1 investing opportunities in mexico: the automotive example eduardo j solís march 17, 2006
TRANSCRIPT
1
Investing Opportunities in Mexico: the Automotive example
Eduardo J Solís
March 17, 2006
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Mexico has been doing its homework….
We have negotiated preferential market access throughout the world; so far with …43 countries
We have followed very disciplined fiscal and monetary policies
We have maintained a very responsible policy towards government spending
3
Current Economic IndicatorsCurrent Economic Indicators
4
0.0
5.0
10.0
15.0
20.0
2000 2001 2002 2003 2004 2005 2006**
InflationAnnual growth
Current Economic Indicators
8.9
4.55.6
4.05.2
3.3
2000 2001 2002 2003 2004 2005
Country Risk EMBI
Interest RateCETES 28 days
Exchange RatePesos per dollar
10.2
11.3 11.210.6 10.5
2002 2003 2004 2005 2006***
Source: BANXICO.** January 19th
7.89%
*** February 3th
95156
245318
366371
607578
190
1998 1999 2000 2001 2002 2003 2004 2005 Feb.27,06
5
13.10113.086
12.19112.22612.164
12.546
12.017
11.311
12.509
0.1
4.6
2.6
-0.3
0.5
-3.1
4.4
6.2
11.0
11.5
12.0
12.5
13.0
13.5
1998 1999 2000 2001 2002 2003 2004 2005 Ene06
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
Workers Annual Growth
529,348
576,599
2000 2005
Mexico: Job Creation2005 vs 2000
New Jobs
*Source: Mexican Institute of Social Security (IMSS)
Current Economic Indicators
∆%8.9
Permanent Workers registered at IMSS* 1998-2006
Millions of Workers and Annual Growth
6
Mexico: Total ExportsAmount and Annual Growth
Billions Dollars
158.8
79.596.0
110.4117.5
136.4
166.1 161.0164.8
188.0
213.7
13.714.1
2.31.4
-4.4
21.8
16.0
6.4
15.0
20.7
30.6
60
80
100
120
140
160
180
200
220
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-10
-5
0
5
10
15
20
25
30
35
Billions Dollars Annual Growth
∆%
15.6
19.4
Dic.04 Dic.05
Total Exports 2004 vs 2005
Billions Dollars
∆%24.8
USD $
Current Economic Indicators
No Oil Exports
∆% 05-04
Manufactures 10.6
Extractive 29.6
Agriculture 7.8
Source: BANXICO.
7
Mexican Automotive IndustryMexican Automotive Industry
• Positive results in the Automotive, OEM’s and Auto Parts Industries.
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Three major clusters:
•Norte•Centro•Bajío
COAHUILA
D.F.QRO.
HERMOSILLOFORD(PC)
SALTILLOCHRYSLER(ENGINES & UV)
AGS.
NISSAN(PC & ENGINES)
GTO.
G.M.(UV)
SANTIAGOM.BENZ (PC & UV)
SILAO
AGS.
V.W.(PC & ENGINES)
PUEBLA
HONDA (PC)GUADALAJARA
SONORA CHIHUAHUA
G. PALACIO LINAMAR(ENGINES)
MOR.
NISSAN(PC & UV)
CIVAC
BAJA CALIFORNIA NORTE
BAJA CALIFORNIA SUR
SINALOA
DURANGO
NAYARIT
ZACATECAS
S.L.P.
TAMPS.
VERACRUZ
COLIMA MICHOACAN
GUERRERO
OAXACACHIAPAS
TABASCO
CAMPECHE
YUCATAN
QUINT
ANA
ROO
HIDALGO
TLAX.MEX.
PUEBLA
NUEVOLEON
RAMOSARIZPE G.M.
(PC & UV)
TOLUCAG.M. (ENGINES)
TOLUCACHRYSLER (PC & UV)
TOLUCABMW (PC)
CUAUTITLAN FORD(PC & UV)
CHIHUAHUA
TOLUCABMW (P
GARCIA
TULTITLANMASA (TRUCKS)TOLUCAVOLVO (TRUCKS)
KENWORTH (TRUCKS) MEXICALI
S.L.P.SCANIA
(TRUCKS)
NAVISTAR (TRUCKS)
JALISCO
TIJUANATOYOTA
PICK-Ups & BEDS
AUTOMOTIVE LOCATIONAUTOMOTIVE LOCATION
9
375
195211
252278
324
386 391 381 391
429
8.5
19.1
10.4
16.5
19.4
-2.8
4.2
-2.5
2.6
9.7
180
210
240
270
300
330
360
390
420
450
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05
-5
0
5
10
15
20
25
Workers Annual Growth
Permanent Workers registered at IMSS* 1995-2005
Thousands of Workers and Annual Growth
AAGR = Annual Averange Growth Rate. * Source: Mexican Institute of Social Security (IMSS).** Ministry of Economy based BANXICO Information.
Industry1994-2005
AAGR
Manufacturing 3.3
Automotive 4.2
A supply of highly qualified labor in the industry…
Productivity Index
Automotive Industry in Mexico
10
1,591
1,865
1,3431,132
1,096978978854
667643482
325226
919
17.218.518.7
43.7
48.2
33.5
3.7
27.9
7.66.4
0.0
12.1
3.3
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
95 96 97 98 99 00 01 02 03 04 05 06e 07e 08e
0
10
20
30
40
50
60
Vehicles Annual Growth
Domestic Sales 1995-2007 Thousands of
Units and Annual Growth
e) EstimateSource: Ministry of Economy based on AMIA information.
Automotive Industry in Mexico
11
Foreign Direct Investment in Mexico Automotive and Auto Parts Sector
2000-2005
Million dollars
Total USD $10,312
1,609 1,405 1,220 1,093
2,3352,650
2000 2001 2002 2003 2004 2005e
e. Estimate.Source: Ministry of Economy.
Automotive Industry in Mexico
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Automotive Industry PerformaceAutomotive Industry Performace
• The new Automotive Investment Policy in Mexico is aimed to provide different kind of incentives to the Automotive Sector and other related key Industries.
13AAGR = Annual Averange Growth Rate.Source: Ministry of Economy based on AMIA information.
1.0
1.5
2.0
2.5
3.0
3.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Vehicles Total Production 2000-2010
Millon of Units
Projections
3 m +
2.960
2.462
2.072
1.725
Outlook 2006 2007 2008 2009 2010
Current Production 1.725 1.872 2.012 2.160 2,290
Potential Production 0 .200 .450 .800 1.200
Total 1.725 2.072 2.462 2.960 3.490
1.607
∆%16.9
AAGR
Development Policy to provide incentives to
the Automotive Sector
Currentproduction
Potential Projects
1.889 1.818 1.7741.541 1.507
Automotive Industry Performance
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1.0
1.5
2.0
2.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2.443
2.072
1.724
1.450
1.208
Vehicles Exports 2000-2010
Millon of Units
∆%15.8
AAGR
Outlook 2006 2007 2008 2009 2010
Currents Exports 1.208 1.310 1.408 1.512 1.603
Potential Exports 0 .140 .315 .560 .840
Total 1.208 1.450 1.724 2.072 2.443
1.186
Projections
1.434 1.4041.326
1.170 1.095
Automotive Industry Performance
CurrentProjects
Potential Projects
AAGR = Annual Averange Growth Rate.Source: Ministry of Economy based on AMIA information.
Development Policy to provide incentives to
the Automotive Sector
15
16
20
24
28
32
36
40
44
48
52
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Auto Parts Production 2000-2010
Billions Dollars
Projections
51.3
44.4
38.1
32.5
27.4
Outlook 2006 2007 2008 2009 2010
Current Production 27.4 29.4 31.2 32.4 33.7
Potential Production 0 3.1 7.0 12.0 17.6
Total 27.4 32.5 38.1 44.4 51.3
23.7
∆%16.7
AAGR
21.5 20.5 20.4 19.522.4
Automotive Industry Performance
CurrentProjects
Potential Projects
AAGR = Annual Averange Growth Rate.Source: Ministry of Economy based on AMIA information.
Development Policy to provide incentives to
the Automotive Sector
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New Investment Projects in the last two years
New Investment Projects in the last two years
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Company ProjectInvestment
(Millions dollar)*
New Jobs
Sonora Plant 1,600 6,800
Bora modelGolf model Heavy trucks assembly
1805
165
1,70050
1,190
Tacoma pick-up and Box productions for these pick-ups 144 800
Production of "QR“ engine, "KH" engine assembly "CVT" manufacturing.
1,000 1,100
Pick Up Mega Cab Production 250 n.a
Sub Total 3,344 11,640
New Investment Projects in the last two years
Recent Capital Investments in the Automotive and Auto Parts Industry
Source: Ministry of Economy * Note: Include Suppliers
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Company ProjectInvestment
(Millions dollar)*
New Jobs
New world-class vehicle 450 2,500
American Axle & Manufacturing Silao Facility extension 400 1,200
Jatco expansion for transmissions production 300 700
Kenworth expansion and modernization of Mexicali Assembly Plant 70 600
Aassembly plant, it is expected to more than double the current production of pickups.
37 n.a.
Others 384 n.a.
Sub Total 1,641 5,000
Total 4,985 16,640
New Investment Projects in the last two years
Source: Ministry of Economy
Recent Capital Investments in the Automotive and Auto Parts Industry
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Incentives for Investing in MexicoIncentives for Investing in Mexico
• Improvied competitiveness, technology development, suppliers development programs, expansion and infraestructure of the Automotive and Auto Parts Industry in Mexico.
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Suppliers Development Program.11
Design and Innovation Laboratories.22
Centers of supply chain development33
Research & Development Fund.
44 Incubators of technology based New Business.
55
Joint Ventures with Foreign SME´s66
SME’s Suppliers
Support Instruments
Source: Staff of the Minister of Economy of Mexico.
21
Programs Fostering R&D:• Tax credit on projects involving Research & Development of New
Technologies.• Science and Technology Fund for the Economic Development.• Support Program for the Development of New Enterprises Based on
Scientific and Technological Advances (AVANCE).
Government Grants for Strategic Projects:• Ministry of Economy.
Tax Incentives: • Immediate Capital Investment Deduction.• Reduced income tax for Maquiladoras (Presidential decree)
Labor Training:• Labor Training System (SICAT).
State and Local Incentives:• Infrastructure.• Land reserves.• Property tax of payroll tax credits.• Training program.
Incentives for Investing in Mexico
Source: Ministry of the Economy of Mexico.
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Look for products with preferential market access and aim towards higher value added products.
Look for products where geographic advantage gives an edge (i.e closeness to clients)
Mexico’s strategy to open new markets represent tremendous opportunities for trade and investment.
Mexico is scaling up in the value chain, rising opportunities on engineering, R/D, design and the sort.
Mexico represent on itself huge opportunities within its major sectors´ supply chains.
Final Remarks
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Investing Opportunities of the Mexican Automotive Industry:a win-win proposition
Eduardo J SolísHead of the Unit for Investment Promotion
Ministry of the [email protected]
(52-55) 57 29 91 06 to 08