The Manufacturing Industry Will Grow in The New Reality

KPMG has reported that the Mexican manufacturing industry has made progress and sustained itself in the wake of the COVID-19 pandemic. It also stated that this sector has demonstrated great resistance to the various crises in the market and economy of those countries to which it provides locally manufactured products.

“As for foreign direct investment, even though it stopped because of the pandemic, it is expected to continue growing and reach the levels of recent years soon,” the firm states. “It is essential to remember that in the face of the pandemic many companies had to stop their operations partially or totally, temporarily halting new projects. However, once manufacturing activities resumed, the flow of foreign investment in current and new operations in the country continued.”

"The industry has shown great resistance to the health crisis, as it not only managed to retain a large number of jobs, but continued to grow,” KPMG adds. “It is expected that the number of direct jobs will soon reach and surpass the number that existed before.”

Otro tema preocupante para la industria fue la situación del tratado comercial de América del Norte, detalla el documento, en especial las dudas sobre su aprobación y los términos en los que se daría.

One worrying issue for the industry was the unknown situation of the North American trade agreement: the document details, the doubts about its approval and the terms in which it would be given.

“Fortunately, in mid-2020 it was renegotiated,” the firm continues. “Although the terms and conditions have changed –  especially in terms of regional content rules and compensation to the labor employed in production processes – the continuation of this trade agreement is good news. Mexico will continue to benefit greatly because it is better positioned to attract manufacturing operations and support services in the short and medium term.”

"While the most important growth could be in investments from the T-MEC, we will also see important investments from countries in Asia and Europe that seek to establish themselves in Mexico in order to enjoy the various trade agreements in force, the competitive value of its labor and the productivity that has characterized these industries,” the firm says.

KPMG states that, by 2021, Mexico’s manufacturing industry will show significant growth in sectors such as automotive, aerospace, medical and electronic products, areas in which the country has stood out for attracting efficient and competitive manufacturing operations.

In terms of innovation, KPMG says that companies are beginning to make inroads into various emerging technologies that enable them to remain at the forefront of each of their sectors. Data analysis, the use of the cloud, the Internet of Things, robotic process automation and artificial intelligence stand out as examples.

“The only negative aspect observed in the industry over the last few years is the lack of federal, state and municipal incentives to attract investment,” the firm reports. “It is often not enough to have good infrastructure in place and staff available and trained; incentives are also needed to make operations more efficient. It is imperative that governments at all three levels be more competitive in attracting new investments and recognizing that these always bring improvements in living conditions, employment and foreign exchange generation, social and economic development and knowledge and technology transfer.”