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Manufacturing Productivity in Baja California Grows by 10%

Manufacturing Productivity in Baja California Grows by 10%

Manufacturing productivity in Baja California grew by 10% in the first quarter of 2019 in comparison to the same period of 2018.  This is according to Mexico’s National Institute of Statistics and Geography’s (INEGI) Labor Productivity Index (IPL).

During the first quarter of 2019, manufacturing productivity in Baja California was only surpassed by that achieved by the state of Puebla, which recorded an increase of 13.5% according to INEGI’s IPL.  The Labor Productivity Index measures the efficiency and productivity of companies and their workforces in relationship to the quantity and quality of the articles that they produce.

Although growth in manufacturing productivity in Baja California was second nationwide, the state surpassed other entities such as Tlaxcala, Chihuahua, and Nuevo Leon, which recorded increases of 8.5, 7.2, and 6.6% respectively. 

At the national level, during the first quarter of 2019, the manufacturing industry as a whole saw a contraction of .4% over the previous quarter, as well as a contraction of 1.7% over the same period of 2018.  The Mexican states that recorded setbacks in labor productivity in the first quarter of 2019 were Campeche, Zacatecas, Michoacán, Morelos, and Oaxaca with reductions of -22.7, -16.0, -15.2% and – 10.5% respectively. 

According to Carlos Higuera Espíritu, president of the Tijuana Economic and Industrial Development Commission (DEITAC), manufacturing productivity in Baja California owes much of its growth to the influx of industrious migrants from other areas of the Mexican Republic.  Baja California is one of the Mexican states that receive the most internal migration.  Higuera Espiritu explains that many of those individuals that move to his state come to take advantage of the economic opportunities that exist there.  He also stresses that despite negative circumstances, such as the partial closure of export checkpoints and threats of the imposition of tariffs on Mexican goods, investors are helping to boost manufacturing productivity in Baja California by continuing to bring projects to the state.

In addition to investment coming from mainly US sources, manufacturing productivity in Baja California has also been positively influenced by the arrival of Asian companies to the state in recent months.  Many of these firms have acted to avoid the tariffs being levied on Chinese goods by the United States.  The industries that have had the most positive impact on increased manufacturing output in Baja California are the automotive, metal mechanics, and aerospace industries.

In addition to the arrival of new companies to the Baja California region, the president of the area’s Maquiladora and Export Industry Association, Luis Hernandez Gonzalez, recognizes that companies that are in Tijuana and surrounding areas have confidence in the manufacturing productivity in Baja California.  For this reason, they are willing to add more people and processes to their operations.  Expansion of production activities in Tijuana and Baja California helps to provide work for residents of the area, as well as for newcomers that migrate from other parts of the country.  Hernandez Gonzalez noted that the growth in productivity in the region may have been even higher than 10% had it not been for slowdowns that took place during the period at Customs checkpoints.  The president of DEITAC also noted that, in addition to the growth in the automotive, metal mechanics, and aerospace industries, significant growth occurred in the Tijuana and Baja California medical device industry which maintains a high profile in the region.

Labor and Manufacturing Productivity in Baja California

During the first quarter of 2019, the Unit Cost Index of Labor (ICUMO) showed a 4.0% decrease in Baja California in comparison with the same period of 2018.  This percentage decrease is derived from relating the cost per unit of labor with the measurement of productivity.  In contrast to Baja California, on a national level, there was a 2.3% increase in the Unit Cost of Labor in the manufacturing sector compared to the previous quarter, as well as a 4.4% increase in relation to the same period in 2018.  Other Mexican states that had a reduction in the cost of labor during the first quarter of 2019 included Puebla, Chiapas, Nuevo Leon and Quintana Roo with -14.6, -7.0, -6.2, and -4.4 respectively. 

 

 

 

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This quarterly publication will be populated with content that is useful and relevant to readers that are contemplating Mexico investments, have operations already within the Republic, as well as to other individuals that have an interest in Mexico and its manufacturing sector.

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