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News Article

Cooperation: The Key to Increasing Economic Competitiveness

By Miriam Bello | Wed, 11/10/2021 - 13:22

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Mexico has built a place for itself on the international economic stage as a fully integrated manufacturing center with outputs increasingly linked to the broader global economy. Mexico’s competitiveness is multisectoral but, to continue growing and strengthening its capabilities, the country needs to look at the industry as an ally, instead of an enemy.

While foreign matters might impact Mexico’s economic competitiveness, there are several internal issues that both the government and industry must tackle. For the country’s economic recovery, “joint work between the private and public sector is essential, coupled with an accelerated tech transition that fosters a fully interconnected ecosystem,” said José Román, President and Managing Director, Nissan Mexicana and NIBU. For Mexico’s automotive sector, one of its most productive industries, creating a strategic mobility plan considering electric, autonomous cars, clean tech, subways, airports and trains will also be part of a smart recovery.

 Major concerns for the sector in Mexico and abroad are climate change and sustainable manufacturing. According to Román, companies in the auto sector are already working in more efficient engines and better-quality fuels, which are expected to further increase interest in Mexico’s manufacturing capabilities.

These capabilities are led by Mexico’s widely known high-quality talent, which is one of the country’s greatest assets and what has made it attractive for years. This talent will catalyze competitiveness, said Beni López, CEO, Softtek US & Canada. These competitive labor costs have helped strengthen the nation’s manufacturing base. In addition to producing sophisticated products for domestic consumption, the country has also evolved to become a robust exporter.

To continue growing at this pace, education needs a boost. In Mexico, “education is underprioritized,” said Rasmus Duun, General Manager Latin America, The LEGO Group. “This is making the difference between countries and their global competitive advantage.”

Collaboration helps companies avoid duplicating efforts and create better things together. An industry level alliance would allow companies to operate as partners, instead of competitors. By aligning on every industry, “we could ask for clearer rules and a legal certainty based on united interest,” says López.

Industry leaders have struggled with the legal uncertainty in the working environment, such as the recent, sudden change in the outsourcing law. “Legal certainty rules need to be clear and consistent; it is no secret that the current public policies and regulations are changing overnight. Policies in Mexico need to foment a transparent environment that is open to listen to industry concerns,” said Duun.

A universal driver behind competitiveness is technology. Industry 4.0, for example, “not only boosts our manufacturing capabilities, but also helps avoid logistics and supply chain disruptions,” said López. Tech must be promoted so that the industry ecosystem can be improved systematically, he added.

To create and foster local tech, trainings and education are also essential. Joint sponsorships for research and innovation centers can help scale in-house talent, said López. Furthermore, creating innovation and development centers can help the country to be at the forefront of technology while supporting the implementation of factories and projects, said Roman.

The integration of North America has given a great advantage to Mexico by boosting the development of many different industries. Tech, however, it is the key of success, so “we have to invest in tech, regardless of the industry,” said Dunn. Investment in tech is becoming a necessity, as was evidenced by the recent e-commerce boom. “E-commerce is a critical part of commerce now and in the future,” said Dunn.

“Mexico is already an attractive investment hub and competitiveness powerhouse but we compete with China, the US and India. This enhances the importance of caring for our current projects and our inhouse talent,” said Ana López Mestre, Executive Vice President and General Director, AmCham.

Under these circumstances, the USMCA will greatly benefit Mexico, said López. No sector of the Mexican economy has benefited more from the USMCA than manufacturers. The treaty  attracted a significant amount of FDI to help expand productive capacity and ramp up exports. The manufacturing sector accounts for almost 50 percent of total FDI in Mexico and 80 percent of total trade.

Miriam Bello Miriam Bello Journalist and Industry Analyst