A ROBUST AND VARIED TRADE RELATIONSHIP
Mexico is the second-largest economy in Latin America and the 16th-largest in the world; projections call for strong GDP growth of 5% for Mexico in 2021. A large, diversified economy with deep trade and investment relations with the U.S., it is also the second-largest export market for U.S.-produced goods ($290 billion in 2021), as well as for Wisconsin exports ($3.1 billion in 2021, almost back to the high-water mark of $3.3 billion in 2019 before the pandemic began). Although the U.S. imports more from Mexico ($385 billion in 2021), many products assembled in Mexico are made from U.S. parts, even imports from Mexico often benefit U.S. companies that originally produced the component parts. After rapid growth of 4.8% in 2021, Mexico’s economy is projected to continue with solid growth of around 2% for this year and next year, and the U.S.-Mexico-Canada (USMCA) trade agreement enacted in 2020 has opened new opportunities in Mexico for U.S. companies.
Wisconsin exports to Mexico have increased dramatically over the last decade, and they now account for more than one-tenth of total Wisconsin exports. Export growth for the current year is also looking strong, with Wisconsin’s exports to Mexico increasing by 16% for the first six months of 2022 compared to the same period the year before. Within Wisconsin’s exports to Mexico, the industrial machinery category is growing even faster, with exports in this category up 21% for the first half of 2022 over the first half of 2021. This is the top category of Wisconsin exports to Mexico, with other leading categories including electrical machinery, vehicles and plastics. Notably, Wisconsin’s pharmaceutical product exports to Mexico saw astronomical growth in 2021, increasing by more than 2,000%. Wisconsin’s imports from Mexico are also growing rapidly (up 13% in the first half of 2022 relative to prior year figures), indicating robust trade growth in both directions. Although Wisconsin still imports more from Mexico than it exports to Mexico, for 2021 the import and export values were nearly equal.
In February 2023, the Wisconsin Economic Development Corporation (WEDC) will be leading a Global Trade Venture to Mexico. Wisconsin companies, whether new to exporting or looking to expand their exports into Mexico, are invited to participate in this program, which will travel to Mexico City, the largest city in Mexico, and to Monterrey, which is Mexico’s third-largest city by population and second-largest in terms of its contribution to GDP, and has a high concentration of manufacturing facilities aligned with Wisconsin’s key industry sectors.
In each city, participants will be scheduled for one-on-one meetings with potential partners in the market. These partners are chosen for each participating company based on the company’s needs, growth strategy and product or service offerings. Each participant in the Global Trade Venture will also receive a Mexico market assessment specific to his or her company, detailing considerations they should keep in mind when introducing their product or service into the market. WEDC has eyes and ears on the ground in Mexico, in the form of Wisconsin’s authorized trade representatives—thus making it easier for Wisconsin companies to find local partners they can trust, and taking some of the guesswork out of launching in a new market or growing exports within the market. With all your appointments arranged for you, you can focus on business rather than logistics and scheduling.
Mexico has established itself as a global leader in sectors such as automotive, aeronautics and electronics. The agro-industrial sector has taken advantage of technology to increase both imports and exports. The Lopez Obrador administration has moved forward with priorities including investing in health care, infrastructure and clean energy, as well as updating government procurement procedures in ways that make it easier for U.S. companies to participate. In addition, the United Nations ranks Mexico as the world’s sixth-best location for foreign direct investment.
Mexico City is one of the world’s largest cities, with 21 million people in the greater metropolitan area. A key economic driver for the country, the metropolitan area is home to many corporations’ worldwide or regional headquarters, and in particular is a hub for aerospace manufacturing. Wisconsin companies’ meetings in the area may take place in nearby cities, such as Puebla, Toluca, Queretaro and Guanajuato.
Monterrey, in the state of Nuevo Leon in northeastern Mexico, has a population of 4.5 million in the greater metropolitan area. Major industries include aerospace, automotive and home appliances. Northeastern Mexico is a major agricultural region, and is also the location of many maquiladora facilities of U.S. manufacturers. Gone are the days of Mexico’s factories using outdated technology—instead, many of today’s factories have cutting-edge “smart” technologies that make use of sensors and automation to maximize efficiency. Thus, Wisconsin original equipment manufacturers (OEMs), as well as companies that provide engineering services, may find opportunities to help Mexican factories adopt the latest technology.
This will be WEDC’s first in-person Global Trade Venture to Mexico since 2020. Although virtual trade ventures took place in 2021 and 2022, in-person connections are vital to doing business in Mexico because of the trust and personal connection that are established. Companies across many industries can find opportunities in Mexico’s diversified economy, but firms in the following sectors are especially encouraged to participate:
- Clean energy
- Building and construction
- Medical devices, bioscience, health technology
- Food and beverage processing
- Industrial automation
- Information and communications technology
- Packaging equipment
- Tools and dies
- Metal stamping
- Plastics and resins
- Quality control equipment and services
- Safety and security equipment and services
- Transportation infrastructure equipment and services