Rodolfo Balmaceda
President
Mexican Association of Industrial Park (AMPIP)
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View from the Top

Purpose Built Industrial Parks and Infrastructure

Tue, 09/01/2015 - 17:42

Q: How has the cooperation between the public and private sector in the development of industrial parks changed over time?

A: In the past, state governments used to make decisions about infrastructure development in industrial parks, but now, the development of industrial parks tends to be undertaken by the private sector. AMPIP, as an association, is not considering investing resources in renovating old infrastructure, but instead we want to construct modern parks that are purpose built. Admittedly, there have been instances where we have capitalized on the infrastructure of an existing industrial park because it already had the necessary facilities.

The government’s National Program of Infrastructure (PNI) is ambitious, especially since its budget was recently reduced because of the drop in oil prices. Although states with established OEM plants have already developed infrastructure in response, further investment will be necessary to support distribution and logistics. Although road freight is a relatively expensive mode of transport in Mexico, it tends to be the most frequently used, meaning that PNI investment in developing distribution methods, including highways, railways, and ports is crucial. OEM location choices reflect this in that they are dependent on a combination of factors, including infrastructure, logistics and the availability of human resources.

Q: How does AMPIP help private investors to find the best location for their industrial parks?

A: Initially, when providers establish operations in a given state, the government’s own representatives provide support in terms of infrastructure development. Nevertheless, AMPIP promotes the association abroad at industry events in order to create a network of international providers, providing information regarding the services we can offer subsidiaries in Mexico, such as logistics and human resources. Sometimes providers enter the market with broker representation, or having been advised by ProMéxico or state governments. AMPIP can connect with companies through any of these three channels or act as an adviser should this be required. Moreover, AMPIP has a close alliance with the National Council of the Manufacturing, Maquila, and Export Service Industry (INDEX) and 70% of our affiliates are incorporated in this program.

Q: How are AMPIP and its members preparing the terrain for OEMs investing in R&D in Mexico?

A: We have a vested interest in this trend since the three sectors that contribute to bolstering the R&D environment in Mexico are academia, the public, and the private sector. Companies like Nissan and GM are establishing design facilities here and are recruiting heavily for these projects. We have excellent design capabilities in Mexico, and overhead costs are low, but there is still a considerable need to improve our R&D capabilities. The government, with the help of the National Council for Science and Technology (CONACYT), has some interesting projects in development, and an increasing number of companies entering the country are requesting AMPIP’s expertise.

Q: What are the main challenges for new market entrants in terms of service, infrastructure, or workforce?

A: Without a doubt, there will be challenges. Audi, for example, built a plant in San Jose Chiapas, an isolated town, but much of Audi’s workforce came from a small town called Huamantla. The types of qualifications required by OEMs are extremely specific and as a result, lack of qualified labor can be problematic for human resources, as under these circumstances, OEMs must spend considerable resources training their workforce. Other challenges include infrastructural issues, with the government making unfulfilled pledges for the construction of highways or railroads. An expansion of highways connected to ports, the creation of more freight airports, and development of the railroad infrastructure will soon be essential. The energy reform is a vital tool for keeping electricity and gas costs at a reasonable level. Several factors make Mexico an attractive investment site, including our geographic proximity to the largest automotive market in the world, 12 FTAs that cover 45 of the most important global markets, and a cheap and capable workforce.

Q: Besides satisfying this demand, what are AMPIP’s priorities for 2015?

A: Firstly, being a country with high export volumes, we must create an environment that is conducive to security in terms of transport. In the US, this is achieved through collaboration with the Customs-Trade Partnership Against Terrorism (C-TPAT), in Europe the World Customs Organization (WCO), and other countries follow the Authorized Economic Operator (AEO) model. In this way, Mexico has implemented the New Scheme of Certified Enterprises (NEEC), an organization that grants secure company status to those foreign and domestic companies that export from Mexico and that comply with operational, security, and customs requirements. Mexican companies that are part of the INDEX are currently able to obtain the NEEC certification through the Service Tax Administration (SAT). As industrial park developers we identified which companies, carriers, customs, and ports were obtaining these certifications, and since many of those companies are based within our industrial parks, there was a need to become NEEC certified.

We are also working with the Ministry of Economy (SE) to revise the Official Mexican Norm (NOM) with the hope of generating more frequent revisions and adjustments to regulations, with a view to aligning the NOMs to the NEEC certification. On October 2015, the Ministry of Environment and Natural Resources (SEMARNAT) and AMPIP will hold an event for Sustainable Industrial Areas with the support of the SE, ProMéxico, and GIZ, a German agency that promotes sustainable technological shifts and provides sustainability training. Our parks must be truly sustainable, but not only in terms of their environmentally friendliness, also to create added benefits.