Mention Mexican manufacturing and many will think of workers laboring at the behest of an American company on a maquiladora production line with minimal, if any, automation. To be sure, this image still carries some validity in Mexico’s modern-day industrial landscape. Yet over the past decade, the sector has undergone significant change that might surprise those accustomed to the older practices.
Mexico has become a major production hub for car manufacturers and automotive parts suppliers, exporting mostly to the U.S and, increasingly, South America. There are more than 20 automotive assembly plants in regions such as Matamoros, Nuevo León and San Luis Potosí.
The brands for which these factories work — including BMW, Mercedes, Audi and Ford — are placing increasing pressure on them to elevate the quality of their output, improve safety standards and enhance efficiency. This constant demand propels a shift toward automation, which is being further expedited by the production strain imposed by the COVID-19 pandemic.
China is taking full advantage of Mexico’s developing manufacturing base. The last few years have seen a significant increase in Chinese companies there. No less than 80% of Mexican industrial parks space has been leased by Chinese companies in the past 12-18 months. What attracts them are the same benefits that are evident to U.S. manufacturers: shorter supply lines to the American market, a vast labor pool, and privileged treatment offered by the United States-Mexico-Canada Agreement (UMSCA) to local producers in those three countries.
The recent past saw Mexican producers emphasizing textiles, agriculture and basic electronics. Today, Chinese manufacturers are mostly focused on the automotive (northeastern Mexico), medical (Ciudad Juarez and Tijuana) and semiconductor (near Arizona and Texas) industries. What’s more, the variety of business sectors nearshoring production to Mexico has broadened considerably. Aerospace production has gained significant ground in the last decade, with operations in northwest, northeast and central Mexico. There are over 350 aerospace companies active in Mexico, of which almost 90 are located in the Queretaro area (Central Mexico) alone.
Medical device companies represent another booming sector in Mexico's diverse manufacturing landscape. Cities like Tijuana have emerged as major hubs, with the medical device cluster in Baja California accounting for 50% of the country’s total production.
In just a decade, Mexican manufacturing has experienced a seismic shift, driven by the swift rise in automation, a notable influx of Chinese enterprises, and substantial diversification across industries. These changes have redefined Mexico's position in the global manufacturing landscape.
These trends are expected to persist in the coming years, with Mexico further capitalizing on its geographical advantages, skilled labor and industry diversification. The evolving face of Mexican manufacturing is a testament to its dynamic progress and immense potential.
Jorge Gonzalez Henrichsen is co-chief executive officer of The Nearshore Company.
RELATED CONTENT
RELATED VIDEOS
Timely, incisive articles delivered directly to your inbox.