Maquila Portal - Weekly Bulletin

Mexico Manufacturing Industry Information Center.


Bulletin 778- Friday, October 21, 2016

Mexico, destination for most of the Japanese investment

Japan's Ambassador in Mexico, Akira Yamada, underscored that these countries' bilateral relations are excellent, dynamic and with historic outreach. The diplomat also added that Mexico is the country that receives the most Japanese investment. Mexican export and import exchange with Japan grew between 2014 and 2015 by 126% and 145%, respectively, which is equivalent to 131% in terms of bilateral commerce. Besides the number of Japanese companies investing in Mexico is undergoing accelerated growth rates, peaking at 957 in 2015, stated the Ambassador. The number of Japanese companies is growing mainly in the Bajio zone, thus becoming a strategic production hub for the automotive industry.

Source: La Jornada

AHMSA investing US$680 million on specialty steel

Altos Hornos de Mexico (AHMSA), in Coahuila, will invest US$680 million over the next 18 months, with the objective of “entering in full to the specialty steel and the automotive industry”. Alonso Ancira Elizondo, President of AHMSA, explained that this decision was made due to the continued levy to steel. In addition, the multi-million investment is considering the acquisition of a cold laminating machine, to produce a million and a half tons, as well as a tin plate factory with capacity for 400,000 extra tons.

Source: Zocalo Saltillo

Gruma inaugurates new plant in Malaysia valued at US$55 million

Gruma Corporation inaugurated its new plant in Malaysia, with a US$55 million investment. The complex has an installed capacity to produce 30,000 annual tons of tortillas, tortilla chips and flat bread for wraps and pizza base. “This is a solid step towards the consolidation of our global presence and the strengthening of the world-leader Mexican maize flour, tortilla and wraps manufacturer”, declared Juan Gonzalez Moreno, President and General Director for Gruma. The Company started operations in Malaysia in 2007 through the purchase of a specialty flat bread factory. And now it is expanding its presence through the global brand, Mission. Gruma serves clients and consumers from South East Asia and the Middle East, from this new international location.

Source: Forbes

Automotive Industry grows 18.5%, creating 1 million direct jobs

Guillermo Rosales, Deputy General Director of the Mexican Automobile Dealers Association (AMDA), stated that the automotive industry has reported an 18.5% growth in the market during the last 9 months. Over 131,000 units have been commercialized just in the month of September, with expectations to close the year in roughly 1.6 million units. Experts and analysts reckon that Mexico has the proper conditions, regarding economy and demography, to continue growing in the automotive market. More than 1 million direct jobs have been created over the course of this year, with a good perspective to attract auto parts investment.

Source: Cluster Industrial

Brembo to invest US$39 million in Nuevo Leon

The Italian corporation Brembo will soon start operations in a production plant of components for the braking system and aluminum forging in the Municipality of Escobedo, Nuevo Leon, with a US$39 million investment. The plant is expected to produce roughly 2 million aluminum calipers per year, which will be sent out to the markets of America, Europe and Asia. The Company pointed out that this project will have an installed capacity of 14,000 tons per year, generating 500 direct jobs and standing on a 31,500 square meters area. The production will be shipped out to OEMs in Europe, Asia and America.

Source: El Financiero

Railroad, magnet for assemblers in Mexico

The railroad, with its different options of connectivity to ports and the U.S. border, is one of the main poles of attraction to have assembly plants establish themselves in Mexico. The railroad brings a solid network for high quality, efficient logistics, explained Carlos Velez, Vice president of Business Solutions and Marketing with Kansas City Southern (KCS). Besides, he indicated that 81% of the cars produced in Mexico are exported, with 85% shipped out to North America, out of which 87% is transported via railroad. In this regard, Jose Miguel Baena Galaviz, Automotive Business Director for Ferromex, commented that both railroad companies are investing in equipment, safety, railway improvements and expansion to their patios, in order to have a more efficient service, to contribute to the supply chain of companies already operating in Mexico and attract more ventures of this industry into the country.

Source: T21

Systems for success in cross-border trade

With U.S. corporations dramatically expanding their manufacturing facilities in Mexico to save on labor and transportation costs, smart CEOs are increasingly focused on keeping their reputations intact with quality controls in staffing, warehousing and distribution. Keeli Jernigan, CEO and President of Trans-Expedite Inc., a global freight and logistics company for Fortune 500 corporations, shares key strategies to use in end-to-end transportation and logistics solutions:

•Enlist local experts in global best practices. The efficiency and quality corporations pride themselves on in the manufacturing process can be lost if staffers in the warehousing and logistics management are not trained or managed to specification. "It pays to include expert staffing as part of the supply chain," Jernigan says. In building warehouse facilities and transportation functions, she partners with U.S.-based bi-lingual staffing companies with a presence in Mexico to ensure accountability and maintain strong employee relations in the area. Likewise, include local employment attorneys and CPAs on the team, she says.

•Create a seamless strategy. Map out a transportation and logistics plan that ensures efficiencies in shipping but also tax considerations when crossing the border. "Operating on the border is completely different from operating solely in the U.S.," she points out. "Be sure to hire a transportation expert who knows the dynamics of logistics and customs on both sides of the border. Additionally, exporters can lower or eliminate U.S. Federal taxes or duties if they go through a Foreign Trade Zone," she adds. Insist also on key certifications like the ISO 28000 for the highest standard available for supply chain security, and Custom Trade Partnership Against Terrorism (CTPAT) to ensure security at the border.

•Leverage a high-tech, high-touch approach to oversight. Today's technology allows companies to track a delivery or inventory in real time and make that information available on a client's SmartPhone. "Companies need to know where their shipments are and what's in their inventories in advance of a meeting or to meet a deadline. They should be able to get all that information from a single source," she says. At the same time, executives like the reassurance to know that there is a person available to them on the phone anytime day or night who can address any service interruptions or shipping delays and implement Plan B, Jernigan says.

Source: By Keeli Jernigan, CEO and President, Trans-Expedite, Inc.

Collaborative Robots, to support the market

Collaborative robots (cobots) are going to support the market's automation, according to the World Robotics Report 2016 of the Federation International of Robotics (IFR). The reports sheds light on the compact size, friendly interface of cobots and their estimated sells are expected to increase by at least 13% per year, from 2017 to 2019. Universal Robots, leader in the cobot industry, validates once more its mission: lowering the barriers and promoting automation in areas that used to be deemed complex and costly. The robots by Universal Robots are used, for instance, in automobiles' assembly lines, working hand in hand with employees, supporting them in ergonomically unfavorable tasks, besides their possible application in the plastics industry, electronics assembly and the machinery tooling industry.

Source: Universal Robots

Korean Consortium to invest US$36 million in Tamaulipas

The Korean origin consortium, Seoyon Electronics Company, announced a project to invest US$36 million to install an industrial building in Reynosa, Tamaulipas, dedicated to manufacturing auto parts, which will generate 500 direct jobs, informed the Mayor Maki Ortiz Dominguez. She mentions that the Company has production plants in China and Poland, whereas Reynosa is going to be the first Mexico location. Ortiz Dominguez explained that the project includes the purchase of 4.4 hectares for a factory and 0.7 hectares for local offices.

Source: 20 Minutos

Cisco invests in Mexico US$4 billion

California-based Cisco Systems Inc. will invest up to US$4 billion in Mexico through 2018 to expand production. The expansion will allow for the production of routers, servers, switches, videoconferencing screens and wireless access points. The investment will create 270 new direct jobs and 77 indirect ones at Cisco, and another 4,830 direct jobs at suppliers' factories, along with 1,105 indirect positions. The largest manufacturer of internet equipment will upgrade factories and increase production through contract manufacturers. On a global scale, Cisco manufactures 220,000 ICT products daily. Revenues reached an all-time record last year of US$49bn.

Source: Mexico News Network

Nestlé invests US$245 million in Nantli plant

Nestle has launched its 17th manufacturing plant, located in Nantli, Ocotlan with an investment of US$245 million. The plant will manufacture exclusively baby milk powder formulas intended for local distribution and 21 export markets. This is the first plant dedicated to global production in 10 years with 60% of production destined for local consumption and the rest for export markets, said Heiko Schiffer, Global CEO for Nestle Nutrition. With its 17th plant, Mexico has become the company's 7th most important location after the U.S., China, Germany, the U.K. and France. Laurent Freixe, Head of the Americas claimed that the intention is to elevate Mexico to become its 5th largest production outlet for global markets in the coming years. Idelfonso Guajardo, Economy Secretary believes that the FDI made by Nestle sends important messages to the markets about the long term viability of investing in Mexico. The investment will increase Mexico's exports of milk foods by 32%. The plant will support the creation of 2000 direct and indirect jobs.

Source: Mexico News Network

Industry 4.0 to completely change businesses

According to Eduardo Bartolome, Director of Communication and Government Affairs Central America for Siemens, the adaptation of companies to technology 4.0 enables smart manufacture, with participants involved making quick decisions and improving processes. The manufacturing industry represents 32% of Mexico's GDP and 35% of the total volume of exports. The fourth industrial revolution is the interaction between software and hardware, the appearance of new materials, the development of more potent operative systems, the design of more efficient processes and digitization of processes and services. "Industry 4.0 is a process already underway in Mexico and it will continue evolving during the next 5 or 10 years", added Eduardo. This technology, according to specialists, permits companies save up to a 30% in costs.

Source: Forbes