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Light manufacturing plays a growing role in Mexico

June 1, 2022
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Why this is important to Wisconsin businesses: Wisconsin companies providing services or equipment to light industry operations may find a market for their products in Mexico.

Light manufacturing plays a major role in Mexico’s economy, accounting for 13.9% of the gross domestic product, according to a study by World Resources Institute Mexico and HSBC Bank.

The sector provides 80% of all manufacturing production in Mexico, 91% of the country’s manufacturing jobs and 65% of its exports, the study says. In addition, 39% of foreign direct investment in Mexico goes to light manufacturing operations. In 2019 alone, that amounted to $13.7 billion.

In general, light manufacturing uses raw materials and partially finished products to make high-value items for consumers or components for other manufacturers. In Mexico, light manufacturing activities are focused primarily on three industries: transportation, food and computer equipment, according to the study, issued in late 2020.

Typically, light industry factories are located near major metropolitan areas to allow for quick distribution through consumer channels, and they have become an important part of Mexico’s regional economies, according to a report by Prince Manufacturing.

The cost of investing in light manufacturing is usually low, the Prince report says. However, the functionality, presentation and physical characteristics of the products are important in order to attract consumer purchases.

Since production requires fewer raw materials and less space to operate, energy use and pollution are also lower in light manufacturing.

But greenhouse gas emissions from light manufacturing increased 3% a year between 2010 and 2015, and the industry accounted for 7% of total emissions, according to the study by World Resources Institute and HSBC. The analysis calls for light manufacturing to take steps toward decarbonization, saying it will be the second-largest contributor to Mexico’s greenhouse gas pollution by 2050—representing 20% of total emissions—if no action is taken.

Wisconsin companies providing supplies or technology to the light industry sector may find opportunities in Mexico.

 

 

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