US Business Community Trusts in Mexico’s Advantages

Q: How would you assess the business community’s sentiment regarding Mexico’s relationship with the US?
A: We face uncertainty, rapid changes and the digital era. These processes entail challenges for societies, governments, companies and individuals. Mexico is living a unique moment because of the 2018 elections and the NAFTA modernization process. The business community expects positive results from the negotiations and while we are conservative in our budgets and forecasts for 2018, we remain optimistic and trust the FTA will be successfully updated, elections will be democratic and that we will adapt to the new environment.
Q: What would be the ideal outcome of the NAFTA renegotiations for the region’s automotive industry?
A: The best scenario includes a modern NAFTA, democratic elections in Mexico and companies being able to reinvent themselves in the digital era. The new NAFTA must address topics such as e-commerce, telecoms and energy that were not considered when it was first drafted. On the other hand, the agreement must not lose its goals of making the region more competitive, promoting formal jobs, increasing the countries’ GDP and boosting domestic growth in all three markets.
The region must aspire to better negotiation terms for the automotive industry. If NAFTA falls through, automotive would be among the most affected industries. Companies need to upscale their talent and be able to adapt to market conditions. With or without NAFTA, the automotive industry needs to reinvent the way it produces, hires people and does business in line with technological advancements. That being said, companies are unlikely to stop investing in Mexico if the FTA is canceled. Automotive companies have a history of investing in Mexico and it is unthinkable that they would simply pull out and set up shop somewhere else. Overall, there are around 1,450 companies associated with AmCham and they will continue investing in the country.
Q: What are the main challenges that US companies face when setting up shop or expanding operations here?
A: Mexico’s competitiveness depends on a variety of conditions that are not limited to NAFTA. The country must overcome internal challenges about rule of law, security, corruption and impunity. Furthermore, Mexico’s automotive industry faces the issue of finding the right talent to implement appropriate business strategies. Technology changes manufacturing processes, which means the workforce’s skills must also adapt to remain competitive. This is not only a problem of formal education but also a matter of on-the-job training, upscaling digital competences and improving leadership. Training within and without Mexico’s automotive industry is designed for the past rather than the future. There should be apprenticeships, dual education, on-the-job training and a promotion of talent mobility.
Q: How can companies help Mexico improve its image in the US?
A: Mexico lacks good marketing. We need spokespeople who go out and promote the good things about the country. US companies with presence in Mexico must work with their headquarters and offer all information related to the country. Yet, American companies are still willing to invest in Mexico. In 2017, AmCham companies accounted for 20 percent of the private sector’s fixed gross investment in Mexico, representing around US$43.4 billion and they will continue on that path.  Our members represent 21 percent of Mexico’s GDP and create 2.5 million direct and 6 million indirect formal jobs.
Q: What opportunities can the CPTPP offer the Mexican automotive industry?
A: This agreement opens new markets for business and under better conditions; it is a good agreement for every country involved. Without losing its ties to Canada and the US, Mexico needs to expand its vision to really assert itself in the global economy and be among the Top 10 economies in the world.