News, Insights and Best Practices for Manufacturing in Mexico

Mexico becoming major attraction to US lawmakers

22 May 2014

Category: Labor & Economics, Politics & Regulations, Taxes & Finance

Mexico has become a major destination for U.S. politicians that want to curry favor with an economic superpower that is quickly developing its country into a major hotspot for manufacturing and exports. Currently, according to The Daily Beast, 6 million U.S. jobs depend on bilateral trade with Mexico, which totaled $525 billion in 2012 - double what it was in 2009.

Exports account for 14 percent of America's gross domestic product, despite exporting firms making up only 1 percent of the total companies in the U.S. If that 1 percent became 5 percent, for example, according to Hank Marshall, director of the office of economic development for the city of Phoenix, "Imagine the growth potential."

In other words, doing business with Mexico could dramatically improve the U.S. economy.

"Today, all candidates for governor of Arizona have in their action plan a trip to Mexico to meet the Mexican president and his cabinet," said Margie Emmermann, policy adviser on Latin America and Mexico for Arizona Gov. Jan Brewer, TDB cited.

Illinois is also involved with Mexico
Not only border states are becoming partners with Mexico, but even places as far away as Illinois and Massachusetts are forming ties, according to TDB.

Much of the business comes from companies that want to build a maquiladora in Mexico, according to the article. Jobs come from U.S. companies building factories in Mexico and then shipping finished products back to the U.S. to be assembled or sold. Additionally, Mexico has direct investment in the U.S. There were 4,000 investor visas issued to Mexican citizens in 2012. The only countries that were issued more were Japan and Germany.

Sales rise in Mexico
Part of the U.S. interest in Mexico comes from the gains in Mexican economy. Most recently, Reuters reports sales in March in Mexico were high. They rose for the first time in three months, making many hope that the Mexican economy is moving back into an expansionary position. Sales rose by 0.8 percent from February, and 1.7 percent year-over-year.

This growth comes on the heels of news that Mexico has continued tightening regulations on its financial institutions, according to BN Americas. Most recently, the Ministry of Finance has issued a resolution that would make risk-management requirements stricter for lending institutions like banks. This is part of Mexico's strategy to avoid any kind of unnecessary risks such as what happened in the U.S. before the most recent global recession.

Never was there a better time for expanding to Mexico
Mexico has become a major manufacturing powerhouse. Many American companies are building there because of its safe banking rules and its ties to countries around the world. Those seeking to nearshore to Mexico can ask a nearshore sheltering company for advice about how best to proceed.

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