Monterrey Mexico
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3 months ago

Manufacturing in Monterrey drives the Nuevo Leon Economy

Monterrey Mexico

At the close of 2021, 238 companies were looking into establishing manufacturing in Monterrey and the Nuevo Leon.

Manufacturing in Monterrey and Nuevo León has demonstrated an average increase of 10% growth during each of the region’s last four census periods. Furthermore, during the uncertain 2021 calendar year, the manufacturing industry in Monterrey and the state of Nuevo Leon was the sector that demonstrated the most opportunities for economic growth. This information is according to recent information provided by Américo García Almaguer, Undersecretary of Industry and Commerce of the State.

The strength of activities linked to manufacturing in Monterrey and Nuevo Leon is reflected by the fact that industry represents a 30% share of the state’s Gross Domestic Product. Moreover, despite the complications experienced during the pandemic, manufacturing operations in Monterrey and Nuevo, Leon was the source of a full 33% of all new jobs generated.

Workforce preparation and employee skills, and an ability to adapt to changing technologies are among the main strengths of manufacturing in Monterrey and Nuevo Leon. These qualities enabled the region’s economy to face the coronavirus pandemic’s challenges.

According to Undersecretary García, the automotive industry is the leading sector that will stand out the most in the foreseeable future. As evidence, factories in Monterrey and Nuevo León combine for 40% of Mexico’s auto parts output. Prospects for further industry growth are bright. This is due to the greater regionalization of value chains that occurred during the pandemic. This will increase the need for local suppliers.

Another one of the sectors in Monterrey and Nuevo Leon that is experiencing increased opportunities is software development. This is particularly evident in the areas of new technologies related to artificial intelligence, the internet of things (IoT), and cybersecurity.

Among the challenges facing the economy of Monterrey and Nuevo Leon, a return to pre-COVID 19 normalcy stands out. Even though companies have established their protocols to operate safely, it is essential to monitor for any future contagion outbreak to protect employee health and keep production lines up and running.

The Export Economy

According to Mexican government statistics, Monterrey and Nuevo León are the sources of approximately 9.65% of the country’s exports. This translates into a value of around US $ 15 billion. As a result, Nuevo León has positioned itself as the fourth-ranked of Mexico’s 31 state entities by export value. Notably, 99.6% of exports output is derived from manufacturing in Monterrey and the rest of the state. This statistic makes it the entity with the most significant economic dependence on the manufacturing sector and the IMMEX (maquiladora) industry.

Transport equipment manufacturing stands out with almost 31% of production concerning recent export numbers. This is followed by the manufacture of electrical generation equipment with approximately 19% and, finally, the manufacture of electrical appliances, representing 9.92 percent of the value of manufactured exports.

“From what we see, these sectors of manufacturing in Monterrey and Nuevo Leon are enjoying growth and expansion. However, one of our advantages is that we are a diverse state in terms of the industries that we host. Therefore, although these sectors are most prominent, other industries are also going to receive future investment,” reported the Undersecretary of Industry and Commerce of the State.

Américo García Almaguer also stated that, during the current year, there would be changes in federal agencies that will directly impact the IMMEX program. These changes will include labor issues in areas such as outsourcing, teleworking, pensions. Additionally, there will also be changes in tax and customs matters. “Modifications will come to improve or grow the economy. Therefore, we have to prepare ourselves and be aware of the changes and inform ourselves beforehand to be prepared,” he said.

Given the aforementioned, he recommends that exporting companies focus on their strengths, operations, and continue with their production plans.

On the other hand, he stressed that the sectors linked to the export economy comprised of manufacturing in Monterrey and Nuevo Leon could improve job generation in the short term. This is according to a study by Mexico’s National Bureau of Statistics (Inegi). An important factor in job growth is that two-thirds of the employment recovered in 2021 came from the IMMEX maquiladora manufacturing industry.

Foreign direct investment in manufacturing in Monterrey and Nuevo Leon

Monterrey and Nuevo Leon are among the most successful entities at attracting foreign direct investment. “This is the case thanks to the competitive advantages that contribute to the positioning of  Monterrey and Nuevo León as an attractive destination to invest and do business,” said Lorenzo Aguilar Camelo, Undersecretary of Investment and Industrial Development. Among the main advantages of manufacturing in Monterrey and Nuevo Leon are “the entity’s highly trained human capital, its modern infrastructure, its privileged geographic location, its quality of life, among other advantages,” said the official.

He announced that to promote FDI, in January 2021, a project will begin operations in which they have worked together with the private initiative and the academic sector: Invest Monterrey, an investment promotion agency for the state, which will boost the economic development of the region.

On the other hand, he pointed out that, given the current global dynamics, the state has become very attractive for investments in distribution centers; Mainly for companies that have significantly increased their online sales.

The strength of the home appliance industry in the context of manufacturing in Monterrey and Nuevo Leon

According to the Inegi census information released in 2020, the total production of household appliances in Mexico is valued at US $ 21.5 billion. This figure represents an impressive growth by a factor of 171% since 2014. In this context, Monterrey and Nuevo León occupy first place nationally in production in this sector. Furthermore, Monterrey and Nuevo Leon represent 21% of the country’s production of these goods. This translates to a total of approximately US $4.4 billion.

Betsabé Rocha, director of the Nuevo León Appliances Cluster (CLELAC), pointed out that the organization’s recent activities have focused on building community and communication among partner companies. Furthermore, because refrigeration and related products are considered essential, the suppliers that manufacture this class of products have been equipped to operate with the proper COVID protocols.

Likewise, he pointed out that, thanks to the work of the social responsibility and human capital committee, good practices were implemented to achieve a low 3% annual rate of turnover.

“Today more than ever, we have to be competitive,” said the director of CLELAC. Among the opportunities for growth in manufacturing in Monterrey and Nuevo Leon, he highlighted the recent trend toward nearshoring. He pointed out that companies are looking for alternative manufacturing sites closer to home. This is due to volatility in tariffs and logistics conditions and supply-chain complications. As a result, companies are looking to reduce their risks and stabilize their operations by locating plants closer to their end-user markets.

“From a global perspective, it is no longer about depending on China. Monterrey and Nuevo Leon, as well as Mexico as a whole, are once again the indisputably ideal manufacturing and trading partner for the most important market in the world, which is the United States,” he said.

Alan Russell

Chairman of the Board and Chief Executive Officer

Alan Russell

Chairman of the Board and Chief Executive Officer

Tecma, Mexico Shelter Company CEO, K. Alan Russell, is at the helm of one of the maquiladora industry’s foremost organizations.