Mexico Shows Resilience Amid Stagnation of Global Manufacturing

Global supply chains have been unable to fully recover from the effects of the COVID-19 pandemic, further disrupting manufacturing industries. However, Mexico’s manufacturing industries have proven resilient and reported growth during 2Q22. 

Meanwhile, the US’s interpretation of the rules of origin remains on the spotlight. Recently, the Auto Drive America trade group asked US President Joe Biden’s administration to relax its posture on this subject.

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Global Manufacturing Tumbles but Mexico Remains Strong

Since China’s lockdowns in April 2022, the global manufacturing sector has remained in a downward spiral, with two-thirds of the world’s main manufacturing markets suffering a contraction. Mexico’s manufacturing Gross Domestic Product (GDP) increased 3.67 percent in 2Q22 compared to 1Q22, amounting to US$2.7 billion (MX$5.43 billion), according to the Government of Mexico. 

Mexico is expected to continue to grow its manufacturing sector thanks in part to the opportunities that nearshoring brings to the country because of its privileged geographical position. Learn more about the latest news in the manufacturing sector here. 

Autos Drive America Asks for the Relaxation of Rules of Origin

Eleven members of Autos Drive America have asked the US government to ease the country’s position regarding the USMCA’s rules of origin. The three countries have different interpretations as to what should be considered as regional value content. Canada and Mexico argue that the US is interpreting the rules of origin in a way that was not originally agreed to in the free trade agreement.

"For the USMCA to fulfill its potential to create jobs and transition to new and greener technologies, the Administration [of President Joe Biden] should reconsider and abandon its advocacy of the previous administration's unilateral reinterpretation of the roll-up provisions, which would allow automakers to smoothly implement the billions of dollars of investments they have planned for the US and the region," stated Autos Drive America, according to El Economista. Find out all the details here. 

Nemak Improves Earnings, Production in 3Q22

The growth in demand for EVs has created countless challenges and opportunities for the automotive sector. Nuevo Leon's auto parts company Nemak has capitalized on this situation, reporting an EBITDA of US$157 million and revenues of US$1.22 billion in 3Q22. For Armando Tamez, CEO, Nemak, higher customer production and new product launches focused on the company’s electromobility and structural applications were key to the positive top-line performance. “Improved business performance was supported by a richer product mix, new measures to mitigate inflation effects, and operating efficiencies," he said. 

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