News, Insights and Best Practices for Manufacturing in Mexico

Mexico's Factory Sentiment Rose in April 2014

02 May 2014

Category: Labor & Economics

Mexican factory sentiment rose in April, Reuters reports. Although growth remains weak in Mexico thus far in the year, industrial production could be picking up. The HSBC Mexico Manufacturing Purchasing Managers' Index rose to 51.8 in April, which is an increase of 0.1 from March. Any reading above 50 indicates that manufacturing is expanding.

"This result suggests that the manufacturing sector will keep on growing, but probably at a slow pace," Sergio Martin, chief economist at HSBC in Mexico said.

Additionally, Martin added as the U.S. regains footing in its own manufacturing sector after the unusually cold winter, Mexican output might increase as well.

Greater economic cooperation between US and Mexico
A bi-national agreement between Mexico and the U.S. has been signed in San Antonio, which experts believe will promote business growth along the border states, and the rest of the U.S., according to Texas Public Radio. The Mexico-U.S. Entrepreneurship and Innovation Council (MUSEIC) agreement will establish a unified North American pathway for promoting trade, innovation and fair competition between the countries. The primary goal is to create more entrepreneurial opportunities in Mexico. These will lead to high paying jobs, and boost Mexican trade with the U.S.

"[The bill is being signed] so that people see a future there [in Mexico]," said Thomas Bowles, council member for the technology sector of MUSEIC, according to TPR. "And there's a reason to educate their kids to grow up to take these high-paying jobs or better-paying jobs. Then we can reduce the pressure on the border because there's no need to come to the U.S. to take what's usually some sort of manual labor or fairly low-paying job if at home, you can get a job that is better."

Mexico continues to make trade partners with other nations
According to RTÉ News, Mexican Secretary of the Economy Ildefonso Guajardo traveled to Ireland in order to take part in the Dublin-Mexico trade conference. According to Guajardo, Europe has become the main target for Mexico's economic growth since the country signed a free trade agreement with the European Union, which dramatically reduces the cost of shipping between Mexico and any country in the EU. In fact the EU is the second biggest trading partner after the U.S.

"Ireland is a natural gateway to Europe for us, and the Irish experience in IT is something we have to look at closely, given the position Mexico holds in that field in the Americas," he said to RTÉ News.

Mexico exports a wide range of different goods to Ireland, including medical products. It also imports goods and services, such as tech support and dairy industry equipment. Guajardo wants to expand this to include investment of Irish companies in Mexican factories - in other words, expanding to Mexico by working there.

The benefits of manufacturing in Mexico include access to neighboring countries via the North American Free Trade Agreement (NAFTA). Such a program would allow Ireland to ship goods to Mexico, and then ship them almost certainly without tariffs between Mexico, the U.S. and Canada.

Latin America has some of the most engaged workers in the world
American companies can also benefit from moving to Mexico. An offshore shelter can make the transition easy. The Mexican labor force is hard-working, and Mexico is cheaper to build products in than China.

A recent study by Aon Hewitt has found that Latin Americans have the highest engagement level in of the world. Engagement is 70 percent in Latin America, according to Benefits Pro. The data came from Aon Hewitt's 2014 study, "Trends in Global Engagement," which looked at data gathered from over 6,000 companies in 155 countries around the world.


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