Industries

Some Hard Facts

• 4^th largest automotive exporter worldwide
• 7^th largest automotive producer worldwide
• 3% of Mexico’s GDP is the automotive industry
• 1.8 Mio.+ people work in the automotive industry
• 70% are exported, mainly to the U.S. Market
• 31 OEM automobile manufacturers of light and heavy vehicles in Mexico
• 600 tier 1 supplying and supporting OEM with regional content

Mexican Automotive Manufacturers

The automotive industry in Mexico is a major sector of the country's economy and one of the largest producers of automobiles worldwide. It is home to many major car manufacturers, including General Motors, Ford, Nissan, Toyota, Volkswagen, General Motors, BMW, Nissan or Volvo among many others, and have experienced a significant growth over the past few decades in Mexico. Thus, it is not surprisingly that this sector has been a significant contributor to Mexico's economic growth and job creation, as well as a major recipient of foreign investment. Indeed, it accounts for about 3% of Mexico's GDP and employing more than 1.8 million people directly or indirectly.

Advantages producing cars in Mexico

Mexico's favorable geographical proximity to the United States, cost-effective labor, participation in the United States-Mexico-Canada Agreement (USMCA), and its free trade agreements with several nations have positioned it as an appealing destination for automotive manufacturers to establish their operations. Notably, Mexico is actively investing in the advancement of electric vehicles, with numerous companies planning to manufacture EVs within the country in the near future. Consequently, Mexico has steadily expanded its production capacity in recent years, leading to a notable presence of 93 out of the top 100 global automotive parts manufacturers operating within its borders.

In terms of South American automotive manufacturing, Mexico holds the largest market share, producing approximately 4,000,000 units annually, with approximately 80% of these units being exported. On a global scale, Mexico has ascended to become the seventh-largest producer of automobiles and the fourth-largest exporter worldwide.

As we can see on the graph below, Mexico almost recovered from the pandemic and sold with total 3,233,215 units in 2022 almost every month more compared to the previous year. Looking just at the light vehicles, there has been 2,865,000 cars exported which reflects a plus of 16% vs. 2021 and plus 7% vs. 2020. However, the industry is still far away from its peak time with 3,451,000 exports in the year 2018.

Majority car exports to the United States

As mentioned before, over 70% of the models are exported to other countries, particularly to the United States. Thus, Mexico's automotive industry's dependency on the United States market is significant, and any changes in the United States' economic policies could have a significant impact on the countries automotive industry's future growth and development. Furthermore, the North American supply chain has been a crucial factor in Mexico's automotive industry's growth. Many of the vehicles produced in Mexico are assembled using components manufactured in the United States and Canada. This integrated supply chain has made it more efficient for automakers to produce cars in Mexico and export them to the United States.

What cars are made in Mexico

When it comes to automotive manufacturing in Mexico, the primary car producer in terms of exports is the American company GM, accounting for nearly 27% of the total exports, followed by

Japanese Nissan and German VW. Moreover, Mexico's appeal as a nearshoring destination has attracted numerous other car manufacturer, including BMW, Nidec, and Citic Dicastal, who have announced investments in new projects within the country. The combined investment value of these three projects alone amounts to a substantial 2.1 billion pesos.

Producing diverse range of cars

Despite the COVID-19 pandemic causing a slowdown in 2020, the industry is expected to continue to grow in Mexico in the coming years, driven by increasing demand for vehicles in North America and the development of new technologies. Indeed, many automakers have manufacturing facilities in Mexico and produce a wide range of vehicles, from small cars to large trucks and SUVs. Mexico's car industry also produces luxury cars, such as the BMW 3, Audi Q5, Series, and Mercedes-Benz C-Class, as well as electric vehicles, such as the Chevrolet Bolt and the Nissan Leaf. Overall, Mexico's car industry offers a diverse range of vehicles for both domestic and international markets.

However, Mexico is not only strong in the car manufacturing but exports several other parts of the automotive industry such as:

• motor vehicles for the transport of merchandise
• tractors
• parts of motor vehicles
• parts of other aircraft
• trailers and semi-trailers

Tier 1, 2 and 3 car suppliers

Mexico boasts a robust automotive supplier base, encompassing both Tier 1 and Tier 2 suppliers, which play a crucial role in producing a diverse range of vehicle components. With over 600 Tier 1 automotive suppliers currently operating in the country, Mexico directly contributes to the supply chain by providing parts and components to automakers. Notably, the recent surge in nearshoring has led to a significant increase in the number of new Tier suppliers in Mexico, spurred by the "Tesla" effect, as suppliers strive to be in close proximity to their customers and leverage the advantages offered by the Immex program and the availability of skilled labor. Among the prominent Tier 1 suppliers in Mexico are Magna, Denso, Continental, Bosch, and Aptiv, renowned for their expertise in the automotive industry. It is worth mentioning that automotive suppliers are spread throughout Mexico, with certain regions being recognized for their automotive industry clusters, thus facilitating efficient collaboration and resource allocation.

Locations of the car manufacturers and suppliers

Northern Border Region: Are the regions along the border with the United States and includes the states of Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas. It is home to several assembly plants and supplier parks, and is a major hub for trade between Mexico and the United States. Especially Monterrey has been experienced a huge boom of new suppliers thanks to the investment of Tesla.

Bajio Region: Is located in central Mexico and includes the states o

f San Luis Potosi, Queretaro, Aguascalientes and Guanajuato. The region is home to several automotive assembly plants and supplier parks and has become a major hub for automotive production in Mexico.

Central Mexico: Includes the states of Mexico, Morelos, Puebla, and Hidalgo and is home to several automotive assembly plants and supplier parks. This region is well-known for its expertise in manufacturing automotive components such as wiring harnesses and electrical systems.

Pacific Coast: Includes the states of Jalisco and Colima is known for its expertise in manufacturing automotive components such as aluminum parts and electronic systems.

Southeast Mexico: Includes the states of Veracruz, Tabasco, and Campeche and is known for its expertise in manufacturing automotive components such as powertrain systems and engines. However, it is crucial to acknowledge that automotive suppliers may also be situated in other regions across Mexico, and the distribution of suppliers may evolve as the industry progresses. Moreover, Mexico is actively investing in the advancement of electric vehicles, with several companies strategically planning to manufacture EVs within the country in the forthcoming years.

Government Support for the automotive industry

The government has demonstrated its support for the automotive industry by implementing favorable policies aimed at attracting foreign investment, such as tax incentives and R&D assistance. These initiatives provide financial resources, training programs, and technical support to assist companies in developing innovative technologies and enhancing their products and processes. Nonetheless, the automotive industry in Mexico encounters certain challenges, including concerns regarding worker safety and environmental impact, as well as the necessity to enhance infrastructure and decrease reliance on imported components and parts.

Furthermore, the government has yet to introduce environmental incentives aimed at encouraging the adoption of cleaner technologies and mitigating the environmental footprint of the automotive sector. These incentives could involve tax credits, subsidies, and other advantages for companies investing in sustainable technologies and adopting environmentally friendly practices. Despite these challenges, Mexico's automotive industry is poised for a promising future, with sustained investment and growth anticipated in the years ahead.

Packaging in Mexico

According to the report, the food and beverage industry continues to be the main buyer of packaging machinery, representing about 50% of the country's total demand for packaging machinery. And, the sales volume of packaging units for food products in Mexico is expected to reach a total of 65 billion units in 2025, compared to 62.7 billion units in 2021.In addition, e-commerce is driving packaging machinery sales, as several companies are re-designing their products to make them more resistant and protective than those designed to be standing on shelves. The acquisition of secondary packaging machinery is also growing in Mexico, largely driven by a clear trend in the country towards automation of the various end-of-line processes that traditionally had been done manually.

Major investments in packaging

After the pandemic, more and more companies realized that they are too dependent on the Chinese market and must diversify their portfolio. Thanks to the trade agreements, its proximity to the United States, and long-lasting experience in various manufacturing industries, many companies decide to set up their production in Mexico. This requests new packaging machinery with higher quality materials and compliance with more advanced production standards in the packaging sector. In addition, many companies who enter the market Mexico looking for environmentally friendly packaging materials respective machineries.

Thanks to the nearshoring boom, the packaging market in Mexico is growing and many companies announced new projects to invest into the processing and packaging equipment:

• $160 by Nestlé to expand its pet food plant in Guanajuato
• $275 by Unilever to increase its capacity in four plants
• $1.3 billion by Constellation Brands in Veracruz
• $750 million by Grupo Bimbo
• $500 by Diageo to increase its tequila production and bottling in the state of Jalisco
• $231 by Arca Continental in bottling and logistic projects
• $129 by Sanofi in the State of Mexico

Challenges packaging industry

Even though there will be a continuing increase demand of packaging in Mexico, there are also some rusks such as high inflation, supplies scarcity. In addition, new technology must be implemented to meet the high demand caused by the nearshoring boom. As we can see on the mentioned companies above, many national und multinational firms have high trust into Mexico and investing in new machinery and adding production capacity to meet demand.

Packaging Exhibitions Mexico

There are various exhibitions of packaging manufacturers in Mexico such as the EXPO PACK Guadalajara or Expo Empaque Norte Monterrey. Attendees will experience a wide variety of machines, materials, and other goods and services from several hundreds leading international suppliers along with unmatched networking and education opportunities.

Apparel & Textile Manufacturing in Mexico

The textile industry has a long history in Mexico and is a significant sector of the country's economy and has been attracting manufacturing investment for the fabrication of textiles for many years. Presently, there are over several hundred textile companies established in Mexico which create over 500,000 working places in this sector. Mexico ranks as the world's seventh-largest textile producer, with a notable concentration of production in the states of Mexico State, Mexico City, and Puebla. The country's textile industry encompasses a diverse array of products, including home textiles, apparel, and technical textiles. Mexico has garnered a reputation for manufacturing top-tier knitwear, denim, and workwear, which enjoy significant global demand due to their exceptional quality.

Thanks to Mexico’s large and skilled workforce with experience in apparel production, including design, cutting, sewing, and finishing, they have attracted companies from around the world to set up their manufacturing operations in Mexico. Thus its, not surprisingly that the apparel industry became a key player in the maquila program and accounts for around 75% of the total production and is therefore the largest segment.

Advantages of Mexico for the apparel industry

Due to the proximity to the United States and the cheap labor force, Mexico is a significant exporter of textile products, with the United States being the largest market for Mexican textiles. Other major export markets include South America, Central America, and Canada. Thus, the Mexican government has invested heavily in its infrastructure, including transportation, communication, and technology, which has improved logistics and supply chain management for the apparel industry.

Though the main reason manufacturing apparel & textiles in Mexico is the Maquila Program which was created by the government to promote economic development and attract new foreign investors. Around 400 companies with over 130,000 employees are IMMEX-certified and take the advantage of the import duty-deferral government program.

The main competitor are the low-cost producers like China and Bangladesh, however due to the tense relation and its trade war between China and the United States, the industry continues to grow and remains an important contributor to the Mexican economy. A major challenge is the need to invest in modernizing and upgrading production facilities.

Textile Forecast Growth Mexican Market

As we can see on the graph, the textile production market share is expected to increase to USD 4 Billion from 2021 to 2026. One of the key growths is the increasing demand for textile in the automotive industry. This sector uses synthetic fibers to produce lightweight, fuel-efficient, and environment-friendly vehicles to comply with stringent regulations. Thus, the high production of vehicles which all need textiles in the interiors, will increase the demand for textiles during the forecast period.

The fiber segment, which is extensively used to produce garments, apparel, construction materials, medical dressings, and automotive interiors segment, will have a significant growth during the forecast period. For instance, silk fibers are used for applications such as tasar materials, socks, clothing, and others. The silk market in Mexico is growing at a healthy rate, given the various benefits of silk, including its suitability for all climatic conditions, quick-drying nature, durability, and softness.

Textile Relocation from Europe to Mexico

After two pandemic years, manufacturers in clothes and apparel were hoping to be able to recover in 2022. However, when Russia invaded Ukraine, manufacturers facing fresh challenges from the energy crisis to fluctuating raw materials prices to the global supply chain’s transformation. Many European producers such as Spain, Portugal or French are very dependent on the gas to produce Apparels & Textiles, however they are facing huge problems due to the increased electricity costs. And as there is no end in sight, many companies considering to relocate their production places – which could be in favor of Mexico.

Appliance Industry Mexico

Many appliance products are being manufactured in Mexico now as well. As manufacturing costs continue to rise in China, producers are moving their operations to Mexico for a variety of cost-efficient reasons.

The Mexican government has taken several efforts to encourage investment in the appliances industry, including offering tax incentives named as “Immex-Program”, and investing in infrastructure improvements to support manufacturing operations and decrease supply chain costs. As a result, the appliances industry has become an important part of Mexico's manufacturing sector and a key driver of economic growth. Thus, it is not surprisingly that Mexico is – beside Japan or England – one of the biggest exporters of appliances in the world, major appliances exports include laundry appliances (washers and dryers), range stoves and fridges and freezers.

The household appliance industry in Mexico has experienced an astonishing growth over the past three years as well, primarily due to wage inflation and the trade conflict between China and the United States. Based on various projections, the industry will continue to grow in 2023 by 8% thanks to the over 500 appliance companies and new entrants. Another factor is the OEM’s requirement for just-in-time delivery, which requires the supplier to be within a 1-2 hour driving distance from the OEM’s assembly plant – Mexico can provide that due to the modern infrastructure and proximity to its final customers in the United States. However, Mexico has still lots of potential to improve its numbers; Household appliances manufacturers currently occupy only 12% of existing industrial areas.

Locations of the appliance manufacturers

There are around 3,500 companies that belong to the home appliance industry, mainly located in the states Guanajuato, Baja California, Chihuahua, Jalisco, State of Mexico and Mexico City. According to Clelac, Guanajuato leads the list nearly 600 establishments, followed by Jalisco with 450 and Nuevo León, with 350 companies established in the state.

Some of the most representative of the home appliance industry that are installed in Mexico are: Samsung, Whirlpool, Mabe, Carrier, Bosch, Hisense, Trane Technologies, Criotec, Dometic, among others. Mexico ranks 5th as a global home appliance supplier, with a 5.1% share. In first place is China, with 29.5%; followed by Germany, with 9%; the United States, with 5.8%; and Italy, with 5.7%.

Companies’ investments into Home Appliance

The manufacturing industry in Mexico is for refrigerators, washing machines and other household appliances almost US $15 billion dollars’ worth. In terms of production and investment, there will be a future growth of 8% thanks to the nearshoring trend. Various companies like Bosch, Danfoss, Whirlpool or Hisense announced new openings and will continue to grow during the coming years with already existing plants. In that, companies do not only want to focus on mass production but also on new technologies in the home appliance industry to stay competitive and attractive in the long term.

Indeed, the smart home appliance industry is worth US $31 billion globally with an annual growth rate of 18% until 2026. Thanks to only 3 hours driving to the United States, Nuevo Leon is responsible for over 40% of the appliance production and generates over 30,000 direct jobs in that region. And in the coming years, this figure will increase by up to 20% thanks to the arrival of new investments.

Even though Mexico is a very attractive location based on low cost, many companies are also looking for a more reliable supply chain – and Mexico can provide both. And thanks to the United States-Mexico-Canada Agreement, which is a free-trade pact between the three nations, companies take advantage to produce products tax free.

Dependency on the appliances sales to the United States

With over 85% exports of appliances to the United States, there is a very high dependency on only one country. If the United States should fall into a recession again, Mexico’s appliance industry would be directly affected. Thus, in the long-term, the country should diversify its client portfolio and take into consideration to produce for other continents such as Europe or Africa as they have the faster supply chain than China.

The Electronic Industry Mexico

Mexico is one of the largest electronic producer worldwide, most produced and exported products are televisions, smartphones and computers. Over the last decades, many of the world’s leading multinational and renowned companies such as LG, Sony, Panasonic, Toshiba or Samsung that comprise the electronics industry in Mexico have established operations in the country. Beside on a mass scale, the country is increasingly specializing in higher value-added products. The industry in Mexico has advanced from a posture of low-mix and high-volume to the manufacture of small quantities of many different products, i.e., low-volume and high-mix.

Since yearly over 100’000 engineering students graduate in Mexico, global manufacturers and suppliers take the advantage to start their operations in Mexico. Based on figures of the Mexico’s National Statistical Directory of Economic Units (DENUE), they have identified more than 1,100 firms that manufacture computer equipment, communication, measurement and other equipment, components, and accessories in the electronics industry in Mexico.

Electronic Growth Projections

According to projections by electronics industry analysts, the Mexican exports grew in 2022 more than 4%. The segments with highest export growth have been computer and consumer electronics, and flat-screen televisions, in particular. Beside the OEM who keep investing into their facilities, suppliers to these firms have been also forced to expand to Mexico in order to have a cost-efficient supply-chain. Thus, the pace of new foreign direct investment and new plant openings haven’t stopped – more and more manufacturers are expanding into Mexico than ever before. This has allowed mid-sized and large multinational firms alike to take advantage of Mexico’s beneficial cost structure, logistics, and increasingly qualified labor.

Large electronic investments by Asians

In the coming years, Samsung for example will make significant investments to improve its manufacturing facilities for setting up new chip production. They will invest $500 million into Mexico to boost the production of home appliances, most of it in Queretaro in central Mexico. Samsung already operates a TV assembly plant in Tijuana, Mexico, with an annual output of around 19 million units of plasma, LCD and LED tv’s. Having Mexico has a manufacturing base enables Samsung to effectively cater to the entire North American market.

Over 400 companies from Asia have announced at the end of 2022 to move part of their production outside China to new destinations – to produce close to the United States as well as take advantage from the cheap labor force and the trade agreements. It will undoubtedly have a positive impact on the Mexican economy as transnational companies would seek to bring their production and manufacturing plants closer to Mexico. Beside that the suppliers would take advantage of a much more cost-efficient supply chain, Mexico has the human talent and the material close to the assemblers.

Opportunities with Semiconductor

As mentioned earlier already, Mexico now provides advanced research and design services and the manufacture of highly sophisticated products, including:

• Semiconductors
• Chipsets
• Printed circuit boards
• Microelectronics
• LCD panels
• Microprocessors

As Mexico’s strongest industry – the automotive sector – is very dependent on semiconductors, the trade war and Covid pandemic caused a 20 percent drop in automobile production in Mexico during 2020. During the 10th North American Leaders' Summit held in January 2023 in Mexico, the leaders of Canada, the United States and Mexico, agreed to work on an import substitution plan so as not to depend on Asia for technology, particularly in semiconductors. Indeed, the United States wants to become a manufacturer and not depend on other manufacturers like China or Taiwan for the supply of semiconductors.

Semiconductors plants announced for Baja California and Jalisco

According to Alberto Bustamante, the head of the National Auto Parts Industry (INA) business chamber, three technology companies will establish semiconductor chip manufacturing plants in Jalisco and Baja California to meet global demand. The semiconductor shortage has affected around 200,000 units in Mexico, leading to delays in automotive production. However, with the installation of two semiconductor plants in the U.S. by the end of this year or early 2024, Bustamante believes that the chip shortages will be resolved within the first six months of next year, ensuring a steady recovery for the Mexican automotive industry.

Electronic manufacturing locations

Many of those electronic manufacturing companies are mainly located along Mexico’s borders to the United States as well as central and western regions like Monterrey, Juarez, Guadalajara, or Aguascalientes. They all take advantage cheap labor force and the trade USMCA trade agreement; indeed, Tijuana is one of the largest clusters of electronics manufacturers and assemblers in all of Mexico. However, in contrast to other sectors where the exports are mainly for the United States, Mexico has in the electronic industry a quite diverse clientele. Beside the USA, main export destinations for the consumption of these products are Canada, Colombia, France, and the Netherlands. This demonstrates that Mexico has an extremely successful track record of more than 30 years as an exporter of electronic products. This also due to the reason that Mexico offers trade liberalization throughout the supply and production chains. This means that the country has access to inputs at international prices that are competitive due to the country’s proximity to the highly competitive North American market.

Furniture Industry in Mexico

Even though Mexico has been manufacturing several years furniture products and it has been a significant sector, the industry has recently grown due to the globalization and the tense relation between China and the United States. Indeed nearshoring has become an increasingly critical strategy for companies seeking to lower their shipping costs or leverage trade agreement benefits that exist between companies near their target sales region. There are several other reasons why Mexico comes to the top of the list of considerations for furniture producers looking to diversify their global footprint. Thanks to the countries over 50’s international trade agreements, its proximity to the United States as well as to its competitive prices, it is the ideal production place for any furniture company. In numbers, there are over 700 furniture companies based in Mexico, 55k plus employees and there has been over $2.5 billion exports to the United States of furniture products from Mexico.That places Mexico as the fourth largest such exporter behind China, Vietnam and Canada.

USMCA agreement boost relocation

Thanks to the USMCA rule of origin requirements that require portions of miscellaneous furniture products to be manufactured in one of the signatory countries, many companies are moving such manufacturing into Mexico. For example two Chinese furniture companies announcedinvestment projectsin Nuevo León, Mexico, reaching a projected investment of USD $150 million and the creation of more than 1,600 new jobs. Kuka Home, China's largest furniture manufacturer, and Sunon, an office furniture manufacturer, launched new operations in Mexico to meet demand from the North and South American markets. Even though United States is facing a recession in 2023, the Mexican industry will maintain its growth in said market, up to 6% thanks to the nearshoring trend.

Furniture products produced in Mexico

Mexico’s robust furniture industry serves both the international and growing domestic markets and manufacture a wide range of furniture products such as

• Hotel furniture
• Hospitals and veterinary furniture
• Wood and metal furnishings
• Mattresses, beds, bedframes
• Integral kitchens
• Modular bathroom furniture
• Office furniture
• Casino furniture and fixtures
• Seats
• Home furnishings

Who are the largest furniture manufacturers in Mexico?

There are various manufacture furniture companies in Mexico; over 700 national and international companies with a workforce of 55k+ working in this sector. Two years ago, IKEA was choosing to produce furniture in Mexico with its first North American manufacturing plant with over 100,000-square-meter in Saltillo. However, there are many other international brands such as Quetzal, Richer Design, Pottery Barn or Z Gallerie to name a few.

What kind of wood is mexican furniture?

Mexican furniture is crafted from various types of wood, each offering distinct characteristics and aesthetic appeal. Some commonly used woods in Mexican furniture production include cedar, mesquite, and parota. The latter is widely utilized due to its affordability, versatility, and abundant availability in Mexico. Cedar is favored for its natural resistance to insects and durability. Mesquite is known for its rich, unique grain patterns and strength, while parota, a tropical hardwood, is cherished for its stunning grain and sustainable sourcing.

Mexican furniture crafted from these woods can be found in various regions across Mexico, with specific areas renowned for their expertise in woodworking and furniture craftsmanship.

The chart below displays the states and their respective furniture products and tree species of production.

Furniture production locations in Mexico

Mexico's furniture manufacturing production can be found especially in the northern (Nuevo Leon, Chihuahua, Coahuila, Sonora, Baja California) and central states State of Mexico (Jalisco, Puebla).Jalisco for example has become known for its collaboration with the Swedish furniture manufacturing Ikea.

Production in Jalisco's furniture industry with its main spot Guadalajara increased by 9% at the end of 2022, after Mexico gained ground over China as an importer in the U.S. market The manufacturer Palliser Furniture expandedits theater seating and entry-level price furniture in Matamoros, Coahuila. The facility opened in 2017 and put to work new manufacturing methodologies (65,000-square-foot), including the use of conveyor one-piece continuous flow production, to boost its production efficiency and provide more strenuous quality control.Another company named International Furniture Direct expanded its facilitiesin Puebla, southeast of Mexico City, and Guadalajara and doubled its Puebla facility to 280,000 square feet in order to increase production by 50%.

Trends in furniture

Due to the pandemic, the office furnishing trends have been evolving dramatically as many people switch from expansive workstations to flexible workspaces. The largest categories of furniture exports are miscellaneous wood-framed upholstered seats, wood furniture, metal-framed upholstered seats, wood-framed upholstered chairs, and wooden bedroom furniture. In addition, Urban living in the United States and growth in apartment living in Mexico, have increased demand for furniture made to fit smaller spaces.

Medical Device Industry Mexico

There are various manufacturers that are already in Mexico such as Johnson & Johnson, Philips, GE Medical Systems, Siemens, Medline, Medtronic, Smiths Medical, Abbott Laboratories, or Stryker Corp. They are active in different fields like surgical, dental, orthopedic articles, mechano-therapy applications, veterinary instruments and devices, and surgical furniture, among others.

Numerous medical device manufacturers strategically position themselves in close proximity to major markets in the United States, facilitating seamless product shipment and exchange. San Diego, California, which is the fourth-largest life sciences hub in the U.S., has a high concentration of medical device manufacturers located in nearby areas. Directly across the border lies the city of Tijuana, which is a short half-hour drive to the country’s booming Baja California region. Additionally, regions such as Chihuahua, Coahuila, Nuevo León, Jalisco, Sonora, and Tamaulipas boast a notable presence of medical equipment manufacturers operating within their borders.

Factors of the medical device growth

Mexico has a growing medical device industry with a wide range of companies involved in the production and development of medical devices. Factors that those mentioned companies expanded to Mexico and contribute to this industry’s growth include:

• A highly trained and educated workforce
• Academic, government and private sector collaborations expand device manufacturing and improve efficiency
• Proximity to the U.S. provides several cost-effective benefits over other global locations like China

Many of the medical device companies in Mexico have established development centers in the country to take advantage of the skilled workforce, lower production costs, and strategic location. In addition, the Mexican government has implemented policies to support the growth of the medical device industry, including tax incentives, research and development grants, and streamlined regulatory processes. These factors have made Mexico an attractive location for companies looking to expand their medical device operations and tap into the growing demand for medical devices in the global market.

Locations of the Medical Device Manufacturers

As we can see on the graph, Baja California holds the largest concentration of medical manufacturing companies in Mexico and accounts for almost 50% of National Export. On second place follows Juarez and Nuevo Leon.

Baja California is a popular location for medical device manufacturing due to its strategic location along the US-Mexico border. The state has developed infrastructure and skilled labor force, making it an ideal location for companies to produce medical devices for export to the United States and other markets.

Chihuahua has emerged as a significant hub for medical device manufacturing, bolstered by its well-established transportation network, access to raw materials, and a highly skilled labor force. Medical device companies in this region produce a wide range of products, including orthopedic devices, surgical instruments, and diagnostic equipment. The state's favorable infrastructure and expertise contribute to its prominence in the medical device manufacturing sector.

Further to the Northwest region, Nuevo Leon with the capital Monterrey, Companies in this region benefit from a skilled labor force, access to raw materials, and a favorable business environment. In the state Jalisco with its main capital Guadalajara, many companies have established manufacturing facilities in this region due to its skilled labor force, favorable business environment, and proximity to major markets.

What Medical Device Products are manufactured

Mexico has a strong presence in the production of cardiovascular devices, including pacemakers, implantable defibrillators, or stents. This is due in part to the country's expertise in precision engineering and its close proximity to the United States, which is the largest market for cardiovascular devices. Additionally, Mexico hosts numerous firms engaged in manufacturing orthopedic devices, including spinal implants, joint replacements, and trauma fixation devices. The country's diagnostic sector is also on the rise, with a growing industry involved in the production of imaging equipment, diagnostic tests, and various medical devices utilized for disease diagnosis and treatment.

The country's strong research and development capabilities have attracted companies looking to develop new and innovative medical devices. Mexico is also home to several companies involved in the production of dental devices, including orthodontic appliances, dental implants, and prosthetics. The country's skilled labor force, low production costs, and strategic location have made it an attractive location for companies looking to expand their dental device operations.

There are several medical device companies that have established operations in Mexico. Here are some examples of established medical device companies and what they are dedicated to:

• Medtronic: Global leader in medical devices, with operations in Mexico encompassing research and development centers, manufacturing facilities, and distribution centers. Their product range includes surgical equipment, cardiac and vascular devices, and diabetes management products.
• Zimmer Biomet: Prominent manufacturer of orthopedic devices, including trauma fixation devices and joint replacements. They operate a manufacturing facility in Mexico, producing a diverse range of orthopedic products, along with a dedicated research and development center.
• Philips Healthcare: Renowned global leader in medical imaging equipment. Their Mexico operations primarily focus on the production of imaging equipment and other medical devices. Products include MRI machines, CT scanners, and ultrasound equipment.
• Boston Scientific: Manufacturer of medical devices utilized in urology, cardiology, and endoscopy. Their operations in Mexico center around the production of cardiovascular devices, such as pacemakers, stents, and implantable defibrillators.
• Stryker: Leading manufacturer of medical devices employed in neurotechnology, orthopedics, and spine surgery. They possess a manufacturing facility in Mexico, producing a wide array of orthopedic and surgical products, alongside a dedicated research and development center.

Complex Medical Device Guidelines & Regulations

Mexico enforces rigorous guidelines and regulations governing the manufacturing of medical devices. Companies are required to comply with strict regulations and standards to ensure the safety and efficacy of their products. These regulations cover all aspects of the manufacturing process, from design and development to testing, production, and distribution. Compliance with the Mexican Official Standard (NOM) for medical devices is mandatory, incorporating criteria for risk management, quality assurance, and product labeling.

In addition to the NOM, the manufacturers must also comply with international standards such as ISO 14971:2019, which outlines requirements for risk management and ISO 13485:2016, which outlines requirements for the quality management system of medical device manufacturers.

The regulatory body responsible for overseeing the medical device industry in Mexico is the Federal Commission for the Protection Against Sanitary Risk (COFEPRIS), which operates under the Ministry of Health. Manufacturers are required to secure certifications and approvals from COFEPRIS to legally market and distribute their products within Mexico. These include obtaining a Certificate of Free Sale (CFS) or a Certificate of Good Manufacturing Practices (GMP) for exporting the products to other countries.

Overall, Mexico's regulatory framework for medical devices is rigorous and designed to ensure the safety and effectiveness of medical devices manufactured in the country. This helps to ensure that patients receive high-quality medical devices that meet international standards.

Information Technology in Mexico

Mexico’s information technology (IT) sector is well established and belongs to the top 3 for offshoring options with the tech industry which is expanding at 3x the global average. Indeed, the industry is pulling more than US$12 billion a year with more than 4,000 companies across the country contributing to the sector. Some companies are IBM, Oracle, Softtek, or Intel. Factors for the rapid growth are Mexico’s strategic location, skilled workforce, favorable business environment, and government support. Also, Mexico also has a favorable time zone that allows companies to provide 24/7 services to clients in North America.

Beside call centers, Mexican IT industry offers a range of services, including software development, data analytics, cybersecurity, IT consulting, and digital marketing. And due to the investment of the Mexican government and growing infrastructure, more development talent is emerging in Mexico at lower salary rates than their American counterparts; graduates in Mexico earn four times less than people from the United States who do not even have a degree.

There are different information technology provided such as cloud computing, data analytics, digital transformation, cloud services, cybersecurity, application development, and digital transformation. Thus, it is not surprisingly that the Information Technology sector in Mexico is also positioned as a high-quality software developer, benefiting the needs of aerospace manufacturing as well as financial industries.

Growing IT Mexico

The Mexican IT industry is one of the fastest-growing in the region, with an annual growth rate of around 12%. According to the Mexican Association of the Information Technology Industry (AMITI), the industry's revenue was $38.3 billion in 2020, and it is expected to reach $50 billion by 2025.

The country has a large pool of skilled IT professionals, with around 650,000 people employed in the IT sector. More than 130 universities and technical schools offering IT-related courses and programs, producing around 120,000 graduates in the field each year, which represents over 20% of all the graduates. The government has also established technology parks and innovation centers to encourage collaboration and innovation in the industry.

Tech hubs in Mexico

Major IT industrial sectors are in the capital Mexico City, Guadalajara and Monterrey, whereas the state Jalisco is the home for 40 percent of Mexico’s IT industry and a well-educated workforce. Indeed, Guadalajara is being called the Silicon Valley of Latin America. Jalisco – Latin Americas most important innovation hub – goal is surpassing US$5 billion in Foreign Direct Investment, generating more than 80,000 jobs in the sector and reaching US$50 billion in exports by 2030.

Furthermore, there are 16 technology institutes and 12 universities with more than 8,000 technical and engineering students graduating every year from the state. The government has made the software sector a priority and has established the Program for the Development of the Software Industry (PROSOFT) initiative. Through the initiative, the Mexican government wants to reach a production level of 5 billion dollar of software development and become a leader in Latin America.

Data Centers in Mexico

In the last years, there’s been a quickly growing need for data center infrastructures, cloud computing, and security services, as well as business intelligence software to keep pace with market demand. According to a report by Datacenter Dynamics, the market was valued at $1.2 billion in 2020 and is expected to reach $2 billion by 2025, which means an annual growth of 10%.

The countries’ favorable location makes it an attractive location for data center operators looking to serve both North American and Latin American markets. The proximity to the United States also makes it an ideal location for disaster recovery and backup facilities. Several major data center operators have established a presence in Mexico, including Digital Realty, Equinix, and KIO Networks. These companies operate data centers in several Mexican cities, including Mexico City, Monterrey and Queretaro. Indeed, Queretaro has become the primary data center hub and contributes to over 65% of the data center facilities in Mexico. As those data center operators need lots of energy, building renewable energy sources, such as solar and wind power to reduce their carbon footprint and lower operating costs, this should be one’s of the governments primary goal.

IT-Exports mainly to the United States

Many of these IT companies in Mexico export their products and services to other countries worldwide, including the United States, Canada, and Europe. The United States is the largest market for Mexican IT exports, accounting for around 85% of the country's IT exports. Other significant export destinations for Mexican IT companies include Canada, the United Kingdom, Germany, and Japan.

Various Raw Materials production Mexico

Mexico is a country with a rich and diverse supply of raw materials that make it an attractive destination for foreign investors. It is one of the largest oil producers in the world and has a lot of reserves of oil and natural gas. Behind the USA, Canada and Venezuela, Mexico is the world’s 11th largest oil producer, 13th largest oil exporter, with the 17th largest oil reserves, and 4th largest producer in the Western Hemisphere.

In addition, the country is also a major producer of agricultural products, including wheat corn, sorghum, tomatoes, beans, and soybeans among others. Thanks to its stable political system, favorable business environment, skilled workforce, and proximity to the United States and other major markets make it an ideal location for foreign companies looking to tap into the country's vast natural resources. The raw material is one of the reasons why many foreign investors explore investment opportunities in this dynamic and growing economy.

Plastic production in Mexico

As Mexico is an attractive location for manufacturers from various industries, the country produce for different sectors, including packaging, automotive, construction, and consumer goods. It has experienced steady growth in plastic production over the years; in 2021, it was producing around 7.3 million metric tons of plastic annually, making it one of the largest plastic producers in Latin America. And the growth will stay thanks to the nearshoring trend.

Mexico is a major producer of automotive parts and components, with many international automotive companies operating manufacturing facilities in the country. Various manufacturing clusters are well known for their plastic manufacturing facilities states such as Nuevo León, Coahuila, and Mexico City. Thanks to the reason that more and more manufacturing companies relocating from China to Mexico, the plastic plays a crucial role for the automotive industry. The automotive industry use plastic components like bumpers, interior parts, dashboards, and fuel tanks due to their lightweight, durability, and design flexibility.

Also, the packaging is a significant application for plastics in Mexico. It is used in various industries, such as pharmaceuticals, food and beverage, personal care products, and consumer goods. Plastic packaging provides convenience, durability, and protection for products. Lastly, Mexico has a lot of refineries and petrochemical complexes that produce the raw materials needed for plastic manufacturing, including ethylene and propylene, which are derived from petroleum and natural gas.

A significant amount of the plastic products are exported to international markets, particularly to the United States.

The mining industry

Mexico is the largest silver producer world wide. The silver is used for the trending products electric cars, solar panels and 5G telekom networks. TheZacatecas is one of the most important mining states in Mexico, and its attractiveness to the mining industry. The state is home to significant mineral reserves, including gold, silver, zinc, copper, lead, and, among others. Indeed, Zacatecas is the leading producer of silver in Mexico and one of the largest in the world in this sector. The city has a very strong infrastructure, including roads, railways, and ports, that facilitates the transportation of minerals and mining equipment. Over 70% of total exploration investment in the Mexican mining industry is made by foreign companies; however, 60% of the total production value is generated by Mexican companies. Canada represents over 70% of the total foreign investment related to the mining sector in Mexico.

Thanks to favorable with laws and regulations, it promotes foreign investment and protect mining assets. The government has implemented policies to encourage mining investment and streamline the permitting process.

Manufacturing and Assembly

Mexico is a major player in the assembly manufacturing industry, with a focus on automotive, electronics, aerospace, and consumer goods production. Thanks to the reason that Mexico has raw materials such as steel, aluminum, plastics, and electronic components are utilized in manufacturing and assembly processes. Beside the automotive, the electronic industry with products such televisions, computers, and home appliances will grow fast thanks to the nearshoring trend.