• Wednesday, November 23rd, 2011

By Daniel
Tue, 2011-11-22

Mexico’s economy is host to one of the fastest growing electronics industries in the world, in terms of export potential and employment generation. Currently, Mexico is the second largest supplier of electronics products to the U.S. market, which is made up of audio and video, telecommunications, computer equipment and its parts.  In 2010, for instance, the sector exported 71.4 billion USD, 20 percent more than the previous year.

Mexico is receiving increasingly large amounts of FDI, while creating it’s own ‘Silicon Valley’; between 2000 and 2010, foreign direct investment in the electronics sector registered 20.55 billion USD, invested in the production of computer equipment and the fabrication of spare parts for communication devices.

Two important factors explain the boom in the development of Mexico’s electric and electronics industries where over 730 manufacturing plants have set up shop.  According to Alix Partner [3]’s Outsourcing- Manufacturing Cost Index 2010 and to KPMG [4]’s Competitive Alternatives 2010 reports, Mexico is the country with the lowest component manufacturing costs in the industry, with an 18.2 percent savings compared to other industrial nations such as Canada, the Netherlands, the UK, France, Germany and Japan. In addition, the skilled labor workforce is growing at a tremendous pace: each year, 114,000 students of engineering and technology-related fields graduate from Mexican universities.

The electronics industry is located primarily in the northern region of Mexico, in the states of Baja California, Chihuahua and Tamaulipas [5], where 80 percent of the world’s largest manufacturing service suppliers operate, including firms such as Flextronics [6], Jabil Circuit [7], Celestica [8] and Sanmina SCI [9]. Additionally, 61 percent of the audio and video electronics industries are located in Baja California, according to the Ministry of Economy.

Well-known multinational companies such as Sony, Samsung, JVC and Pioneer have established themselves in the Tijuana and Mexicali cluster. Currently the home to flat screen TV manufacturing, production in these areas is booming with the sale of flat screen TVs representing around 25 percent of Mexican electronic industry annual exports. This sector is currently generating the highest manufacturing output in Mexico. Furthermore, Mexico was ranked the largest exporter of flat screen TVs in the world in 2009, above countries like China, Germany and the U.S.

In this prosperous environment, it comes to no surprise that the U.S. has continuously been the most important market for Mexico. Over the past decade, the industry has made significant progress and its products now include everything from systems that can be used for brain-scanning as well as 3D animation, or for financial system planning and multinational corporations’ strategic work, increasing the attractive of doing business in Mexico to American and international companies around the globe. Unbeknownst to many, manufacturing in Mexico also stands out in the domestic electric appliances [10] industry. This sector has played a large role in the electronics industry, whose 2009 exports represented an astounding 30 percent of Mexican non-petroleum exports. At the forefront of production techniques and quality, in 2010 this sector grew 11.37 percent while generating 35,000 direct and 110,000 indirect jobs.

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