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Honeywell Consolidates, Maytag Expands
Mexico Stills Draws Textile Investment
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MEXICO SPOTLIGHT
Mexico Seeks to Diversify
As Asia Woos Firms Away
As Asia Woos Firms Away
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espite hemorrhaging 250,000 maquiladora jobs over the past 30 months as manufacturers chased the ultra-cheap labor of the Far East and Central America, Mexico remains a fertile industrial option. While some textile, apparel and electronics firms have opted for Asia, the country continues to attract a wide variety of companies. And despite the turbulence, the maquilas remain a force with about 3,000 factories and a million workers.
Mexico observers say sectors seeing growth include transportation, furniture and wood products, medical equipment, plastics and high-end tools. And, while some electronics firms have moved away, others are choosing to move to Mexico.
Richard Sinkin, managing director of InterAmerican Holdings Co., a San Diego investment firm that specializes in manufacturing in Mexico, says China's ascension to the WTO has made the world's most populated country a true competitor in areas such as textiles and shoes. The other major draw is its scant wages, which are about 10 percent of Mexican wages. Another "hit" has been sourcing as electronics manufacturers move closer to their Asian component suppliers.
"The reason Mexico won't disappear," Sinkin says, "is there are some industries that cannot manufacture in Asia and be competitive, and that has to do with supply chain management."
However, Sinkin says Mexico must resolve some serious infrastructure issues to be a major global competitor. These include improvement of transportation systems and border crossings and better protection of intellectual property.
Mexico's automobile industry is well entrenched and continues to grow. One of the latest projects is Toyota's plant in Tijuana. The $140-million facility will have the capacity to assemble 20,000 Tacoma pickup trucks and 170,000 Tacoma truck beds to be used at a joint venture plant in Fremont, California, co-owned by Toyota and General Motors. The 350,000-sq.-ft. (32,500-sq.m.) plant will employ 460. Truck bed production will begin in the summer of 2004 with Tacoma assembly starting in 2005.
"The auto industry is so well integrated in Mexico, it hasn't been affected," says Rafael J. McCadden, executive director of AMPIP, the Mexican Association of Business & Industrial Parks. "Mitsubishi is looking at Mexico and some other automakers are looking here, too. The auto industry is by far the major industrial sector in Mexico and will continue to be so.
"Industry in Mexico is definitely changing," he says. "Some sectors which once were attracted to Mexico, such as textiles and apparel, aren't any more since they are labor intensive. Labor costs in Mexico are still competitive compared to the U.S., Canada and Europe, but not compared to China and Central America."
McCadden says central and northern Mexico are doing well. While the maquiladora-oriented border regions have been hurt, he believes conditions have stabilized.
"The maquiladora industry is now back into a growth mode," McCadden says. "We see a positive future for logistics operations along the border because they help companies reduce transportation costs and help keep overall costs competitive. A lot of distribution centers are moving to the region."
Mexico observers say sectors seeing growth include transportation, furniture and wood products, medical equipment, plastics and high-end tools. And, while some electronics firms have moved away, others are choosing to move to Mexico.
Richard Sinkin, managing director of InterAmerican Holdings Co., a San Diego investment firm that specializes in manufacturing in Mexico, says China's ascension to the WTO has made the world's most populated country a true competitor in areas such as textiles and shoes. The other major draw is its scant wages, which are about 10 percent of Mexican wages. Another "hit" has been sourcing as electronics manufacturers move closer to their Asian component suppliers.
"The reason Mexico won't disappear," Sinkin says, "is there are some industries that cannot manufacture in Asia and be competitive, and that has to do with supply chain management."
However, Sinkin says Mexico must resolve some serious infrastructure issues to be a major global competitor. These include improvement of transportation systems and border crossings and better protection of intellectual property.
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Mexico's automobile industry is well entrenched and continues to grow. One of the latest projects is Toyota's plant in Tijuana. The $140-million facility will have the capacity to assemble 20,000 Tacoma pickup trucks and 170,000 Tacoma truck beds to be used at a joint venture plant in Fremont, California, co-owned by Toyota and General Motors. The 350,000-sq.-ft. (32,500-sq.m.) plant will employ 460. Truck bed production will begin in the summer of 2004 with Tacoma assembly starting in 2005.
"The auto industry is so well integrated in Mexico, it hasn't been affected," says Rafael J. McCadden, executive director of AMPIP, the Mexican Association of Business & Industrial Parks. "Mitsubishi is looking at Mexico and some other automakers are looking here, too. The auto industry is by far the major industrial sector in Mexico and will continue to be so.
"Industry in Mexico is definitely changing," he says. "Some sectors which once were attracted to Mexico, such as textiles and apparel, aren't any more since they are labor intensive. Labor costs in Mexico are still competitive compared to the U.S., Canada and Europe, but not compared to China and Central America."
McCadden says central and northern Mexico are doing well. While the maquiladora-oriented border regions have been hurt, he believes conditions have stabilized.
"The maquiladora industry is now back into a growth mode," McCadden says. "We see a positive future for logistics operations along the border because they help companies reduce transportation costs and help keep overall costs competitive. A lot of distribution centers are moving to the region."