Image credits: Jorge Orozco
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Analysis

Nuevo Leon: Kaleidoscope of Developed Industries

By Jorge Ramos Zwanziger | Fri, 07/16/2021 - 13:49

Its high quality of living, the lowest poverty rate in the country, world-class industrial infrastructure, leading universities, and large commitment to technology and innovation make Nuevo Leon a driving force for Mexican industrial operations. Something that has made the state so incredibly attractive for international companies is its proximity to the US and the logistics connectivity it offers. The state promises great strengths for companies in the aerospace sector, as a result. The question then is how can the state’s industries contribute to the development of the Mexican aerospace industry?

 

Ongoing Industrial Development

According to INEGI, in 2016, Nuevo Leon housed a variety of industries with 24 percent of the state participating in the manufacturing sector. In terms of exports, according to the Ministry of Economy and Labor of Nuevo Leon, the state exported over US$37.8 billion in 2020 in goods that range from foods and beverages to electronic equipment. This represented nine percent of Mexico’s total exports. “Based on what we are seeing, these sectors are growing. Still, one of our advantages is that we are a diverse state in terms of industry,” Cecilia Carrillo López, Director of INDEX Nuevo Leon, shared with Mexico Industry.

Education in the state is also incredibly strong as the state homes the largest engineering school in Mexico, while being home to over 100 universities, making the state´s workforce highly skilled and productive, explains Business Nuevo Leon. This academic offering is essential to the triple-helix strategy developed by the industry, government, and academia to boost the state’s industrial capabilities.

The aforementioned strengths give the state incredible potential to be one of the most impactful states in Mexico´s aerospace sector. Currently, Nuevo Leon registers over 3,500 direct jobs in the aerospace industry, with over US$800 million in sales revenue, it is also home to the Center for Research and Innovation in Aeronautical Engineering (CIIA) and an aero cluster composed of close to 50 companies, six R&D centers, and two state government dependencies.

            The Monterrey Aerocluster is also part of the state’s triple-helix model and thus jointly collaborates in setting the state’s agenda, goals, and initiatives. “The industry and academic sides of the cluster have developed a strong alliance that helps them attract projects from the US, where many smaller companies are dealing with a talent crisis as skilled workers retire. (The Aerocluster is) working to showcase its capabilities and technical know-how to bring production to Mexico. There is still a great deal to do to promote the country’s capabilities, including strengthening collaboration with different states. It is necessary for all regions to work together to make the country a truly attractive investment destination,” said Claire Barnouin, Executive Director at the Monterrey Aerocluster, in an interview with MBN.

 

FDI and USMCA: New Opportunities?

Its industrial diversity, with a strong focus on the manufacturing sector, makes the state a natural recipient of foreign direct investment (FDI), according to Business Nuevo Leon. The World Bank has even ranked the state first in ease of doing business in Mexico. Most of the FDI in the state comes from the US. According to the Ministry of Economy, from 1999 to 2019, 48 percent of the FDI in the state came from the US, representing over US$27 billion. Yet, investment in the sector could increase even further due to the possible impact of USMCA. “Terms like reshoring and nearshoring are starting to appear more and more as a response to the lessons we are learning from the moment we are living, This applies not only to processes and products but to services such as engineering, design, and project management. We are living in a moment of opportunity and USMCA’s implementation should help us think beyond geographical borders. There is very good collaboration between FEMIA, AIA, and AIAC, the three associations of the aerospace industry in Mexico, the US and Canada, respectively,” shared Carlos Robles, Vice President of the Central Region of FEMIA, in an interview with MBN.

However, things should not only be seen through rose-colored glasses as, according to Robles, “We must also recognize that our government is not helping by not offering any guarantees for new businesses and investments in the country. The facts prove that any rule or law can be changed or bypassed. That equals uncertainty,” he shared in another interview with MBN. “I think the manufacturing strategy is clear: companies in North America should be doing more in Mexico, but political factors are stopping or at least slowing down the decision. Nevertheless, I am still waiting for contracts to be moved, mainly from Asia to Mexico.”

 

Collaboration to Face Challenges

The COVID-19 pandemic dealt a heavy blow to the aerospace industry, making collaboration ever-more necessary to address the problems that come with it. “We are working vertically throughout the aerospace value chain and reaching out to organizations that deal with raw materials and other key aspects of the sector. Networking among members is extremely valuable because a business opportunity can arise when you least expect it, seemingly out of nowhere,” shared Barnouin with MBN. Establishing contacts and creating better revenue for companies is a strategy that many in the sector are undertaking and Barnouin agrees that these are ways in which companies can strategize to generate growth, sourcing complete information and data to make better and more impactful decisions.

The data used in this article was sourced from:  
MBN, Ministry of Economy, Worldbank, Mexico Industry, Business Nuevo Leon
Photo by:   Jorge Orozco, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst