Recapturing the competitiveness

Recapturing the competitiveness

Recapturing the competitiveness

The Asociación Mexicana de Parques Industriales Privados, AMPIP, celebrated its last quarterly meeting in Puerto Vallarta. The Managing Directors of the association of industrial parks took advantage of this event to finish the year by knowing and detailing the panorama for the 2010.

Two intensive days, in a good sense, because the Directors could exchange good information by talking about business and about teaching left by the 2009 and overall, about the expectations for the 2010 related to the development of the real estate industry, the most important topics during the event organized by the AMPIP.

Anthony McCarthy, Bancomext’s Assistant General Director, was in charge of the first talking:
“Prospects of Financing of the Banca de Desarrollo para el Sector Inmobiliario Industrial”.

He mentioned that the mixture of exportations as well as the macro dependence of Mexico with the United States caused a high impact in the Mexican economy.

From the first quarter of the 2006 to the third of the 2008 the real variation of the Gross Domestic Product was positive, starting by 6.1% and finishing the third quarter of the 2008 increasing by 1.7%, and some time later entering in a negative cycle. We have to take into account that our economy has been affected by two specific facts: first, the closure of some cars enterprises and then the AH1N1”, said McCarthy. He added that for the 2010, and in spite of the negative cycle in the country, the tendency begins to rise. It is calculated a growth by 3% for the next year, said the businessman from Bancomext.

During the recessions there is an important inflation; however, in this crisis the interest rates and the inflation have been under control.

One of the main points included in the strategic plan for the country is helping the exterior commerce by generating currencies. Therefore, four key sectors will be covered for the exportations of the country and the generation of currencies: assemble of exportation, tourism, automotive- auto parts and aeronautics-aviation.

The new challenges of the competitiveness in Mexico Roberto Newell, General Director of the Mexican Institute for the Competitiveness talked about this topic that becomes important for the country now more than ever. He specified that Mexico is not one of the most competitive countries, because it is between the places 30 and 40. Besides, two factors stop the nation to climb some positions: first, there is a weakness in public finance, and second, a weakness in the stability of the financial sector. The competitors close to Mexico by talent are Chile, Poland, Malaysia, Costa Rica, South Africa, Panama, Brazil, Russia and Thailand. “They are better than us; they go ahead, excepting Argentina that has fallen two places”, said Newell.

In its final prediction, the Organization for Economic Co-operation and Development OECD points that the falling of the Mexican economy was 8%. The falling in the level of consumption in the American families affected us, because they decreased their rates of saving”.

Finally, Roberto Newell added that Mexico continues having the same assets that can be boosted: location, coasts, free trade agreements, democratic political system and natural resources, among others.

Opportunities for the region

Barry Lawrence, Coordinator of the Mexico- Texas Trade Corridor of the University of Texas A&M, in the United States, exposed how to profit the location of the country through several aspects: the costs of manufacturing, transport, stock, sending, financing, security, taxes, bureaucracy and proceedings. Nevertheless and in spite of having a good location, Mexico doesn’t have the correct rail infrastructure.

There are successful models of clusters developed in Mexico, for example in Jalisco and the electronic industry. However, the country has a big concentration of the automotive industry, the cost of manufacturing is expensive and he also emphasized the importance of building the industrial parks along road corridors.

The new dynamic of the global economy and challenges for the future for Pablo Bréard, Vice-president and Head of International Research of Scotiabank, the recovery of the recession in Mexico will be slow, gradual and it will not be synchronized, following the world tendency. In this sense, he warned the convenience about knowing who to compare Mexico with, and, on the other hand, which external factors can affect the Mexican economy, since in the Latin American context some countries will be the main characters during the following years: Brazil, Mexico, Chile,
Peru and Colombia.

Prospects of the factory-work exportation industry

César Castro, President of the CNIMME, Consejo Nacional de la Industria Maquiladora de Exportación explained that Mexico is one of the most affected economies by the crisis. However, the main institutions think that the 2010 will be the year of the recovery. So, the International Monetary Fund, the newspaper The Economist, the OECD, The Banco de Mexico and the Secretaría de Hacienda y Crédito Público estimate that the recovery will fluctuate around 3%.

According to the expert, a growth in the inflationary prospects will be attended for the 2010, and then they will fall in 2011; in the same way, the exchange rate will fall and the employment level will recuperate.
He expressed that the devaluation of the national currency has been favorable for the competitiveness of the country in terms of manufacturing production costs, with regard to other nations, like China, India or Brazil.

César Castro made a list of several factors of risk for Mexico: damaged public finance, decrease of petrol production, decrease of the tourism, the remittances and direct foreign investment, as well as the insecurity, the economical dependence with the United States, the fiscal uncertainty, the decrease in the exportations and other economies that have raised their competitiveness, like Brazil, Russia, India and China.

Finally, he listed the opportunities present in the country: salaries, qualified workforce, a new model of investment, geographical location, and the time regarding the United States.

Mexico’s advantages over China

Steve Hilgendorf, Director of Alix Partner, explained the audience of the AMPIP’s meeting the Mexico’s advantages over China. In this sense, we must bear in mind some key factors that have done China to lose some places over Mexico as for the production and the merchandise movement.

He gave some examples: commodities, salary, administration, exchange rates, goods transport, import duties and inventory.

The position of China, as far as costs are concerned, has improved, but not so much for being placed over Mexico or India; it’s clear that China is not going to give up its politics of low costs, so the enterprises, the industrial groups and the Mexican government can take measures for short and long terms to overcome the obstacles.

Family enterprises and their succession

Mr. Wayne Rivers, expert in family businesses and the President of The Family Business Institute, talked about the nine points due to which a family business fails:

  • The generations don’t have a common vision for the control.
  • A poor auto-administration.
  • There is no leadership, preparation and development of attitudes of the next generation.
  • There is no a good system to decide who comes and who leaves.
  • The roles and responsibility are not well defined.
  • Lack of operations, sales, financial capacity and measurements.
  • There is no aptitude to solve a problem for being scared of making a conflict.
  • Ineffective planning of the transition.
  • Lack of growth.
  • This talking explained in a detailed way the family succession, a very important aspect to avoid the weakness in any enterprise, without care of the size of it.

Real Estate Manufacturer

Market, how the 2009 ends Javier Lomelín, General Director of Colliers International, explained the conditions of the ending of the 2009 related to the manufacturer development. “The manufacturer markets that have shown a recovery are Puebla, Hermosillo y Saltillo – Ramos. On the other hand, the states having oversupply are Mexico State, Monterrey, San Luis Potosí, Mexicali, Ciudad Juárez, Reynosa and Tijuana, and the states in recession are Guadalajara, Querétaro, Chihuahua, Matamoros, Torreón and Nuevo Laredo”, he said.

Strategies and Prospects for the Foreign Investment in Mexico

The meeting of the AMPIP finished with the talking of Bruno Ferrari, General Director of ProMexico, who made a detailed analysis of the competitiveness that places Mexico into a marked fight with other nations like Brazil, Russia, China and India.

Compared to the BRYC countries, Mexico gets more competitive costs for the manufacturing, and what’s more it is a big supplier of the aerospace industry. On the other hand, in China, the costs have grown in a significant way, because of what China would like to come back to our country”. Bruno Ferrari specified that one of the advantages of the country is having signed free trade agreements with 44 countries.

Ultimately, an agreement was signed between the AMPIP and ProMexico. This agreement seeks to promote Mexico with the direct foreign investment. The purpose is to consider the industrial parks like a part of the competitive advantages that our nation offers to the foreign investors.

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