to generate about 800 jobs once the operations are starting.

Mexican Maquiladoras

Medical Devise Industry continued growth in Tijuana

Manufacturing in MexicoBy Adina Moloman

Sources: SEDECO

Essilor International S.A., which manufactures and designs a wide range of lenses to correct and protect eyesight, is expanding its operations into Tijuana, Mexico.

The company, located in Charenton-le-Pont, France, will lease a new building and purchase additional equipment for the production of the corrective lenses for prescription eyeglasses to meet the demand for its products. The target market for its products is the west coast of the United States.

Construction of the new facility to expand their Manufacturing in Mexico presence is expected to be complete next year.

In Mexico they established 30 years ago a manufacturing plant in Chihuahua and also installed a few years ago the Ecco Essilor Chihuahua Optical Lab.

One of the latest challenges at the Chihuahua plant was the development of a polarized product line.

Essilor worldwide has more than 55,000 employees in 62 countries and manufacture 430 million lenses every year, spanning 630,000 model references.

Tijuana, Baja California has become one of the leaders in the manufacturing and assembly of medical devices worldwide. The new investment decision confirms the confidence on the medical devices industry in Mexico.

Manufacturing in Mexico

Wave power plant project in Baja California

Manufacturing in MexicoBy Adina Moloman

Sources: www.renewableenergyworld.com, California Energy Commission, Ocean Energy Systems-Annual Report 2014, Mexico Now, World Energy Council

Wind and solar energy currently dominates the renewable energy sector in Baja California and probably worldwide.  Ocean energy is estimated to be one of the fastest growing forms of renewable energy in the next ten years and will contribute to the world’s future sustainable energy supply. According to the World Energy Council, wave energy has the potential to contribute 10% of the entire need for electricity globally, with an investment cost of $800 billion.

Mexico is creating the environment for a complete sustainable energy transition in which clean technologies like those of ocean energy will be supported.

Wave energy is a relatively new technology and therefore there are only a few prototype devices installed worldwide.

A foreign company from Finland AW-Energy presented a wave power plant project, which consists in the design, construction and commercialization of its WaveRoller technology, which converts wave power to electricity. In fact, they currently are negotiating with both the Federal and Baja California’s State Government for the implantation of its wave power technology at sites in the state. Their technology consists of a vertical buoyant flap hinged along its bottom edge to a structure on the sea bottom. The flap moves back and forth in the waves, operating a piston pump on the seabed. This is a method to harness near-shore bottom waves.

This project would attract an investment of approximately US$60 million.

The wave energy project will be Mexico’s first and it is expected to function as a pilot program. If it proves successful, a commercial power plant will be constructed.

Baja California has a particular interest in developing wind technologies where The Center for Scientific Research and Higher Education of Ensenada (CICESE) has developed nine buoys off the Pacific coast of North America capturing wave data.  The center is in the process of creating a more detailed map of wave data for the region to support proposed wave projects in the state. Baja California has the potential to create a national hub for the renewable energy sector with similar potential as the Manufacturing in Mexico Sector has strengthen all the participating partners in Tijuana and the rest of the state of Baja California.

 

Mexico Manufacturers

New partnerships and investments for Baja California aerospace sector

Mexico ManufacturersBy Adina Moloman

Source: Aerospace Cluster of Baja California

Baja California delegation took part again at this year’s edition of the Paris Air Show that was held from at Le Bourget Exhibition Center.

The International Paris Air Show is one of the oldest and largest air shows in the world, where were presented the newest technologies of the aerospace industry and related equipment. The first four days of the Show where reserved for trade visitors, followed by three days open to the general public. The Baja California Aerospace Cluster during the Show has concluded a successful business agreement by signing of a Memorandum of Understanding with the Centro para a Competitividade e Inovacion do Cone Leste Paulista (CECOMPI), The Brazilian Aerospace cluster. By meeting with Brazilian aerospace representatives and by signing this agreement with CECOMPI, Baja California is developing key partnerships for collaboration between the aerospace and space industries in Mexico and Brazil. First they have in mind to attract in the state Embraer, Brazil’s largest aircraft manufacturer.

Other good news for the aerospace sector in the state of Baja California where revealed during a press released by the Baja California Governor and consisted on future aerospace investments in the state. Triumph Group, a manufacturer of aircraft components and accessories, who already has a plant manufacturing in Mexico, installed in Mexicali, announced that it would invest in a new manufacturing site in the same location. The second manufacturing plant in Mexicali will manufacture parts of complex shapes using composite materials that are becoming essential in the aircraft manufacturing process.

UTC Aerospace Systems designs, manufactures and services integrated systems and components for the aerospace and defense industries announced its second facility in the state of Baja California. The new plant will commence operations next year at a 160 thousand square foot facility.

GKN Aerospace a leader in the manufacture of highly complex composite and metallic aero structures and engine products is also considering a second manufacturing facility.

Mexico Manufacturers

Latest automotive manufacturing investment announcements

Mexico ManufacturersBy Adina Moloman

Sources: Automotive World, Automotive News, Maquila Portal

Mexico has been the focus of number of recent automotive manufacturing investment announcements, as well as hints of possible future auto manufacturing investments.

Hyundai, Ford Motor Co., BMW and Toyota Motor Corp recently confirmed new plants.

Based on Hyundai’s domestic auto sales increase in Mexico and in the US they recently announced a new investment of about US$1 billion to build a new assembly plant. Toyota Motor Corp announced last month that will open its first passenger-car factory in Mexico. Ford Motor Co. reported in May 2015 combined investments of $2.5 billion in engine and transmission operations in Mexico.

Also there are hints at possible future auto manufacturing investments starting with Seat who could produce its cars in Mexico, since most of its suppliers are located in Puebla and also MINI could enter in the system of Mexican Maquiladoras since its manufacturer, BMW, announced a project to build a new auto facility in the country.

Renault evaluates to invest around US$800 million in an assembly plant in Mexico based on increasing disposable incomes and a rising proportion of the population upgrading to entry-level premium vehicles from their large non-luxury sedans.

Rumors of a Jaguar Land Rover Mexican Maquiladora have been circulated recently. The British automaker is considering manufacturing in Mexico for five reasons: labor costs, logistics, experience with the complete distribution network, an increase of almost 20% in its U.S. sales rates and Mexico’s free-trade agreements.

The company is considering investments of more than $500 million to build this new factory in Mexico.

Mexico has a long tradition and experience in the automotive sector, which makes it attractive for the automotive manufacturers and at the same time creates an ideal environment for Tier 1, Tier 2 and Tier 3 auto parts suppliers. The new manufacturers that evaluates to invest in an automotive assembly plant in Mexico highly considers the entire suppliers base (industry providers and services) previously established to operate in close proximity.

Manufacturing in Mexico

Mexico air cargo traffic growth predictions

Manufacturing in MexicoBy Adina Moloman

Sources: MEXICONOW, World Air Cargo Forecast (WACF)

The Boeing Company with its biennial World Air Cargo Forecast (WACF) together with Air Cargo Management Group (ACMG) reports provides a comprehensive up-to-date overview of the air cargo industry worldwide and in this particular case for Mexico.  According to both sources the predictions regarding the growth in the airfreight sector in Mexico remain fairly optimistic forecasting growth of around 4% in 2015.

The Boeing company attributes this growth to a series of events such as the growing disposable incomes of Mexico’s expanding middle classes that will support an increase in volumes, as demand for high-end consumer goods, often transported by air freight, and an increase in number of developing specialist industries in Mexico that will also present a need for increased air freight.

Air Cargo Management Group (ACMG) argues that an increase of 4.5% in freight ton kilometers (FTK) will be sustained with about 125 new cargo aircraft per year that will replace retiring airplanes and at the same time will meet the requirements of projected traffic growth.  In case the growth projection will not succeed there is still be needed around 60 new cargo aircraft to balance the capacity of the cargo planes that were retired from the existing fleet, said to Air Cargo Management Group (ACMG).

In Mexico the overland transport remains one of the most important sectors in the country, covering more domestic distribution and allowing trade between North, Central and South America. The freight transport in Mexico is dominated by road (trucks) and represents more than 75 % of Mexico’s total freight transport, followed by rail at 16.0% and inland waterways at 4% and a small percentage remains for air freight transportation.

Mexico is the United States’ 3rd largest goods trading partner and 2nd largest goods export market and 3rd largest supplier of goods imports. United-States is Mexico’s main export and import partner, which can somehow explains the low percentage for its airfreight transportation due to their geographical closeness. Nearshore Outsourcing is another phenomenon that explains the intensive use of road freight, where the U.S. corporations are doing their manufacturing in Mexico from China, leading to a mode shift from air to over-the-road. An important number of transnational companies have returned to Mexico based on current total landed cost calculations.

Tijuana Manufacturing

Business activity in the Mexican manufacturing sector

Manufacturing in MexicoBy Adina Moloman

Sources: FocusEconomics, HSBC Purchasing Managers’ IndexTM 2015

According to the surveys that measure business activity in the Mexican manufacturing sector—the IMEF manufacturing index and HSBC’s PMI—suggested moderated growth in last month. The report is covering the activity in manufacturing for the first and the second quarters.

The latest survey suggests that this year has got off to a relatively soft start for many manufacturers with output picking up in the first few months of 2015. Nevertheless the activity created by entities manufacturing in Mexico has continued to expand for a net balance of companies in the recent month. The HSBC Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics is an early indicator of economic health in the Mexico manufacturing sector. The final HSBC/Markit Purchasing Managers’ Index (PMI) stood at 53.3 in May, above the 50-point level that separates an expansion from a contraction in activity on a monthly basis. The PMI is analyzing month by month the behavior of five sub-indices: orders, output, employment, suppliers’ delivery times and stocks of purchases.

Stronger export sales were the main positive development during the last quarter, alongside a rebound in production and employment growth from first quarter lows.

Strong growth of export sales was attributed to stronger demand from the U.S. and South America, while the employment growth was attributed to successful marketing initiatives and the launch of new products.

Meanwhile, the weaker exchange rate continued to push up the price of imported raw materials, with the rate of cost inflation easing only slightly over the month. Other data suggests rising stocks of finished goods and increased pre-production inventories for the productive sector in Mexico.

The economic outlook for Mexico is moderating for this year since analysts participating in the LatinFocus Consensus Forecast cut Mexico’s 2015 GDP growth forecasts, predicting a rising of 2.8% for the current year and more optimistic for the next one with a rising of 3.4%.

 

Mexico Corporation

Baja California a founding signatory to the “Under 2 MOU” agreement

Manufacturing in MexicoBy Adina Moloman

Source: www.under2mou.org, SanDiegoRed

Baja California Governor Francisco A. Vega de Lamadrid signed the “Under 2 MOU” agreement with international leaders from 11 other states and provinces, to limit the increase in global average temperature to below 2 degrees Celsius.

The event took place in Sacramento and was hosted by the California Governor, Edmund G. Brown Jr. There are 12 founding signatories of the agreement from seven countries on three continents and include: California, USA; Oregon, USA; Vermont, USA; Washington, USA; Acre, Brazil; Baden-Württemberg, Germany; Baja California, Mexico; Jalisco, Mexico; Catalonia, Spain; Ontario, Canada, British Columbia, Canada; and Wales, UK.

“Under 2 MOU” agreement is a commitment between the participants to either reduce greenhouse gas emissions 80 to 95 percent below 1990 levels by 2050 or achieve a per capita annual emission target of less than 2 metric tons by 2050.

Since the agreement involves countries and regions from developed and developing economies with different climate programs and realities they agreed also to enhance cooperation to accomplish their goals by sharing technology, scientific research and best practices to promote energy efficiency and renewable energy. Some common targets are zero-emission vehicles and the reduction of black carbon and methane from the manufacturing processes by monitoring and reporting of greenhouse gas emissions consistently.

Baja California is addressing climate change by implementing ambitious environmental policies.

One of the action to tackle climate change that Baja California governor mentions is to have at least 1,000 megawatts of installed wind and solar capacity by 2019.  Baja California is also preparing for waste-conversion projects. He also mentions that is currently implementing The Baja California vehicle emission inspection program where most vehicles are subject to an emissions inspection to help reduce air pollution.

The local government is having in its agenda water storage infrastructure projects. Multipurpose water storage systems will result in more-efficient water usage. Other important climate action is reducing the release of methane, black carbon and other potent pollutants across industries Manufacturing in Mexico.

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