News, Insights and Best Practices for Manufacturing in Mexico

Mexico easing out of slow period, forming alliances with U.S.

19 Mar 2014

Category: Manufacturing in Mexico

The Mexican industrial sector expanded faster than expected in January, according to Reuters. Expansion in the country's industrial sector rose the most in nearly a year, which indicates to experts that Mexico is recovering from its brief period of slow growth.

Activity for Mexico's industrial sector rose 0.5 percent in January from December, according to the source. There had been a brief slowdown in growth during 2013, which suggested to analysts that 2014 would be a slow year for Mexico. In December, the sector experienced a contraction of 0.46 percent.

According to Ernesto Revilla, the chief economist of Mexico, it is too soon to say whether the 3.9 percent growth that was forecasted for 2014 will be impacted by the U.S. Federal Reserve's decision to begin tapering its stimulus to the U.S. economy.

Manufacturing looks strong, however, because factory output rose by 2.34 percent in January from December, which is the strongest growth since September of 2012. Industrial output in general rose by 0.7 percent in January year-over-year. Experts predicted growth of only 0.32 percent.

American companies are still moving to Mexico
While Mexico is slowly moving away from its slow period, the country could soon see another period of growth.

One company, Visual Merchandising, a Colorado-based manufacturing company aligned with Tecma Group in El Paso, Texas, sees no problem with Mexico as a site for offshoring. In fact, it has recently begun expanding to Mexico.

"The present expansion is due to a growth in demand for VMI product," According to Rich Moran, the company's executive vice president of operations, "An increase in floor space at our Mexican manufacturing facility at this time will enable us to ramp up production in response, as well as to improve efficiencies by re-laying our factory work flow."

The company already has a factory in Mexico, but it is increasing its size from 60,552 to 84,312 square feet in order to accommodate the increased business it has been seeing lately.

Mexican, American cities aligning themselves for growth
Emphasizing Mexico's vast potential despite its recent slow growth period, Guadalajara, the second-largest city in Mexico after Mexico City, is becoming sister cities with San Jose, N.M., according to the San Jose Mercury News. Guadalajara is considered a tech hub, and the two cities plan to work together to foster trade between each other and with other parts of Mexico and South America.

"San Jose shares deep economic ties and a common heritage with Mexico, and we are proud to be embarking on a new sister city relationship with Guadalajara," Mayor Chuck Reed said at a meeting. "This partnership will help strengthen economic, educational and cultural ties that can benefit residents in both our cities, and it will grow jobs in both cities."

San Jose's exports to Mexico have increased dramatically, doubling over the past three years. By forming close ties with Guadalajara, San Jose will have trading access to the Mexican city's 600 companies in the technology sector. The two cities trade the most between any two cities in Mexico and the U.S.

The cities agreed to "twin" in 2013, and the mayor of Guadalajara plans to go to San Jose this year to sign an official agreement.


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