Despite Challenges, Mexican SMEs Are Key Players in Industry 4.0

Mexican small and mid-size enterprises (SMEs) are key players in the transformation of the industrial sector posed by the Industry 4.0 paradigm bound to create a more competitive economy. Nevertheless, experts agree that SMEs lack investment in technologies and innovation that needs to be attended before this transition can actually take place.

At the Industrial Transformation MEXICO forum, an assembly leading in Industries 4.0 in Mexico and Latin America, representatives from the National Confederation of Industrial Chambers (CONCAMIN) and the Business Coordinating Council (CCE) discussed that SMEs play an important role in Mexico´s transition towards the adoption of manufacturing processes and interconnection aimed to increase efficiency and productivity. This transformation is posed by Industry 4.0, which represents the existing trend towards automation, technological data exchange and processes inside the manufacturing industry.

Experts agree that it is necessary to plan, build and implement an industrial policy that helps and supports small and mid-size enterprises in their digital transformation processes while acknowledging and identifying the region’s social needs.

José Abugaber, President of CONCAMIN, says there is a need to implement an educational policy that produces human resources for this transformation, one that stimulates the digital transition as well.

“We must keep in mind that employee training and the promotion of digital talent is of the utmost importance for a successful transformation to an industry 4.0, which is what we are looking for," said Abugaber.

This “successful transformation” is very much needed. The New Economic-Industrial Policy in the National Development Plan establishes that Industry 4.0, including robotization and automation, have created new productive differentials in Asian nations, Mexico´s competitors. Therefore, the Industry 4.0 is amongst key sectors that need to be boosted and prioritized, and SMEs need to incorporate it since over 99 percent of the companies in the country fall into the SME category.

The technologies that need investment and innovation from SMEs to help the country transition into this Fourth Industrial Revolution include IoT, artificial intelligence (AI), cloud computing, big data analysis, robotization, cybernetic security, Information Communication Technology (ICT), amongst other technologies.

Yet, SMEs still face important challenges that need to be resolved for this transition to be successful and Experts Contributors for MBN have shared their opinions.

“Mexican SMEs have been characterized by low investment in new technologies to modernize their operations due to several factors, which has made them less competitive and agile to face the challenges of a constantly changing world,” says Ricardo López-Tello, Corporate Sales and Government Director at Intel Mexico and an MBN Expert Contributor.

For López-Tello, investment in technology is crucial for a business's survival to prevent these from disappearing “in the next five years.” López-Tello believes that SMEs need to make the most of current trends and deconstruct the idea that technologies are for bigger companies only.

Joaquín Saldaña, Director of Strategy and Marketing Latam in Huawei Technologies Mexico and an MBN Expert Contributor, believes that the challenges for SMEs include lack of digitalized infrastructure, technology applications and few human capital, in addition of poor investment, amongst other things. According to him, these are preventing SMEs from using ICT.

“It looks like most of them ­[SMEs] are focused on the basic things — getting customers, growing revenue and profitability — and do not have innovation or technology at the top of their minds. In Latin America, we are still facing the challenge of network coverage and digital culture,” wrote Saldaña for MBN.

Despite these challenges, transitioning to the Industry 4.0 has been a success for states like Guanajuato and Nuevo Leon. Gustavo García, Chairman of Skye Group, told MBN through an interview how these two states have been stepping up their game in this Fourth Industrial Revolution.

“Guadalajara and Nuevo Leon are both strong examples. Regarding Industry 4.0, Guadalajara understands how to create new companies and how to attract companies to generate more investment and business. However, that is not innovation but investment attraction. Nuevo Leon, on the other hand, bolsters digitalization by helping society to understand that there is potential beyond manufacturing. Instead of creating more manufacturing companies, they are creating more intellectual property companies,” García told MBN.