Photo credit: Overheating laptop by nick@
Mexico’s economy, up until very recently, was based on labor-intensive, low-paying industries such as textiles. However, in the past few years, the industry that’s been fuelling economic growth in this Spanish-speaking North American country is that of high-tech automotive manufacturing; and although the textile and other manufacturing jobs have been going to China and India, Mexico’s economy is expected to continue growing.
A big part of this growth and interest from investors isn’t simply about lower wages; it’s about highly skilled labor and experience which may not be present in other countries or regions in the world. For example, German automaker Volkswagen opened their first plant in Mexico in 1967; and anyone who’s visited the country knows that the Bug or “el vocho” was ubiquitous in the country for decades.
The present-day Volkswagen plant in the historical city of Puebla, about a two-hour drive southeast of Mexico City, is now the largest auto manufacturing plant in North America. Featuring state-of-the art equipment, computer and robot technology, it employs over 18,000 people and produces 2,500 vehicles a day. The country exports most of the cars, and is at the present time the eighth largest automobile producer on the planet. It is also the fourth largest automobile exporter, and growth is not expected to slow down any time soon.
But what are the other reasons why investors in high-tech industries should consider Mexico? According to Thomas Karig, one of Volkswagen Mexico’s vice presidents, “Mexico is becoming quite an automotive powerhouse”. Karig emphatically states that companies and car companies in particular should set up shop in Mexico; Mexico’s location makes it an almost perfect location for export to North, Central, and South America. Further sweetening things for foreign investors is the fact that the country has an open trade policy and a workforce that is highly skilled and experienced.
In September of 2012, Volkswagen subsidiary Audi announced it would be establishing a new plant close to the one in Puebla. President of the Mexican Automotive Industry Association Eduardo Solís stated: “There is an important element here where Mexico is, currently in the automotive industry, associated with good quality, with good products. We have been scaling up in the value chain.”
It’s not only the automotive industry that is growing; because automotive industry employees in the past were able to afford educational opportunities for their children, industries that require a highly educated workforce can operate in Mexico. Other countries, although wages may be lower, simply do not have the education the Mexican workforce has. Mexico is the place to invest in industries such as aerospace, technology, and autos; and these industries are, not surprisingly, growing quickly.
Other car manufacturers in Mexico include Lexus and Nissan; interestingly, New York City’s entire new fleet of taxis is currently being manufactured at the Cuernavaca Nissan plant.
To summarise why Mexico is a place high-tech industries should consider, perhaps Cesar Lopez Ramos of California-based Plantronics Inc. says it best: Mexico is attractive because it has “human capital that is more developed and capable of not only making products but innovating.”