News, Insights and Best Practices for Manufacturing in Mexico

Mexican oil money will be good for every business

08 Apr 2014

Category: Labor & Economics

Canada is becoming a major investor in Mexico, according to Fox News. Canadian banking conglomerate Scotiabank plans to invest $10 billion in the Mexican oil and gas industry over the next four years. The bank plans to back large companies like BP and ExxonMobil, which are taking advantage of the cessation of Pemex's monopoly on the nation's oil and gas business.

Fox News cited evidence that not only would major companies get money from these deals, but mid- and small-sized firms stand to benefit as well.

Scotiabank's Latin America director, Paul D'Agata, said as much during an interview with Fox. There are many mid-sized companies involved in oil, he said.

Big money goes a long way
But it won't just be oil companies that benefit from Scotiabank's investment of $10 billion. That money will directly help the people of Mexico by creating jobs and raising the standard of living. Additionally, gas and oil will become cheaper, making it more cost-effective for manufacturing companies to operate. In an interview with PBS, Oscar Aguilar, a local Mexican journalist in Querétaro, reported on the emergence of a major hub for building airplanes and other machines. He reports that companies as diverse as Bombardier, American Airlines, Aeromexico, Samsung and Honda, as well as Siemens, General Electric and many others have all moved to the city, which has welcomed the foreign investments and an increase in job growth.

Shipping from Mexico is easy
Mitsui O.S.K Lines (MOL) is another company benefiting from Mexico. While it does not build cars, it does ship them overseas in large quantities. The company has made plans recently to begin shipping between Mexico and the ports that lie in the U.S. and Canada that fall under the North American Free Trade Agreement. Such a route would be very advantageous to Mexican manufacturers, because there are no tariffs on most goods shipped between the U.S., Mexico and Canada, and so goods can be brought by boat at much lower cost than traditional shipping. The route is also shorter than the one between China and the U.S. for example.

Mexico has free trade agreements with many countries, and it is a member of the Latin American trade bloc, the Pacific Alliance, further enhancing its appeal as a global shipping port. If a company stations itself in one of the central parts of Mexico, like Querétaro, it could ship between the Atlantic and Pacific oceans very easily.

MOL chose to ship from the Atlantic side and Pacific side both. On the eastern seaboard, there will be three large boats that leave Veracruz in Mexico and have calls at Jacksonville, Brunswick, Baltimore, Newark and Davisville.

From the Pacific, boats will leave Lazaro Cardenas, and ship to San Diego, Richmond, Portland, Tacoma and the Canadian port of New Westminster.

Mexico is experiencing good growth
Oscar Aguilar, in his interview with PBS, reports that when he moved to Querétaro, he felt enormous gratitude for the opportunities there.

"Querétaro means a town that gave me a job, gave me stability and gave me an opportunity to grow with my family," Aguilar said.

Mexican Finance Secretary Luis Videgaray was also interviewed by PBS, and he had nothing but good things to say about the Mexican economy.

"Perhaps no other country has had such a successful year as we did last year in terms of changing things in the Mexican economy: in energy, telecommunications, the fiscal front, financial reform," Videgaray said. "We did many things that better the prospects of growth for Mexico."

Companies that want to take advantage of building in Mexico now but don't know the region very well could benefit from a offshore shelter company that will ease the transition and allow companies to continue working much as they had before.


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