News, Insights and Best Practices for Manufacturing in Mexico

Natural gas - key to manufacturing success in Mexico?

07 Jan 2014

Category: Aerospace Manufacturing, Automotive Manufacturing, Labor & Economics, Manufacturing in Mexico, Politics & Regulations

Despite the North American Free Trade Agreement between the U.S., Canada and Mexico, the closed-off, nationalized energy sector of Mexico led to higher domestic energy costs for years - something Mexico intends to change with its recent energy reforms, according to The Wall Street Journal.

"The medium-range impact will be greatest not on the energy sector but on the industrial sector," said Luis de la Calle, a political consultant who helped negotiate NAFTA. "With cheap natural gas, we will make steel in Mexico, we will make glass in Mexico, we will be able to make petrochemicals in Mexico."

The move by Mexico to open its oil and gas industry to international investment comes at an especially important time in global trade and industrialization. Much of the world's growth in oil consumption - an additional 1.1 million barrels per day - is slated to occur in emerging markets, the Oil & Gas Journal reported. The International Energy Agency's Monthly Market Report forecasted a shift in global oil demand in 2014, rising from 91 million bpd to 92.1 million bpd.

As Mexico looks to woo aerospace manufacturers and automakers - among other industries - from other, traditionally more popular offshore locations such as China, the global energy sector will become an increasingly important part of the equation. Rising labor costs and low-quality products in China are challenging businesses for long-term manufacturing solutions.

For many businesses, the maquiladores of Mexico hold significant future prospects for businesses looking to capitalize on the U.S. shale boom and the recent energy reforms in Mexico that will inevitably drive down energy costs for manufacturers. A shelter company can assist manufacturers fully take advantage of the benefits of such a move.

 

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