Mexican Manufacturing News, July 2023

01. INA PAACE Automechanika celebrates its recent exhibition.

NA PAACE Automechanika México, Latin America’s largest automotive aftermarket trade fair, has just kicked off its 25th edition. According to the organizers, the fair is expected to become a key platform for promoting the development of the automotive aftermarket. Organized by INA, the fair will be held in Mexico City from July 12-14, 2023. Attendees expect the fair to be an ideal platform for manufacturers, suppliers, and distributors to showcase their products and latest innovations. To ensure this, the organizers have prepared a larger exhibition area where companies will have the opportunity to showcase their custom cars, electric vehicles, tools, and new technological advancements. INA and PAACE emphasize that the new forum will explore two fundamental themes for the future of the automotive industry: electric vehicles and last-mile delivery through e-commerce platforms. For these two themes, the organizers have invited leading global companies such as UPS, Mercado Libre, Jetz App, and Meru. Several other speakers will also be invited to share their insights on the automotive industry and its importance to the Mexican economy. The event will provide valuable information for repair shop owners and technicians who wish to gain a deeper understanding of their businesses and optimize their operations. In his inaugural address, INA President Francisco González stated that the pandemic had dealt a heavy blow to the automotive industry. However, the participation of all companies in the exhibition demonstrated the resilience of the automotive sector, a vital industry in Mexico. “Mexico is now the fourth largest producer of auto parts, and will surpass Germany in 2022. In 2022 alone, the value of auto parts production exceeded $3,400 per second, and it is projected to reach $116 billion by the end of 2023—a historic figure,” he added. INA PAACE Automechanika highlighted women’s participation in the industry, with Beatriz Jiménez, founder of Ingeniería Rosa, presenting her project training women to operate workshops. Jiménez will also participate in the “Future Forum” panel discussion, where she will promote greater female involvement in workshop work.

02. Mexico has overtaken China as the United States’ largest trading partner – a sign that the global economy is undergoing a rapid transformation.

According to a new article by Luis Torres, senior business economist at the Federal Reserve Bank of Dallas, Mexico has once again solidified its position as the United States’ largest trading partner, with goods traded between the two countries valued at $263 billion in the first four months of this year. Trade with Mexico accounts for 15.4% of all U.S. imports and exports, second only to trade with Canada and China, which account for 15.2% and 12% respectively. Even as the world has passed the peak of the pandemic, Mexico’s ability to wrest the top spot from China—which has further integrated into the U.S. economy over the past two decades—clearly indicates that the economic turmoil of 2020 will continue to shape the direction of the global economy for years to come. Torres says the seeds of this shift were sown before the pandemic—former President Donald Trump’s tariffs on some Chinese goods and the signing of the USMCA, a minor update to the nearly three-decade-old North American Free Trade Agreement. But Torres says these changes also indicate an accelerating shift towards “nearshoreization,” which refers to countries moving supply chains for key goods to physically and politically close countries. “While recent data on nearshore outsourcing is scarce and much of the evidence is anecdotal,” Torres writes. “The increase in protectionism and related industrial policies aligns with declining global trade, increased regional trade, nearshore outsourcing, and re-outsourcing (production returning to the home country). Nearshore outsourcing increased during the pandemic due to higher shipping costs across the Pacific and consumer demand for faster delivery times—the latter we call the ‘Amazon Prime Minister effect.’ Peter S. Goodman of The New York Times also wrote earlier this year that as political tensions between the US and China escalate, companies like Walmart are increasingly looking domestically to meet their needs.” Michael Burns, managing partner at Murray Hill Group, a supply chain-focused investment firm, told Goodman, “This isn’t about deglobalization. It’s the next phase of globalization, focusing on regional networks.”

03. Nearshore Outsourcing Observatory: AMPIP Member Survey

BBVA Research and the Association of Private Industrial Parks in Mexico (AMPIP) conducted a survey to quantify and predict the impact of Mexico’s nearshore development. The results confirm business interest in operating in Mexico and project even more companies to move there over the next two years.

Key Takeaways

– Companies within industrial parks can offer complementary visions because they have direct access to companies deciding to relocate production to Mexico.

– Since the start of the US-China trade war in 2018, a total of 830 new foreign tenants have joined. This translates to an average of 207 new companies per year between 2018 and 2022.

– Demand for industrial space is projected to grow by 2025: 453 new companies are expected to join in the next two years. An average of 227 new companies will join each year between 2023 and 2025.

– To maximize this opportunity, changes in energy policy, water supply, and crime reduction are needed.

You can read the full report at the following link:

https://www.bbvaresearch.com/wp-content/uploads/2023/07/Nearshoring-Outlook-Eng-10Jul23.pdf