Mexican economy growing stronger
The Mexican economy has begun to grow stronger, thanks to an increase in quality factories and investments from large corporations such as General Motors. Mexico is frequently competing with other countries when it comes to business, and the country looks to make gains on one of its rivals. Mexico has concentrated efforts in expanding its factory production in order to compete with traditional economic powers such as China, and the economy is getting help from companies like GM. The auto giant has recently made plans to invest in Mexican operations, moving critical manufacturing duties into the country. The boost in the Mexican economy could have an affect on many people who send money to relatives in the country, and the surge could create jobs and possibly bolster currency.
A recent report by the Boston Consulting Group expects Mexico's manufacturing advantage over China to continue to grow. Mexican workers typically produce more goods per hour than the Chinese in similar positions, according to the report. The ratio of quality work to the lowest price is better in Mexico than China, and it speaks to the dedication and work ethic in the country. The production is helping to stabilize the economy, and families who send money to loved ones can rest easier knowing the impending financial strength in Mexico.
The BCG report predicts that Mexican factories will produce more than U.S. $60 billion in goods per year. Most of those products are exported to other countries, including the U.S.
"We know there's a lot of work leaving China for Mexico, because it's cheaper," said Harold Sirkin, a BCG senior partner. "Products made in Mexico contain four times as many U.S. made parts, on average, as those made in China."
The relationship to the United States is a positive one for both countries, and many of Mexican exports head toward the U.S. The free trade agreements employed by Mexico have raised the global appeal of importing and exporting with the country, according to the BCG report.
Sirkin added that many companies, including those in China, are looking to expand their factories into Mexico. Several industries are gaining particularly well within the country, such as electronics, appliances, machinery, and automobiles.
GM expanding into Mexico
One company attracted to the affordability and quality in Mexico is General Motors. According to Reuters, GM has recently detailed a plan to invest U.S. $691 million into its factory operations in the country. Specifically, the company wants to add an engine factory in Toluca and a new factory in Silao, and also perform upgrades to the current factory in San Luis Potosi. Most of these locations would focus on transmissions and next generation technologies built by GM.
The attraction GM has with Mexico has to do with the quality of labor, and the affordability of the work force. Manufacturing in the country is more cost-effective than in other parts of the world, and the location helps – being close to the U.S. reduces the costs normally associated with importing and exporting. According to Reuters, many automakers are interested in expanding to Mexico, and some analysts feel that the Mexican economy might become Latin America's biggest, eventually overtaking Brazil.
The current GM facilities in Mexico have 15,000 employees, and that number is expected to grow significantly with the addition of several new locations. This will bolster the economy, and help improve finances for both Mexico and the U.S.
"The automotive sector is today one of the pillars of the national economy, representing more than 20 percent of manufacturing GDP and continues to be, for many reasons, a fundamental industry in attracting investments to productive sectors of the economy," said Ernesto Hernandez, president of GM Mexico.
Overall, the Mexican economy is trending positively, and many people who are financially invested in the country can take comfort in that.