(Bloomberg) Mexico's economy seemed to have started a slacker 2022. But states that host a large number of factories along the US border are thriving, and the country's exports exceeded $80 billion in the first two months of the year.
Thanks to strong demand from the US and a revival of the automotive sector, investors are starting to arrive and banks are preparing to finance new projects. Exports of non-oil goods grew by almost 27% in February compared to a year earlier. If you're interested in cars, toys, or medical supplies, there's probably a company ready to ship from the busiest border in the world.
Mattel, the manufacturer of Barbie dolls and Hot Wheels toy cars, announced in mid-March plans for Mexico to house its largest plant in the world, a US$47 million consolidation and expansion project that includes a facility of more than 18,000 square meters with nearly 3,500 workers.
The five Mexican states responsible for most exports are located along the border. The Monterrey-based Grupo Financiero BASE, which provides half of its loans in the Texas-bordered state of Nuevo León, whose customers range from orange producers to affordable mobile phone manufacturers, expects exports to grow another 6% by 2022.
“It's a year of great opportunities,” said Julio Escandón, executive director of BASE, in a recent interview. “Due to the pandemic and perhaps now because of the situation in Ukraine, the supply chain coming from Asia is moving to Mexico.”
There are a large number of companies that contribute secondary projects, such as manufacturers of covers for hot tubs or car seats. Cars were scarce in part due to a lack of chips that drove up prices, but in February exports increased by 32% compared to a year earlier, suggesting that some of the worst problems of missing parts have been resolved.
Battery manufacturer Contemporary Amperex Technology is evaluating a plant in Mexico to supply Tesla, although the deal is not yet closed. A series of votes at automobile production plants where new union representatives were elected also suggest that working conditions could become fairer, under pressure from the US to abide by the regulations of the trade agreement.
The rest of the country has been weaker in its recovery. According to a Bloomberg survey, an expansion of 2% is expected by 2022, but Escandon's projections for the northern states are more optimistic.
He said that demand from the United States continues to grow. There is an expansion of plants, but existing wineries are not enough for that level of growth, he said.
Original Note:
Mexico's Border Bonanza Reflects Shifts From China: Supply Lines
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