Transcript Diapositiva 1

Investing Opportunities in Mexico: the Automotive
example
Eduardo J Solís
March 17, 2006
1
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
2
Current Economic Indicators
3
Current Economic Indicators
Inflation
Country Risk
Annual growth
578
EMBI
607
8.9
4.5
2000
2001
5.6
2002
4.0
2003
371
5.2
366
318
245
3.3
2004
1998
2005
1999
2000
2001
2002
2003
Interest Rate
Exchange Rate
CETES 28 days
Pesos per dollar
20.0
15.0
11.3
7.89%
10.0
11.2
10.2
190
2004
156
2005
10.6
10.5
2005
2006***
95
Feb.27,
06
5.0
0.0
2000
2001
2002
** January 19th
2003
2004
2005
2006**
2002
2003
*** February 3th
Source: BANXICO.
2004
4
Current Economic Indicators
13.5
Permanent Workers registered at IMSS*
1998-2006
Millions of Workers and Annual Growth
13.086 13.101
6.2
13.0
4.6
4.4
12.546
12.5
11.5
0.5
11.0
1998
0.1
2.6
-0.3
11.311
1999
2000
Workers
-3.1
2001
6.0
4.0
12.16412.226 12.191
12.017
12.0
12.509
8.0
2.0
0.0
Mexico: Job Creation
2005 vs 2000
-2.0
New Jobs
576,599
-4.0
2002
2003
2004
2005
Ene06
∆%
8.9
Annual Growth
529,348
2000
2005
*Source: Mexican Institute of Social Security (IMSS)
5
Current Economic Indicators
Mexico: Total Exports
USD $
220
30.6
20.7
166.1
15.0
158.8161.0
164.8
136.4
140
110.4
120
80
188.0
21.8
160
100
213.7
Billions Dollars
200
180
∆%
Amount and Annual Growth
96.0
35
30
25
20
14.1 13.7
15
1.4
2.3
6.4
Manufactures
10.6
Extractive
29.6
Agriculture
7.8
5
0
79.5
-5
-4.4
Total Exports 2004 vs 2005
Billions Dollars
-10
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Billions Dollars
∆%
05-04
10
117.5 16.0
60
No Oil Exports
Annual Growth
Source: BANXICO.
15.6
Dic.04
∆%
24.8
19.4
Dic.05
6
Mexican Automotive Industry
• Positive
results in the Automotive,
OEM’s and Auto Parts Industries.
7
AUTOMOTIVE LOCATION
Three major clusters:
•Norte
•Centro
•Bajío
CHIHUAHUA
KENWORTH
(TRUCKS)
TIJUANA
G. PALACIO
MEXICALI
SONORA
LINAMAR
(ENGINES)
CHIHUAHUA
TOYOTA
PICK-Ups & BEDS
RAMOS
ARIZPE
COAHUILA
G.M.
(PC & UV)
GARCIA
NAVISTAR (TRUCKS)
NUEVO
LEON
DURANGO
FORD
(PC)
S.L.P.
TAMPS.
HERMOSILLO
SCANIA
(TRUCKS)
ZACATECAS
S.L.P.
AGS.
CHRYSLER
(ENGINES & UV)
YUCATAN
D.F.
HIDALGO
AGS.
JALISCO
COLIMA
GUADALAJARA
G.M.
(UV)
FORD
(PC & UV)
GTO. QRO.
SALTILLO
NISSAN
(PC & ENGINES)
HONDA (PC)
CUAUTITLAN
MEX.
MICHOACAN
MOR.
TLAX.
CAMPECHE
PUEBLA
TABASCO
SILAO
G.M. (ENGINES)
CHIAPAS
SANTIAGO
TOLUCA
BMW (P
(PC)
TULTITLAN
MASA (TRUCKS)
VOLVO (TRUCKS)
OAXACA
TOLUCA
CHRYSLER (PC & UV)
M.BENZ (PC & UV)
GUERRERO
TOLUCA
TOLUCA
PUEBLA
NISSAN
(PC & UV)
CIVAC
V.W.
(PC & ENGINES)
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Automotive Industry in Mexico
Permanent Workers registered at IMSS*
1995-2005
Thousands of Workers and Annual Growth
450
19.1
420
360
10.4
330
195
20
9.7
10
4.2
2.6
5
211
0
180
'95
'96
25
15
324
252
240
429
391
391
381
375
278
8.5
270
210
386
16.5
390
300
19.4
'97
'98
Workers
'99
'00
-2.8
'01
'02
-2.5
'03
-5
'04
Annual Growth
A supply of highly qualified
labor in the industry…
Productivity Index
'05
Industry
1994-2005
AAGR
Manufacturing
3.3
Automotive
4.2
AAGR = Annual Averange Growth Rate.
* Source: Mexican Institute of Social Security (IMSS).
** Ministry of Economy based BANXICO Information. 9
Automotive Industry in Mexico
Domestic Sales
1995-2007
Thousands of Units and Annual Growth
2,000
1,800
1,600
48.2
43.7
1,400
1,200
1,000
800
600
400 226 325
200
0
482
1,865 60
1,591
1,343
1,132
33.5
1,096
27.9
854 919 978 978
18.7 18.5
643 667
12.1
7.6
6.4
0.0
40
30
17.2 20
3.3
10
0
3.7
95 96 97 98 99 00 01
Vehicles
50
02 03 04 05 06e 07e 08e
Annual Growth
e) Estimate
Source: Ministry of Economy based on AMIA information. 10
Automotive Industry in Mexico
Foreign Direct Investment in Mexico
Automotive and Auto Parts Sector
2000-2005
Million dollars
Total USD $10,312
2,335
1,609
2000
1,405
2001
1,220
2002
2,650
1,093
2003
2004
e. Estimate.
Source: Ministry of Economy.
2005e
11
Automotive 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.
12
Automotive Industry Performance
Vehicles Total Production
2000-2010
Millon of Units
3.5
3.0
2.5
2.0
3m +
Development Policy to
provide incentives to
the Automotive
Sector
1.889 1.818
1.774
1.5
∆%
16.9
AAGR
2.960
Potential
Projects
2.462
2.072
1.541 1.507
1.607 1.725
Current
production
1.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Projections
2010
Outlook
2006
2007
2008
2009
2010
Current Production
1.725
1.872
2.012
2.160
2,290
0
.200
.450
.800
1.200
1.725
2.072
2.462
2.960
3.490
Potential Production
Total
AAGR = Annual Averange Growth Rate.
Source: Ministry of Economy based on AMIA information. 13
Automotive Industry Performance
Vehicles Exports
2000-2010
Millon of Units
2.5
Development Policy to
provide incentives to
the Automotive
Sector
2.0
1.5
1.434 1.404
2.443
∆%
15.8
AAGR
2.072
Potential
Projects
1.724
1.450
1.326
1.170 1.095 1.186
Current
Projects
1.208
1.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Projections
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
1.208
1.450
1.724
2.072
2.443
Total
AAGR = Annual Averange Growth Rate.
Source: Ministry of Economy based on AMIA information. 14
Automotive Industry Performance
Auto Parts Production
2000-2010
Billions Dollars
52
∆%
16.7
AAGR
Development Policy to
provide incentives to
the Automotive
Sector
48
44
40
36
24
21.5
20
22.4
20.5
20.4
19.5
2001
2002
2003
44.4
Potential
Projects
38.1
32.5
32
28
51.3
23.7
27.4
Current
Projects
16
2000
2004
2005
2006
2007
2008
2009
2010
Projections
Outlook
2006
Current Production
Potential Production
Total
2007
2008
2009
2010
27.4
29.4
31.2
32.4
33.7
0
3.1
7.0
12.0
17.6
27.4
32.5
38.1
44.4
51.3
AAGR = Annual Averange Growth Rate.
Source: Ministry of Economy based on AMIA information. 15
New Investment Projects in
the last two years
16
New Investment Projects in the last two years
Recent Capital Investments in the Automotive and Auto Parts Industry
Company
Investment
(Millions
dollar)*
Project
Sonora Plant
New Jobs
1,600
6,800
Bora model
Golf model
Heavy trucks assembly
180
5
165
1,700
50
1,190
Tacoma pick-up and Box productions for
these pick-ups
144
800
1,000
1,100
250
n.a
3,344
11,640
Production of "QR“ engine,
"KH" engine assembly
"CVT" manufacturing.
Pick Up Mega Cab Production
Sub Total
* Note: Include Suppliers
Source: Ministry of Economy
17
New Investment Projects in the last two years
Recent Capital Investments in the Automotive and Auto Parts Industry
Company
Investment
(Millions
dollar)*
Project
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
Sub Total
384
1,641
n.a.
5,000
Total
4,985
16,640
Source: Ministry of Economy
18
Incentives for Investing in Mexico
• Improvied
competitiveness, technology
development,
suppliers
development
programs, expansion and infraestructure of
the Automotive and Auto Parts Industry in
Mexico.
19
SME’s Suppliers
Support Instruments
1
Suppliers Development Program.
2
Design and Innovation Laboratories.
3
Centers of supply chain development
4
Incubators of technology based New Business.
5
Research & Development Fund.
6
Joint Ventures with Foreign SME´s
Source: Staff of the Minister of Economy of Mexico.
20
Incentives for Investing in Mexico
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.
Source: Ministry of the Economy of Mexico.
21
Final Remarks
 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.
22
Investing Opportunities of the Mexican
Automotive Industry:
a win-win proposition
Eduardo J Solís
Head of the Unit for Investment Promotion
Ministry of the Economy
[email protected]
(52-55) 57 29 91 06 to 08
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