Presentacin de PowerPoint

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Mexico as a strategic manufacturing platform
Automotive, Electronic and Aeronautic
Industries NamTech Summit Los Cabos, June
25th 2007
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The making of the right business environment in
Mexico
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Mexico offers today a very attractive business
environment.

• Lowest ever country risk levels
• Investment grade Economy
• Low inflation rates
• Healthy public finances disciplined Fiscal and
  monetary policies
• Highest level of International Reserves
• We have preferential market access pursuant to
  our network of the Free Trade Agreements that we
  have negotiated throughout the world so far with
  44 countries along with a committed discipline on
  government economic policies

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In recent years, inflation reached its lowest
level and is expected to remain within the
Central Banks target band of 3 - 4
Annual Inflation (1988-2007) ()
51.97
8.96
4.21
As of March 15, 2007. Source Bank of Mexico
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Current Economic Indicators
Country Risk EMBI JP Morgan
74 May ,07
Interest RatesCETES 28 days
7.04
Source BANXICO.

• March 2007

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Mexicos Total Exports (billion Dolars) by far
the leading exporter in Latin America and the
third largest exporter to the US
Billon Dollars
250.3
311
60.9
Source BANXICO
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Current Economic Indicators
Flows of Foreign Direct Investment (FDI) into
Mexico second largest in the world amongst
developing countries
Source BANXICO
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The Automotive Industry in Mexico
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The Automotive Industry in Mexico
16.7 of the GDP Of the manufacturing sector
18 of total employment within the manufacturing
sector (726,000 employees)
21.4 of total exports of the manufacturing sector
Preliminary to June 2006
Source Ministry of Economy, Federal Government
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Automotive final assembly location map
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Auto parts location map
DANA,DELPHI,GOOD YEAR,LEAR CORP,VISTEON,JCI
ALIED SIGNAL, KATA,VELCRO,YAZAKI,TRW
ALCOA,FUJIKURA,FOAMEX CORP,JOHNSON
CONROLSMAGNA,LEAR SEATING,DELPHI
DELPHI,ABS,ALCOA FUJIKURA,AISIN
SEIKI,NEMAK,VISTEON-CARPLASTIC,YAZAKI
BOSCH, HONEYWELL, AUTOLIV, MORGAN, POLIMER SEALS
SHULMAN, ALFRED ENGELMAN, ARVIN MERITOR,DELCO
REMY,DANA, CONTITEC,THYSSENKRUPP
BAJA CALIFORNIA NORTE
SONORA
CHIHUAHUA
DELCO,UNIROYAL,ALPINE,KIMKO,
COAHUILA
DELPHI,MEXICORVOSWALBRO,ENGINE MNGMT
BAJA CALIFORNIA SUR
ABS,BASF,BOSCH,EATON,DANA,LEAR
CORP,FPA,MAGNA,PARKER,PERKINS,ZF
NUEVO LEON
BOSCH, CALSONIC,EATON, GONHER,MICHELIN, VITRO
DURANGO
SINALOA
ELECTRIC DGO,SUMITOMO,YAZAKI
TAMPS.
ZACATECAS
ARCOMEX,CONDUMEX,SPICER, DELPHI, JCI
CITSA PPG,BOMBARDIER
LINAMAR (MOTORES)
S.L.P.
AGS.
BUSSCAR, BOSCH, GESTAMP, JATCO, KS MEXICANA,
KANTUS, MORESTANA
NAYARIT
AP TECHNOGLASS, ARALMEX, ATR,CARBURAT,HELLA/HEM
EX,JABIL CIRCUIT,KS WIRE HARNESS,TAKATA,
YAMAVER
GTO.
YUCATAN
QRO.
HIDALGO
SIEMENS,AVON RUBBER
JALISCO
QUINTANA ROO
MEX.
TLAX.
COLIMA
MICHOACAN
CAMPECHE
ARBOMEX, CELAY, ENERTEC MX, MORESA, TENNECO
AUTOMOTIVE, VELCON, KASAI, LEAR CORP,
MOR.
VERACRUZ
PUEBLA
TABASCO
AIR SISTEM,AXA YAZAKI
GUERRERO
BERU, SAINT GOBAIN SEKURIT
OAXACA
BENTELER, JCI, LUK, MAGNA GRP,SKF,
SIEMENS,TRW, THYESSENKRUPP
CHIAPAS
AXA YAZAKI
e) Estimated Source AMIA
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Automotive industry in Mexico 10th place in
production of automobiles in the world
Automotive production Millions of units and anual
growth 2003-2006
?
Development Policy to provide incentives to the
Automotive Sector
Fuente AMIA
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Automotive industry in Mexico
Exports of Vehicles by destination 2005 - 2006
Units
? 51.3
2005
? 29.5
81,251
2006
Europa
122,898
? 83.0
29,574
Sud América
54,112
? 26.8
1064,731
Norte América
1349,768
Fuente AMIA.
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Automotive IndustryCompanies with
presence in Mexico 1995
vs 2006

• Accura
• Audi
• BMW
• DaimlerChrysler
• Ford Motor Co.
• General Motors
• Honda
• Jaguar
• Land Rover

• Lincoln
• Mercedes Benz
• Mini
• Mitsubishi
• Nissan
• Peugeot
• Porsche
• Renault
• Seat
• Toyota
• Volkswagen
• Volvo

• Chrysler
• Ford Motor Company
• General Motors
• Honda
• Nissan
• Volkswagen de México

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Auto parts industry in Mexico
Mexicos Auto-Parts Production Billion
Dollars
2003-2006e
Development Policy to provide incentives to the
Automotive Industry
USA Motor Vehicle Parts Imports
First Semester 05-06
Billion Dollars
e) Estimated Source INA Source Trade Stats
Express. National Trade Data.
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Auto Parts Industry in Mexico
Mexico is the first supplier of auto parts into
the US market
USA Motor Vehicle Parts Imports share
1990-2006

First Semester 2006 Source Trade Stats
Express. National Trade Data.
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Immediate challenges and opportunities in the
Automotive sector in Mexico
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Challenge and Opportunity work together with
the industry to attract key suppliers of this
sector

• As Mexicos manufacturing experience scale up in
  the value chain, demand for parts and components
  is expected to continue to grow.
• Close to 20 billion dollars of parts and
  components are supplied to the industry from
  abroad (tier 1,2 and 3)!
• This translates into opportunities for new
  investments in Mexico within the supply chain of
  the automotive industry

Direction of Electric and Electronics Industry
March, 2007
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The Electronic Industry in Mexico
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The Electronic Industry in Mexico
8.0 of total employment within the
manufacturing sector (close to 320,000 people
employed)
More than 700 Manufacturing companies
26.8 of total exports of the manufacturing
sector (56.4 BD in 2006)
Preliminary to June 2006
Source Ministry of Economy, Federal Government
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Geographic Location of Electronics Industry

• ? Audio video
• ? Home Appliance
• ? Computer
• ? Telecommmunications
• ? Automotive
• ? CEM
• ? Foto impresion
• ? Others

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Direction of Electric and Electronics Industry
March, 2007
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Examples of electronic products assembled in
Mexico
Telecommunications
Computer equipment

• PCs
• Storage Unit
• CPUs
• Laptops
• Desktops
• Servers
• Multifunction Printers
• LCD Monitors
• Scanners

Parts Components

• Microwave Receptions Apparatus
• Switching Equipment
• Telephone Sets
• Cellular Phones
• Radio Equipment
• Switching Transmission Equipment
• Modems

• Electronic Boards
• Power Sources
• Cathode Ray Tubes
• Tunners
• Fly Backs
• Digital Integrated Circuit
• Capacitors
• Connectors
• Cabinets
• Harnesses Wires

Audio Video

• Television Sets (LCD, PDP, DLP, LCOS, CRT)
• Set Top Boxes
• Home Theaters
• Chassises
• Multifunction Equipment

Home appliance products

• Side by Side refrigerators
• Front Load Washing Machines
• Digital Stoves
• Microwave Ovens
• Digital Fans
• Air Conditioners
• Waters Heaters
• Iron Machines

Commercial And Office Equipment

• Photocopy Machines
• Electronic Transmission
• Security Systems
• Electronic Switches
• Automatic Control Apparatus

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Direction of Electric and Electronics Industry
March, 2007
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Exports of Electronic, electric and home
appliances products Millions of dollars

• In 2006 exports of this sector experienced 20.4
  growth. Telecommunications and audio video were
  the most dynamic electronics segments in 2006
  (24.7 and 38.0).

56,398
46,289
46,856
39,032
21,187
Source Ministry of Economy. SICMEX.
Direction of Electric and Electronics Industry
March, 2007
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An example mobile phones exports

• Total value of cell phones exported almost
  tripled during last two years.
• Mexico exported 73 million cell phones in 2006.

Cellular phones Exports
(Million dollars)
(Thousand Units)
Source Ministry of Economy. DGIPAT.
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Direction of Electric and Electronics Industry
March, 2007
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TV Manufacturing in Mexico Adoption of new
technologies
Share
New Technology TVs Thousand Units
TVs with CRTs Thousand Units
Estimated
Direction of Electric and Electronics Industry
March, 2007
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Immediate challenges and opportunities in the
Electronic industry in Mexico
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Challenge take advantage of the opportunities
in other electronic-demanding sectors

• New opportunities for manufacturers of electronic
  components are taking place in industries which
  use high-complexity electronic components. These
  are among the most dynamic industries in México
• Automotive and auto parts
• Aerospace
• Home appliance
• Medical equipment
• Electronics industry in Mexico is specializing in
  high value added products. Logistics advantages
  and well-trained engineers and technicians create
  conditions to manufacture low-volume high-mix
  products and components with optimal cost
  effectiveness, best quality and shortest time
  to market.

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Direction of Electric and Electronics Industry
March, 2007
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Challenge work together with the industry to
attract key suppliers of this sector

• As Mexicos manufacturing experience scale up in
  the value chain, demand for parts and components
  is expected to continue to grow. In 2006 total
  parts and components market value in Mexico
  reached more than 17 billion dollars translating
  into opportunities for new investments in Mexico
  within the supply chain of the electronic
  industry

Imports of parts components (Million dollars)
Direction of Electric and Electronics Industry
March, 2007
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IT Software production
Mexican ITSW Industry
2003-2006e
MDD Million Dollars Source Ministry of Economy
Professional services is a growing industry in
Mexico. World class companies are setting BPO in
Mexicowe are ready to support these activities!
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Challenge the transition towards knowledge
based manufacturing

• Mexico is prepared to scale up in the Electronics
  Value Chain LCD panels, plasma panels, float
  glass for flat tv, semiconductor waffers, testing
  and assembly projects are currently being
  discussed
• The United States needs a partner within the
  nothamerican region to further develop technology
  close to its major clients engineers and close to
  its major Engineering centers Mexico poses
  itself as the viable optionMore than 130,000
  engineers graduate from Mexican Universities on a
  yearly basis
• The Government is quite committed with the
  necessary economic instruments to foster this
  transition
• We have been doing our homework during this past
  decade!

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The Aeronautical industry in Mexico
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We have a good case for the Aeronautical
industry in Mexico

• Mexicos experience and success in the
  development of the automotive and
  electrical-electronic sectors guarantee the
  success in the development of its aeronautical
  industry.
• The Aeronautical sector in Mexico has more than
  16,500 workers in more than 124 companies, in the
  manufacturing, engineering and MRO areas.
• Today, Mexican exports represent more than
  500 Million US dollars but there is high
  potential for much more.

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Aerospace Industry Location in Mexico
And now Jabil!
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Examples of Current Mexican Capabilities
AS 9000
Manufacturing
NADCAP APPROVED!
Engineering
and very soon MRO in Landing gears And CFM 56!
MRO Services
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Mexico is the rational answer to meet your
clients demands

• Mexico offers opportunities for the aerospace
  business to improve the cost profile for their
  clients
• Migrate and/or develop local suppliers
• Set up own operations in Mexico
• BUT.there are also great opportunities for
  skilled shops and good talented suppliers in
  other fast growing industries in Mexico like the
  automotive industry

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.the Vision
Three staged approach to the development of the
AeronauticalIndustryin Mexico 1.-
Consolidate current capabilities2.- Manufacture
more complex Parts and Components and Structures
and further develop engineering services 3.-
Fully assembly a plane in Mexico within the next
4 to 6 years
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Pumping out engineers and technicians
We are committed to bringing new areas of talent
development to increase the skill pool available
for aerospace companies both at technical and
engineering levels. Mexican universities and
technical schools are providing the finest
technical operators and engineers (aeronautical,
electrical, mechanical, software and electronic
capabilities) to meet the aerospace industry
demands in Mexico.
120,00 to 140,000 new engineers a year with
quite a number of Universities -at technical and
higher level- and RD centers partnering with the
industry
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And finally, Mexico enters into the
path of fully developing its capabilities with
good success stories Bombardier Aerospace
started their operations in Mexico manufacturing
fuselages for the Challenger 850 Jan 2007- and
harnesses for all their models and has moved
towards manufacturing tails and stabilizers for
the Q400 turboprop Honeywell has landed a
plant to manufacture engine components in
Chihuahua and has initiated a Systems Integration
Lab and Test -300 engineers and 100 trained
technicians- in MexicaliMD has landed a plant
in Mexico and started to manufacture fuselages
and harnesses for helicopters in Monterrey first
fuselage to be shipped on Dec 2006-. SAFRAN
Labinal engeneering and technology division is
setting up a business unit with 100 design
engineers in Chihuahua and Messier Services is
setting up a new facility to MRO landing gears in
Querétaro
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Mexico inherent advantages a CULTURAL convinience

• Convenient geographic and cultural proximity
• Same time zone / reduced airfare
• Lower communication costs
• Large pool of young and trainable local talent
  -AS9000, NADCAP..etc-
• Manufacturing, engineering and MRO operations
  competitive benefits
• Unbeatable Total Cost per Engagement
• Lower operation and labor costs.
• Protection of Intellectual Property Rights.
• FAA certification of the operations.and BASA
  well underway.

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Incentives for Investing in Mexico
Source Ministry of the Economy of Mexico.
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Verónica Orendain Unit for Investment
Promotion Ministry of the Economy in
Mexico vorendai_at_economia.gob.mx (52-55) 57 29 91
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