News, Insights and Best Practices for Manufacturing in Mexico

Materials company expands its San Luis Potosi operations

02 Apr 2015

Category: Automotive Manufacturing, Labor & Economics, Manufacturing in Mexico

There are various states throughout Mexico that serve as manufacturing hubs for a large number of foreign organizations. These companies are attracted to the country's low-cost, yet highly skilled labor force that produces quality goods on a consistent basis.

It's not uncommon for organizations to invest large sums of capital to build their own manufacturing facilities, or get their operations off the ground by running them through a maquiladora in Mexico. The government has taken great steps to make it easy for organizations outside the country to come in and begin manufacturing their products in Mexico, making it one of the fastest growing economies in the world.

While many companies are working to gain a foothold in the country, others are already established and making plans to expand.

PGI expands its Mexico factory
Polymer Group Inc. produces nonwoven materials across a wide range of business markets. The company employs 5,000 people at its various locations across the globe - one of which is Mexico.

In a recent press release, the company announced that it was planning to expand the capacity of its factory in San Luis Potosi, Mexico. After the project is completed, PGI will have the ability to significantly increase its manufacturing output of personal and health care products. The new factory addition will be completed in Q4 of this year.

"PGI recognizes the needs of our customers to provide differentiated products," Scott Tracey, president of PGI's North America and Global Wipes and Technical Specialties division. "I am extremely proud of our Mexico site and the print expertise that it provides the organization. The plant expansion closely aligns with our growth strategy as the world's leading specialty materials company."

"San Luis Potosi offers a number of distinct advantages for companies."

The move made by PGI is similar to that of General Motors. According to GM Authority, the company made a capital investment of $87 million toward the expansion of its factory, which is also located in San Luis Potosi.

"We start this project looking to modernize and increase our working capacity in the stamping process in San Luis Potosi, which is key to producing vehicles like Chevrolet Aveo and Trax, which are very popular in the Mexican market," Ernesto Hernandez, CEO and president of GM Mexico, told the website.

For the last three years, the Aveo has been the top-selling passenger vehicle in Mexico and the Trax is the most popular small sport utility vehicle in the country. This expansion will help GM Mexico meet its consumer demand for these vehicles.

Many companies in Mexico are either in the planning stages of establishing operations in Mexico, or expanding their highly efficient manufacturing facilities.  Many foreign companies are either in the planning stages of establishing operations in Mexico, or expanding their current facilities.

A brief overview of manufacturing in San Luis Potosi
Mexico's auto production industry is arguably the most important to the nation's economy. A number of foreign automakers assemble all or part of their vehicle lines in various locations throughout the country.

San Luis Potosi offers a number of distinct advantages for companies hoping to establish an operational hub there. According to European CEO, the city is centrally connected via both railway and highway to some of the country's most important cities in its manufacturing infrastructure. Some of these include Mexico City, ports on the Pacific Coast and the Gulf of Mexico, as well as towns in the U.S. such as McAllen, Laredo and Brownsville, Texas.

The website wrote that San Luis Potosi is essentially ground zero when it comes to logistics in Mexico. The airport's custom hub is the only one in the country that never closes and one of the easiest for foreign companies to come into and establish its manufacturing operations.

The Powder and Bulk Solids website wrote that Universal Acoustic and Emission Technologies recently received the manufacturer of the year award in its home state of Wisconsin. However, although Universal AET is based in Stoughton, the company runs a manufacturing facility in San Luis Potosi.

"We're proud of our long history of serving a diverse customer base that has changed and grown with the evolution of our products, solutions, and technologies," said Dick Stronjinc, president and CEO of Universal AET.

Manufacturing in Mexico has become increasingly popular over the years. Given its partnership with more than 40 countries as a part of the North American Free Trade Agreement, the Mexican government taking steps to improve its educational infrastructure by grooming the next generation of manufacturing professionals, and legislative reforms to its energy sector, the country will continue to improve its offshoring advantages which attract the interest of foreign companies.

Organizations considering taking this step should explore the viability of establishing their own operations or working with shelter companies for ease of access into the country. Either route will position a company to generate increased revenue as a result of enhanced customer satisfaction with the items produced in the country.

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