3 new opportunities for Mexican manufacturing

May 27, 2016

Mexico builds its reputation as a leading manufacturing region by relying on its previous successes and searching for new opportunities. Companies within the nation's borders prepare for innovative products, while the government does what it can to attract foreign partners wishing to profit from a global market.

After years of growth, the Mexican automotive industry contracted a little in April 2016, according to Automotive News. The slight decline was not because of a lull in Mexican automotive manufacturing, but because U.S. demand for trucks did not favor the usual product mix offered by the country. AMIA President Eduardo Solis said Mexico will explore opportunities to create diverse products and new markets in response to trends. Here are three pieces of news that suggest Mexico will finish 2016 with record-breaking auto industry numbers:

1. Innovative products
The first step to continuing the success Mexico has seen in recent years is responding to current demand. The Audi company plans to open a new facility in Mexico. This factory will build the lightweight truck models U.S. consumers currently find popular.

Innovative products,favorable trade agreements, and stronger relations with the U.S. will continue the Mexican manufacturing boom.
There are a variety of factors contributing to the Mexico manufacturing boom.

Many companies find success by building flexible manufacturing facilities in Mexico ready to respond to changes in consumer preferences or market standards. The country is no longer seen as a source for particular production projects. A skilled workforce combined with effective cross-border communication makes Mexico a prime candidate for manufacturing innovation in all industries.

Automotive World detailed how GKN Driveline began production on a new $1.75 billion plant in Mexico during Spring 2016. The company designs and manufactures state-of-the-art automotive technology like four-wheel drive and innovative propshaft components. This means brands that use the equipment like Audi, BMW and Ford can source parts from Mexico; shortening the supply chain for American facilities.

Mexico offers the skilled labor and facilities necessary to create the latest merchandise and companies invest in the area, making it a stronger link in the supply chain.

2. A new international trade agreement
For a long time, Mexico has enjoyed more favorable trade agreements than most competing countries. World Politics Review explained how the new Trans-Pacific Partnership will add countries to Mexico's existing partnerships with other regions.

The countries introduced to Mexico through the Trans-Pacific Partnership include territories with a lack of trade options and areas new to global commerce. Mexico is currently the 12th-largest exporter in the world, and the Worldfolio suggested it could soon increase its ranking by outpacing other Latin American options. The International Monetary Fund predicted the Mexican economy will grow 2.6 percent in 2016, while Brazil's is projected to decline 3.8 percent.

"Mexico sits in an effective location for international trade."

Mexico sits in an effective location for international trade. It's surrounded by water and ships goods across the Atlantic and Pacific. The proximity to the U.S. and Canada makes it an ideal location for manufacturing products for a large North American market. As long as the country continues to enthusiastically pursue positive trade agreements, it should continue to be an excellent location for global partnerships.

3. Tighter relations with the U.S.
For years, the question has been whether to manufacture products in Mexico or the U.S. Nearshore Americas explained how in the near future the answer to this inquiry will often be both. Instead of completely assembling a car or truck in one country or another, partnerships between regions will favor collaborative activities that link countries and promote unified operations.

Just like GKN Driveline facility, Mexico hosts a number of factories that make parts for auto manufacturers. It's also common for local plants to assemble pieces shipped in from other locations. When companies know exactly what benefits particular territories offer, they can assign the specific tasks best suited for each facility.


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