BRP: First Investor of the USMCA Era

On Thursday, July 2, the Canadian firm Bombardier Recreational Products (BRP) announced the construction of a vehicle plant in Ciudad Juarez, the first investment in the USMCA era, according to a note from Reporte Indigo. On BRP’s official statement, the company revealed that the opening of the new plant will be key to meeting demand for its off-road vehicles (ORVs) division, as well as to keep pace with the increasing demand for Can-Am side-by-side vehicles (SSVs) experienced in recent years.

The site planning and construction are scheduled to begin within the next months and the plant is expected to be ready by fall 2021, revealed BRP. The project will represent an investment of approximately CA$185 million (US$136.38 million) and it is expected to result in the creation of up to 1,000 permanent jobs. In addition, BRP’s total capital expenditure for FY21 is now expected to be between CA$275 million (US$202.73 million) and CA$300 million (US$221.16 million). 

Currently, BRP operates manufacturing facilities in Canada, the US, Mexico, Finland and Austria and holds a total workforce of more than 12,600 employees. The company reported annual sales of CA$6.1 billion (US$4.5 billion) in 2019 across over 120 countries where it sales it vehicles. According to the Canadian government, "Mexico's stability, its growing consumer class and labor competitiveness continue to make the country an attractive market for Canadian exports and investments." For this reason, Canadian direct investment in Mexico is estimated at CA$22.5 billion (US$16.59 billion), which makes Mexico the 10th largest direct investment destination for Canada. In addition to its appeal, Export Development Canada (EDC), which has operated a regional office in Mexico since 2000, has listed Mexico as a priority market.

Today, Mexico hosts large Canadian companies such as Grupo Financiero Scotiabank, the electronic industry company Celestica Inc, the automotive industry company Magna International, Gold Corp in the mining sector and Bombardier in the aerospace industry. From 1999 to 2017, the amount of Canadian FDI in Mexico totaled more than US$33 billion, according to a note from Forbes Mexico with data from the Canadian Chamber of Commerce in Mexico (CANCHAM). 

On the other hand, FDI from Mexico to Canada in 2019 was estimated at US$3.2 billion, a lower figure than in 2018 where the total investment was of US$4.2 billion, according to CEIC data. The main Mexican companies with investment in Canada are Bimbo, Alfa, Industrias CH and Grupo México, according to Pan American World. Canada ranked as the 11th largest FDI destination in the world in 2018, up four places compared to the previous year, according to the 2019 CNUCYD World Investment Report. Canada has a very favorable commercial climate and the country ranks 23rd out of 190 countries in the World Bank's Doing Business 2020 report. In comparison, Mexico fell six places, from 54 to 60, in the World Bank’s report.