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The Foundry Industry in Mexico

September 1, 2016
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Why this is important to Wisconsin businesses: Mexico is one of the world’s leading markets for metal production, much of it for use in the aerospace, automotive and home appliance industries.

Mexico currently ranks sixth in the world in terms of the number of smelters installed in the country and ranks 11th for the production of metals, with 2.5 million metric tons—behind China, the U.S., India, Japan, Germany, Russia, Brazil and Korea. For the Mexican foundry industry, the next few years represent a great challenge but also a chance to become one of the most dynamic and competitive market players globally, due to recent changes in Mexico’s economy.

The foundry sector comprises more than 1,500 companies, of which 90 percent are small and midsize companies that generate more than $4 billion from the sale of metals such as steel, iron, aluminum and copper, among others.

The smelting industry manufactures more than 1.5 million tons annually, of which 818,000 is iron, 633,000 is aluminum and 72,000 is steel, with 70 percent of production for the domestic market and the remaining 30 percent for export.

The Mexican foundry industry comprises: the automotive industry (78%), agricultural machinery (8.3%); general industry (3.9%), valves and connections (1.8%), machinery (3%), and other sectors (5%). More than two-thirds of the industry is concentrated in eight of Mexico’s 32 states: Mexico, Jalisco, Mexico City, Nuevo Leon, Guanajuato, Coahuila, Chihuahua and Puebla.

The biggest foundry in Mexico is Acero Mittal, a foreign firm that is accounts for 24 percent of the total production, followed by Altos Hornos de Mexico, Ternium de Mexico, DeAcero and Tamsa—together, 61 percent of total production. That is, just five companies generate 85 percent of domestic production.

According to statistics from Mexico’s Ministry of Economy, the automotive industry contributes 3.5 percent of GDP, 20.3 percent of manufacturing GDP, and 28.4 percent of manufacturing exports. The Mexican Association of the Automotive Industry estimates 2016 production of light vehicles at 3 million units.

Mexico’s exports of manufactured metal products have grown steadily as a share of total exports. Two-thirds of this growth has come from the automotive and home appliance industries. (The remaining one-third comes from industries such as metallic structures, fired and unfired pressure vessels and containers, agricultural equipment, office furniture and equipment, electrical transmission and control equipment and material handling equipment, among others.) The purchase of machine tools and metalworking equipment by large household appliance and automotive manufacturers is the most important sub-market. The automotive and home appliance industries represent the largest and fastest-growing manufacturing sectors in Mexico. These industries exhibit geographical diversification that promotes regional development.  There are three major clusters, with a total of more than 530 automotive and home appliance-related firms.

Facts and figures on Mexico’s strategic sectors:

  1. Exports from Mexico’s aerospace industry have increased by 140 percent over the past five years. Mexico is the sixth-largest exporter of aerospace products to the European Union and the ninth-largest to the U.S.
  2. Mexico is the world’s sixth-largest exporter of tools and appliances used for medical, surgical, dental and veterinary needs.
  3. Mexico is the world’s second-largest exporter of televisions.
  4. Mexico is the world’s top producer of organic coffee.
  5. Mexico is the world’s third-largest producer of silver, and contributes 16 percent of world gold production.
  6. For two years in a row, Mexico has been ranked as the best country for retirement (from a total of 29 countries on the list).

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