News, Insights and Best Practices for Manufacturing in Mexico

Advantages in the EU for new trade avenues

08 Jan 2014

Category: Manufacturing in Mexico

Nearshoring projects are increasingly popular in North America, where NAFTA-affiliated nations like the United States are finding it less expensive and more manageable to move their manufacturing operations to Mexico than remain in China, where labor costs are on the rise and questions about oversight persist. Just as trade agreements have benefited North America, pacts involving the European Union also pose significant advantages.

Trouble in Spain
The stagnancy of the Spanish economy and the ongoing downturn in the country has created a difficult environment for many Spanish businesses. CNN Money notes that at a macro level, the problem is very simple: There isn't enough money in Spain to support business growth. Salaries are down, spending is down, and smart businesses are adapting by looking outside of their country's borders. Just as offshore American manufacturing operations have moved from Asia to countries like Mexico, which provide a more suitable production environment, Spanish businesses are adapting to their shifting economic climate by exploring opportunities for international expansion. 

Spanish export industry
At a recent event hosted by The Spanish Exterior Commerce Institute (ICEX), Spanish Commerce Secretary Jamie Garcia-Legaz noted that his country would likely set a record for the value of total goods and services exported in 2013. Many Spanish economists see the export industry as a way to lift the country out of its economic woes, and many businesses are investing in the business infrastructure needed to make exporting a reality for their products. CNN Money told the story of small-business owner Xevi Ramón of Triticum Bakery recently invested in deep freezers, which will allow him to ship his products as far as Australia. 

An ear to the ground on global commerce
With legislation like the Transatlantic Trade and Investment Partnership (TTIP) on the horizon, many businesses in both the European Union and North America are evaluating the possibilities for expansion of global trade and manufacturing. New technology makes it easier to connect globally, and as markets expand, new opportunities, ones that were perhaps previously obscured by antiquated trade agreements, become visible. Expanding trade and manufacturing markets like that in Mexico can provide a boon to countries like those in the European Union that are struggling to dig themselves out of recessions. 

Additional opportunities
While Spain may be looking to expand trade of goods and services initially to new countries, as has been the case in the United States, it's possible that other opportunities will arise. Mexican manufacturing, for example, which is inexpensive and constantly becoming more sophisticated, has created a windfall of benefits for many American companies. Not only is labor less expensive, but with new energy regulations in place in Mexico, competition for lucrative energy contracts is heating up, which could have an additional favorable effect on the manufacturing economy.

This may not be the exact case for a country like Spain, but the main takeaway is that as independent business owners continue to think outside the box, they'll find more opportunities to grow in the global community.

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