Manufacturing in Mexico Conference

Name: Manufacturing in Mexico Conference
Uploaded: 2018-01-14T19:24:27+00:00
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Channel: Aaliyah Boyle
Description: Manufacturing in Mexico Conference

Manufacturing in Mexico Conference
Near-Shoring - Maquiladoras - Site Selection Las Vegas, Nevada May 19-20, 2011 Bellagio

Importance and Performance of the Auto Parts Industry
Why invest in Mexico: Importance and Performance of the Auto Parts Industry NATIONAL AUTOMOTIVE PARTS MANUFACTURERS ASSOCIATION IN MEXICO

Mexico Overview • A free market economy in the trillion dollar class.
• A mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. • Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. • Per capita income is roughly one-third that of the US. Source: The Wolrd Factbook, CIA Source: Promexico, SE

Why Mexico Ranking 134 115 93 18 1 According to the International Bank
for Reconstruction and Development, compared to global good practice economy as well as selected economies: Mexico is ranked 35 out of 183 economies for Doing Business. Rank Doing Business 2011 EaseofDoingBusiness StartingaBusiness DealingwithConstructionPermits RegisteringProperty GettingCredit ProtectingInvestors PayingTaxes TradingAcrossBorders EnforcingContracts ClosingaBusiness 35 67 22 105 46 44 107 58 81 23 Easy of doing Business, Global 134 115 Protecting Investors, Global Ranking 93 Rank 109 79 44 44 28 16 35 43 1 18 1 Source: Doing Business in Mexico, 2011, The Worls Bank

Why Mexico: changes to business regulation
“Mexico launched an online one-stop shop for initiating business registration. Mexico improved construction permitting by merging and streamlining procedures related to zoning and utilities. Mexico increased taxes on companies by raising several tax rates, including the corporate income tax and the rate on cash deposits. At the same time, the administrative burden was reduced slightly with more options for online payment and increased use of accounting software.” Source: Doing Business in Mexico, 2011, The Worls Bank

1. Importance of Auto and Auto Parts Sector in Mexico
Presentation Structure 1. Importance of Auto and Auto Parts Sector in Mexico 1. Interdependence 2. Network of trade agreements 2. Terminal Industry 3. Auto Parts Industry 1. 2. 3. 4. 5. Trade Balance Production Value Employment Vehicle Park Demand Structure 4. INA’s Presentation

The Mexican automotive industry
• Historically, the automobile industry has been a strategic sector for development in Mexico. Its share in the national economy places it as the second most important industry in Mexico, only preceded by the oil industry. • With a vast infrastructure and over 1,250 auto parts companies, the Mexican automobile sector is the 9th largest vehicle producer in the world, and an important platform for manufacturing global products to the highest standards of quality and safety.

Industrial Policy • The Mexican Government sees the new higher quality and ecological standards as a development opportunity. • To push impetus towards more added value activities (engineering, product design, testing and R&D), Mexican Government provides support to attract new investments and to facilitate operation of companies already established in the country. • High support for investment projects that promote innovation and technological development. • Mexico offers incentives, including job training and tax credits on R&D and innovation projects.

Programs to support the Automotive Industry
• Decree to support competitiveness of the automotive industry. – It grants benefits (customs, tariffs, government purchases) for the manufacturing of new light vehicles. • Fund to Support Micro, Small and Medium Enterprise (Fondo PyME). – Supports projects that promote the creation, development, consolidation and competitiveness of small and medium enterprises. Large companies that contribute directly or indirectly to these activities could also apply for benefits. • PROMEXICO Fund. – Has an active role attracting direct foreign investment by supporting projects that promote economic development.

Importance of the automotive sector
• The transportation equipment manufacturing accounted for 18% of manufacturing GDP • Employment generated by the auto industry represents 10% of manufacturing employment The automotive sector exports represent 23% of total exports

Design and Engineering Centers
Design Center Number: 31 Academy / Research Institutes: 14 Enterprises: 17 Qualified workforce • Mexico has over 750 thousand engineering and technology students. • Every year, 90 thousand engineering and technology students graduate. • Mexican universities offer more than 900 graduate programs related to engineering and technology. Center for Automotive DesignModels, Mexicali,B.C Engineeringand Virtual Design Center, CuautitlánEdo de México TechnologyDevelopmentCenter and part design, Puebla, Pbla TestingCenter (Lab. emissions testinglaboratory) Manzanillo,Colima TestingCenter, Capuán, Michoacán Engineeringand Design Center, Toluca,Edo de México Source: INA with SE and AT Kearny Information Engineeringand Design Center, Toluca,Edo de México TechnologyDevelopmentCenter and Lab EmissionsAnalysis,Toluca,Edo de México

Interdependency Through Value Added Chain
NORTH AMERICA, EUROPE, ASIA, AUSTRALIA CHRYSLER, FORD, GM, TOYOTA, NISSAN, VW, HONDA, ETC SUPPLIERS TIER ONE (SYSTEME & ASSEMBLES) R BOSCH, DELPHI, MAGNA, CONTINENTAL, JOHNSON CONTROLS, ETC NEMAK, KUO, SAN LUIS RASSINI, METALSA, BOCAR, VITRO, CIFUNSA, OTHER SUPPLIERS & RAW MATERIALS (30,000 PARTS) STEELS, PLASTICS RESINS, COOPER, ALUMINUM & OTHER SERVICES & SUPPLIES FORGINGS,FOUNDRIES, PLASTICS, ETC

Trade agreements network
Mexico has preferential access to 12 free trade agreements with 44 countries with a population of over 1 billion people . 18 days 12 days 4 days 27 APPRI’s 12 FTA’s 6 ACE’s

Foreign Trade • Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994, Mexico's share of US imports has increased from 7% to 12%, and its share of Canadian imports has doubled to 5%. Mexico has free trade agreements with over countries including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan, putting more than 90% of trade under free trade agreements. Source: The Wolrd Factbook, CIA • Automotive business opportunities in three continents (America, Europe, Asia). Mexico's competitive advantages: a skilled labor force, logistics, low country risk, business environment ALADI Ecuador ALADI Paraguay ALADI Brasil ALADI ALADI TLC AELC ALADI OMC Cuba Perú Islandia MERCOSUR Liechtenstein TLCAN EUA TLC CostaRica ALADI Uruguay ALADI Argentina TLC Israel Noruega Suiza ALADI TLC G3 TLC TLC TLC TLC TN ALADI TLC AAE TLC GATT 1986 Chile 1992 APEC 1993 OCDE 1994 Colombia* 1995 Nicaragua 1998 Chile 1999 UE 2000 Guatemala 2001 MERCOSUR 2002 Urugay 2004 Japón 2005 Perú 2011 Source: SE

Terminal industry NATIONAL AUTOMOTIVE PARTS MANUFACTURERS ASSOCIATION IN MEXICO

2009PRODUCTION STATISTICS
2009 global production In 2009, Mexico was the 10th place worldwide in production 2009PRODUCTION STATISTICS Rkg Country 1 China 2 Japan 3 United State 4 Germany 5 South Koea 6 Brazil Cars Comercial Total Var% 10,383, ,407, ,790, % 6,862, ,072, ,934, % 2,246, ,462, ,708, % 4,964, , ,209, % 3,158, , ,512, % 2,576, , ,182, % Mkt Share 22.3% 12.9% 9.3% 8.4% 5.7% 5.2% 7 India 2,166,238 466,456 2,632,694 13% 4.3% 8 Spain 9 France 10 Mexico 11 Canada 12 Iran 13 UK 14 Thailand 15 Tchec Rep. 16 Polonia 17 Turkey 18 Italy 19 Russia 20 Belgium Total 1,812, , ,170, % 1,819, , ,047, % 942, , ,561, % 822, , ,490, % 1,359, , ,395, % 999, , ,090, % 313, , , % 967, , , % 819, , , % 510, , , % 661, , , % 595, , , % 524, , , % 47,952, ,761, ,714, % Fuente: OICA OICA 3.5% 3.3% 2.5% 2.4% 2.3% 1.8% 1.6% 1.4% 1.2% 0.9% 100% Source:

2010 global production 1 China 2 Japan 3 USA 4 Germany 5 South Korea
In 2010, Mexico is the 9th place worldwide in production and increased its share from 2.5% to 3%. 2010PROVISIONALPRODUCTION STATISTICS Rkg Country 1 China 2 Japan 3 USA 4 Germany 5 South Korea 6 Brazil 7 India 8 Spain 9 Mexico 10 France 11 Canada 12 Thailand 13 Iran 14 Russia 15 UK 16 Turkey 17 Czech Rep. 18 Poland 19 Italy 20 Argentina TOTAL Cars Comercial Total Var% 13,897, ,367, ,264, % 8,307, ,318, ,625, % 2,731, ,030, ,761, % 5,552, , ,905, % 3,866, , ,271, % 2,828, , ,648, % 2,814, , ,536, % 1,913, , ,387, % 1,390, , ,345, % 1,922, , ,227, % 968, ,102, ,071, % 554, ,090, ,644, % 1,367, , ,599, % 1,208, , ,403, % 1,270, , ,393, % 603, , ,094, % 1,069, , ,076, % 785, , , % 573, , , % 508, , , % 58,264, ,345, ,609, % Fuente: OICA OICA Mkt Share 23.5% 12.4% 10.0% 7.6% 5.5% 4.7% 4.6% 3.1% 3.0% 2.9% 2.7% 2.1% 1.8% 1.4% 1.1% 0.9% 100% Source:

Light vehicle production in Mexico
OEM DomesticMarket Exports Jan-dec 2009 2010 Change% GeneralMotors 69,628 98,073 41% 280,906 461,277 64% Volkswagen 48,189 73,946 53% 272,051 361,031 33% Nissan 47,692 73,654 54% 227,473 344,675 52% Ford 2,960 10,368 250% 231,370 383,281 66% Chrysler 22,629 27,052 20% 134,453 230,267 71% Honda 10,164 14,026 38% 37,564 40,975 9% Toyota 0% 42,696 54,278 27% Total 201,262 297,119 48% 1,226,513 1,875,784 OEM TotalProduction Jan-dec 2009 2010 Change% GeneralMotors 350,534 559,350 60% Volkswagen 320,240 434,977 36% Nissan 275,165 418,329 52% Ford 234,330 393,649 68% Chrysler 157,082 257,319 64% Honda 47,728 55,001 15% Toyota 42,696 54,278 27% Total 1,427,775 2,172,903 Source: INA with information provided by AMIA

Heavy vehicle production in Mexico
OEM 2009 Change % Freightliner 24,933 43,705 75% International 20,264 26,468 31% Kenworth 6,037 10,325 71% MB 2,918 2,970 2% Volvo 654 659 1% VW 958 651 -32% Isuzu 312 570 83% Hino 89 354 298% Scania 240 339 41% Dina 132 143 8% Omnibús 50 12 -76% Man 55 1 -98% TOTAL 56,642 86,197 52% Source: INA with information provided by ANPACT

Light Vehicle Production - History & Forecast
3,500,000 130% 110% The manufacture of vehicles has gone through several recessions, the deepest among them was in and Forecast 3,000,000 In 2009, the automotive sector suffered a contraction of -29% in vehicle assembly, which was recovered in 2010 with a growth of 50%. It is expected that light vehicle production will remain constant in 2011, growing 5% in 2012 and 12% in 2013. 90% 70% 50% 30% 2,500,000 2,000,000 1,500,000 10% 1,000,000 -10% 500,000 -30% -50% 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Vehicle Production(Units) AnnualGrowth Rate Source: INA with information provided by CIEMEX-WEFA, AMIA, ANPACT y CSM Auto Worldwide y Global Insight

Auto parts industry NATIONAL AUTOMOTIVE PARTS MANUFACTURERS ASSOCIATION IN MEXICO

Autoparts companies: global top 20
2009 World Ranking First by Country Company Country Country Company World Ranking 1 2 3 4 5 6 7 8 9 Denso Corp. Robert Bosch GmbH Aisin Seiki Co. Continental AG Magna International Inc. LG Chem Ltd. Faurecia Johnson Controls Inc. Delphi Holding LLP Japan Germany Canada S. Korea France USA Japan Germany Canada S. Korea France USA Italy Sweden United Kingdom Denso Corp. Robert Bosch GmbH Magna International Inc. LG Chem Ltd. Faurecia Johnson Controls Inc. Magneti Marelli S.p.A. Autoliv Inc. GKN Driveline 1 2 5 6 7 8 24 28 53 10 ZF Friedrichshafen AG 11 TRW Automotive Inc. 12 Hyundai Mobis Germany USA Korea Mexico Switzerland Netherlands Nemak Honeywell Transportation Systems Royal Philips Electronics 63 69 75 13 Valeo SA 14 Toyota Boshoku Corp. France Japan 15 Lear Corp. 16 Yazaki Corp. 17 Sumitomo Electric Industries Ltd. 18 BASF SE 19 Hitachi Automotive Systems Ltd. 20 Benteler Automobiltechnik GmbH USA Japan Germany In Mexico are installed the most important companies worldwide Source: TOP 100 Global OEM parts Suppliers 2009, Ernst & Young, June 2010

Structure of automotive manufacturing
FOREIGN COMPANIES NATIONAL COMPANIES 100% 18 OEM 70% 1,260 30% AUTO PART MANUFACTURER FIRST TIER PROVIDERS: 365 Source:SE,INEGI & INA 22

Mexican auto parts trade balance
• Imports 2010: $27,821 million of usd • Exports 2010: $37,996 million of usd The trade balance remains in surplus.

Mexico’s Partners: Exports
Two major partners: - United States received 90% of exports - Canada received 4% USDMillion Change % MktShare Rking Country 2009 2008 0 -- El Mundo-- $37,996.49 - $26,012.76 $35, % % 100.0% % 100.0% 1 United States $34,151.04 $23,519.92 $32, % % 89.9% 90.4% 91.5% 2 Canada $1,354.83 3 Germany $284.86 $826.79 $208.98 $ % % $ % % 3.6% % 0.7% % 2.1% 0.9% 5 Japan $264.14 $168.69 $218.09 57% 21% 0.7% 0.6% 0.6% 4 Brazil $297.77 $168.64 $ % 31% 0.8% % 0.6% 6 UK $166.62 $60.71 $ % % 0.4% % 0.3% 7 China 8 Australia 9 Colombia $183.55 $166.90 $91.27 $149.41 $155.41 $59.98 $ % % $ % % $ % % 0.5% % 0.4% % 0.2% % 0.5% 0.7% 0.2% 11 Thailand $43.70 $16.57 $ % % 0.1% % 0.1% 12 Argentina 13 Guatemala $77.65 $59.63 $30.72 $47.66 $ % % $ % % 0.2% % 0.2% % 0.1% 0.2% 10 Spain $42.40 $30.11 $ % % 0.1% % 0.2% 14 Venezuela 15 CostaRica $65.48 $47.23 $66.82 $36.77 $ % % $ % % 0.2% % 0.1% % 0.2% 0.1% Source: INA with World Trade Atlas information

Mexico’s Partners: Imports
U.S. provides 60% China 10% Japan 8% Canada and Germany 5% USDMillion Change % MktShare Rking Country 2009 0 -- El Mundo-- $27,821.40 - $21,310.95 $28, % % 100.0% % % 1 United States $15,660.57 $11,071.39 $15, % % 56.3% 52.0% % 2 China $2,726.41 $2,203.88 $2, % % 9.8% % % 3 Japan $2,289.58 $1,807.31 $2, % % 8.2% % % 5 Canada $1,433.44 $990.79 $1,110.26 45% 29% 5.2% 4.6% 3.9% 4 Germanu $1,287.33 $1,840.99 $1, % % 4.6% % 5.9% 6 South Korea $880.41 $588.65 $ % % 3.2% % % 7 Brazil $726.90 $819.04 $1, % -37% 2.6% % % 8 Taiwan $359.82 $249.91 $ % % 1.3% % % 9 Italy $222.10 11 France $206.44 12 Spain $189.72 13 Thailand $188.09 $141.16 $151.05 $142.50 $143.02 $ % % $ % % $ % % $ % % 0.8% % % 0.7% % % 0.7% % % 10 India $179.04 $100.19 $ % 47% 0.6% % % 14 UK $139.86 $122.02 $ % % 0.5% % % 15 Malasia $121.34 $70.13 $ % % 0.4% % % Source: INA with World Trade Atlas information

United States Partners
NAFTA is the principal a auto part supplier for the United States with almost 50%, Asia and Europe are the next Mexico remains the largest supplier with 31% of imports, will Canadian with 16%, Japan with 13% China to 11%, Germany with 7% and Brazil %. Mexico's participation has increased steadily while that of Canada and Japan has declined. China is the country whose penetration has grown considerably in the last 10 years 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source:International Trade Administration Mexico Canada Japan China Germany Brazil

Employment in Automotive Parts Sector
Employment in manufacturing grew 4.8% in the last month of 2010 compared to the level of December (-9%). . 531,543 jobs were reported Ii December 2010, representing 17% more than in December 2009 and 9% more than in December 2008. On average 501,024 jobs were created in 2010 to 441,098 in 2009 (+14%) and 549,096 in 2008 Source:INA with EIMA information,INEGI

Automotive Parts Production Values
$7,000,000 100% AutopartsValue Production (trimestral,thousandoifusd) 80% $6,000,000 60% $5,000,000 40% $4,000,000 20% $3,000,000 0% $2,000,000 -20% Fuente: INA con datos de EIMA, INEGI $1,000,000 $- -40% -60% Cifrasdefinitivas 1ertrim 05 3ertrim 05 1ertrim 06 3ertrim 06 1ertrim 07 3ertrim07 1ertrim 08 3ertrim 08 1ertrim 09 3ertrim 09 1ertrim 10 3rotrim 10 Source:INA with EIMA information,INEGI

Automotive Parts Value Production by System
After the crisis in 2009, the auto parts industry has recovered, exceeding 2008 levels by 6% and 2009 levels by 50% Value inThousands of Dollars Transmissions, Clutch and its Parts Engine Parts Electric Parts Gasoline Engines Carpets and Seats Suspension, Direction and its Parts Oil, Lubricants and Vehicle Liquids Stamped and its Parts Automotive Accessories and Parts Tires Vehicle Bodies Vehicle Rubber Products Brakes and its Parts Glass, Crystal and Windshields Cooling Other TOTAL Jan-Dec 2010 $9,416,729 $8,077,016 $7,715,261 $5,513,124 $4,840,733 $2,910,856 $2,360,634 $2,058,594 $1,992,908 $1,770,124 $1,389,420 $1,225,211 $1,033,997 $890,064 $236,123 $12,739,711 $61,975,611 Jan-Dec 2009 $5,814,841 $4,764,627 $6,091,178 $3,865,059 $3,159,960 $1,928,587 $2,110,693 $1,321,928 $1,498,337 $1,393,334 $1,190,152 $858,244 $667,453 $676,394 $252,098 $5,634,156 $41,227,040 Jan-Dec 2008 $7,140,616 $7,793,453 $8,911,336 $5,119,142 $4,532,546 $2,539,011 $2,541,770 $1,877,218 $2,521,448 $1,834,909 $2,173,405 $1,061,990 $1,236,496 $884,671 $358,193 $7,768,614 $58,294,816 Change (%) 10-09 62% 70% 27% 43% 53% 51% 12% 56% 33% 17% 55% 32% -6% 126% 50% Change (%) 10-08 32% 4% -13% 8% 7% 15% -7% 10% -21% -4% -36% -16% 1% -34% 64% 6% Source:INA with EIMA information,INEGI

Automotive Parts Value Production
Source:INA with EIMA information,INEGI

Automotive Parts Demand Structure
Billion of USD 2010 2009 2008 100% 61% 39% Auto parts Value Production Exports OEM Supplier 1st level - Tier 1 Aftermarket Domestic Market Importaciones Total Demand $61.97 $37.99 $26.59 $7.60 $3.80 $23.98 $16.79 $7.19 $27.82 $19.47 $8.35 $89.79 $41.20 $26.01 $18.21 $5.20 $2.60 $15.70 $10.99 $4.71 $21.31 $14.92 $6.39 $62.51 $58.30 $35.90 $25.13 $7.18 $3.59 $22.40 $15.68 $6.72 $28.44 $19.91 $8.53 $86.74 Source: INA

Vehicles on road in Mexico
National market: 28 marks for light vehicles 12 brands of heavy vehicles More than 500 models Age Transportation Vehicles 16 year old is the average age 12 million vehicles on the road are over 16 years old Figuresin millions of units Nota:Las cifras no incluyen vehículos usados importados desde Estados Unidos y Canadá Range of Age Vehicles Sold New Imported used from U.S. and Canada Total (millions of % of vehicle per range units 10 years 11-15 years 16-20 years 21-30 years 31 and more Total 11.1 (46%) 2.4 (10%) 3.1 (13%) 4.1 (17%) 3.7 (15%) 24.5 (100%) 2.5 (42%) 1.8 (30%) 1.5 (26%) 0.1 (2%) 0.01 (0%) 6 (100%) 13.6 4.2 4.6 3.7 30.3 45% 14% 15% 12% 100% Note:importof used vehicles include onlylegal vehicles for definitive use Source: INA with information provided by AMIA, ANPACT and SAT

Strengthen the domestic market as well as the export market
Objectives Strengthen the domestic market as well as the export market • Renewal of vehicles • Investment attraction • Free Trade Agreements Developing Innovation and Technology • Systems and Components • Vehicles Be a Global Manufacturing Center • Geographic Location • Automotive Manufacturing Experience • Real competitiveness • Supplier Development

Mission of the Association
Development and Competitiveness Synergy and Profitability Representativeness INDUSTRIANACIONAL DEAUTOPARTES, A.C.

Vision of the Association
Strategic Well Known Vision Alliances Competitiveness

Relationships Academy House of Government Industry Representatives
• National • International House of Government • Federal • Local Industry Representatives • Senators • Deputies • OEM´S Autoparts Clústers Others NATIONAL AUTOMOTIVE PARTS MANUFACTURERS ASSOCIATION IN MEXICO

Special Events

E- mail: ina@infoina.com
Thank you!! E- mail: Phone: (+52 55) Comptroller: Ext. 106 Economic Studies: Ext.120 Foreign Trade and Norms: Ext.124 Special Events and Member Support: Ext.118 NATIONAL AUTOMOTIVE PARTS MANUFACTURERS ASSOCIATION IN MEXICO 38

Manufacturing in Mexico Conference
Near-Shoring - Maquiladoras - Site Selection Las Vegas, Nevada May 19-20, 2011 Bellagio

Manufacturing in Mexico Conference

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