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Japanese Companies at ITM 2023 Climb to Record Number

By Daisuke Shiga - Japan External Trade Organization (JETRO)

Director for Trade Promotion

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Industrial Transformation Mexico (ITM) 2023, one of the largest industrial trade fairs in Mexico, was held on Oct. 4-6 in Leon, the largest city in the state of Guanajuato, where the automotive industry is concentrated. This trade fair replicates the Hannover Messe in Germany, one of the most relevant in the industrial world. ITM presents advances in the areas of automation and robotization, smart logistics, energy solutions, digital manufacturing, information and communication technologies, aerospace, machines and tools, smart factories, development and research, additive manufacturing and other innovations dedicated to improving the quality of life of society.

The exhibition was affected by the spread of the COVID-19 from 2020 to 2021 but returned to a full exhibition hall format in 2022. ITM 2023 had a total floor space of 42,000m2 and 226 exhibitors overall. The trade fair slogan for 2023 is "Let's Build The Industry of Tomorrow."

This year, the exhibition area of the "Automation Zone," which proposes automation solutions for the manufacturing industry, was expanded from last year. The Japan External Trade Organization (JETRO) set up the Japan Pavilion for the second consecutive year, with five Japanese companies exhibiting, while 10 Japanese companies held their own booths separate from the Japan Pavilion, bringing the total number of Japanese companies to a record of 15. At ITM 2022, there were eight Japanese companies exhibiting in the Japan Pavilion and four Japanese companies were individual exhibitors. The field of application of the Japanese companies at this year’s ITM edition was automation technology focused on the manufacturing sector, such as industrial sewing machines, autonomous robots for cleaning, security cameras with artificial intelligence, information technologies, industrial screws, fasteners, products and services for the maintenance of steam systems, among others. The Japan Pavilion exhibitors were as follows:

Konica Minolta Business Solutions de Mexico (first time participating)

TLV Engineering (first participation)

Fujita Rashi Industries (first time participating)

JUKI AMERICA (two consecutive years)

Hanshin Neji (two consecutive years)

Companies exhibiting in their own booths were as follows:

Mitsubishi Electric Automation

Mitutoyo

Keyence

NSK

OMRON

Hitachi Energy (first participation)

Patlite (first participation)

CKD (first participation)

Idaka (first participation)

Enshu (first participation)

A representative from Konica Minolta Business Solutions de Mexico commented that, "We received many inquiries from buyers in industries other than the one we had in mind as a target before the exhibition, which will help us in developing future sales strategies.”

Mexico's economy is driven by the manufacturing industry, including the automotive industry due to its proximity to the US market. There are approximately 1,300 Japanese companies in Mexico, of which more than 50% belong to the manufacturing industry, and 30% operate in Guanajuato, making it an important zone for Japanese economic activity. JETRO continues to promote trade and investment in this state. According to Takao Nakahata, Director General of JETRO Mexico, Japanese businesspersons have strong confidence in the future of Mexico's manufacturing industry and consider it a strategic point for supplying North America, since production volume has been increasing. Meanwhile, he emphasized that what they are looking for in Mexico is not only to set up their factories to produce, but also to add value to the Mexican maquiladora industry with technological solutions, automation, and services. Therefore, with the participation of Japanese companies at ITM2023, JETRO wanted to promote their technology to solve or add value to the Mexican manufacturing industry.

As for the concept of nearshoring that is recently considered the best opportunity for Mexico in terms of production relocation, many Japanese companies are doing feasibility studies for new investments, especially those companies that are engaged in a variety of industries, ranging from medical device and battery manufacturing to those specializing in sustainable restaurant paper for the specific California market.

On the other hand, more than a few Japanese companies located in this country can no longer fulfill the high demand from their clients, so they will expand their investments and even build new factories to meet it. One of the significant announcements regarding nearshoring is Nidec. The largest Japanese motor maker is planning to invest an estimated ¥100 billion (US$700 million) in a new plant in Mexico that would produce electric axles, the powertrains for electrical vehicles. Although none of the Japanese OEMs are fabricating electric vehicles in Mexico, Nidec has a view of supplying automotive parts regardless of the company's nationality.

Inward FDI in 2022 was US$36.2 billion, up 14.8% from the previous year, outpacing 2019's approximately US$34.1 billion and marking the second-largest investment on record after 2013. By country and region, the United States accounted for 56.6% of the total with US$20.5 million, a significant increase of 53.9%. Canada was in second place with US$4.0 billion, Argentina in third place with US$2.3 billion, and Japan in fourth place with US$2.2 billion. The region benefiting the most from nearshoring is the northeastern state of Nuevo Leon, which has seen a wave of investment from automotive-related companies and the IT sector.

We know that nearshoring is not a new concept. Japanese companies ,especially from the automotive sector, have been aware of it for many years since developing their activities in Mexico, mostly in the Bajio region. To spread the nearshoring opportunities to other sectors, such as semiconductors and medical devices, and to other Mexican regions, it is mandatory to collaborate with federal and local governments as well as private organizations and academia, all of which are dedicated to creating strategies in favor of the development of global value chains.