Economy of Mexico - Industry

Industry

The industrial sector as a whole has benefited from trade liberalization; in 2000 it accounted for almost 90% of all export earnings.

Among the most important industrial manufacturers in Mexico is the automotive industry, whose standards of quality are internationally recognized. The automobile sector in Mexico differs from that in other Latin American countries and developing nations in that it does not function as a mere assembly manufacturer. The industry produces technologically complex components and engages in some research and development activities, an example of that is the new Volkswagen Jetta model with up to 70% of parts designed in Mexico. The "Big Three" (General Motors, Ford and Chrysler) have been operating in Mexico since the 1930s, while Volkswagen and Nissan built their plants in the 1960s. Later, Toyota, Honda, BMW, and Mercedes-Benz joined in. Given the high requirements of North American components in the industry, many European and Asian parts suppliers have also moved to Mexico: in Puebla alone, 70 industrial part-makers cluster around Volkswagen. The relatively small domestic car industry still is represented by DINA Camiones S.A. de C.V., a manufacturer of trucks, busses and military vehicles, which through domestic production and purchases of foreign bus manufacturers has become the largest bus manufacturer in the world; Vehizero that builds hybrid trucks and the new car companies Mastretta design that builds the Mastretta MXT sports car and Autobuses King that plans to build 10000 microbuses by 2015, nevertheless new car companies are emerging among them CIMEX that has developed a sport utility truck, the Conin, and it is to be released in September 2010 in Mexico's national auto show, And the new electric car maker Grupo Electrico Motorizado

Some large industries of Mexico include Cemex, the worlds largest construction company and the third largest cement producer the alcohol beverage industries, including world-renowned players like Grupo Modelo; conglomerates like FEMSA, which apart from being the largest single producer of alcoholic beverages and owning multiple commercial interests such OXXO convenience store chain, is also the second-largest Coca-Cola bottler in the world; Gruma, the largest producer of corn flour and tortillas in the world; and Grupo Bimbo, Telmex, Televisa, among many others. In 2005, according to the World Bank, high-tech industrial production represented 19.6% of total exports.

Maquiladoras (Mexican factories which take in imported raw materials and produce goods for domestic consumption and export on behalf of foreign companies) have become the landmark of trade in Mexico. This sector has benefited from NAFTA, in that real income in the maquiladora sector has increased 15.5% since 1994, though from the non-maquiladora sector has grown much faster. Contrary to popular belief, this should be no surprise since maquiladora's products could enter the US duty free since the 1960s industry agreement. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last 5 years while the share of exports from maquiladora-border states has decreased.

Currently Mexico is focusing in developing an aerospace industry and the assembly of helicopter and regional jet aircraft fuselages is taking place. Foreign firms such as MD Helicopters, Bell, Cessna and Bombardier build helicopter, aircraft and regional jets fuselages in Mexico. Although the Mexican aircraft industry is mostly foreign, as is its car industry, Mexican firms have been founded such as Aeromarmi, which builds light propeller airplanes, and Hydra Technologies, which builds Unmanned Aerial Vehicles such as the S4 Ehécatl, other important companies are Frisa Aerospace that manufactures jet engine parts for the new Mitsubishi Regional jet and Kuo Aerospace that builds parts for aircraft landing gear

As compared with the United States or countries in Western Europe a larger sector of Mexico's industrial economy is food manufacturing which includes several world class companies but the regional industry is undeveloped. There are national brands that have become international and local Mom and Pop producers but little manufacturing in between.