Technological Advances Push Industry 4.0, is Mexico Prepared?By Cinthya Alaniz Salazar | Fri, 07/09/2021 - 10:06
A Mordor Intelligence report published earlier this year valued the Mexican factory automation and industrial controls market at US$1,398.7 million in 2019. It also forecasted 8 percent growth in the next five years. The increasingly rapid transition to automation technology is being driven mainly by the automotive industry, of which Mexico is home to 20 plus vehicle assembly plants. Nissan, Honda and Mazda are leading this move through high-volume facilities that have increased production growth by over 7 percent, according to the same report.
The benefits of automation technology, including lower labor costs, increased efficiency and greater production capabilities, have led other manufacturing sectors to invest, in turn allowing them to expand rapidly. In other words, automated technology has spurred the rapid and diversified expansion of Mexico’s total manufacturing sector. The automation sectors’ widespread success can be attributed to a highly competitive market that consists of several major players, thereby ensuring continuous technological innovations. This ideal environment has in turn made Mexico a leader of innovation and technology in Latin America.
In the past, poverty declined with the growth in a country’s manufacturing sector, but an increasingly automated global economy has made this correlation obsolete. According to a 2020 investigation by Banxico, 68 percent of the population in Mexico is at risk of losing their job to automation in sectors beyond manufacturing, including: agriculture, animal rearing, forestation, fishing and food preparation. This shift, also referred to as Industry 4.0 and dubbed the fourth industrial revolution, has marked the end of traditional development practices according to a UN Conference on Trade and Development (UNCTD) 2021 report.
As technological advancements continue to push the world into a knowledge based economy its clear that presently, “Mexican businesses and workers are unprepared to compete in a knowledge-based global knowledge economy,” reads a 2020 Wilson Center publication. The report underlines four central points: resource-driven businesses, weak innovation ecosystems, failing education system and inadequate and or insufficient infrastructure. Points which are echoed in an industry roadmap created by Mexican Association of Information Technology Industry (AMITI).
The AMITI report indicates that Mexico understands both the value in further developing the sector and the need to prepare its business and labor force so they are able to successfully integrate and compete in the emerging knowledge-based economy. Failing to prepare could have potentially catastrophic consequences for the economy and country as a whole.