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NAI Mexico’s Quarterly Business Planning Meeting took place on July 1-3 in Tijuana, and brought together members from all NAI Mexico’s 12 national locations to continuously improve  advisory services for our global clients.

The event included conferences and workshops and industry experts and government officials who participated in the 2020 planning.

Mr. Carlos Higuera, new appointed president of the Tijuana EDC met with the team to present the strengths of the Cali Baja Region and the advantages it provides for foreign companies. An interactive dialogue followed to discuss political changes, the tariffs situation and best practices in business for Mexico—- to attract more foreign investment.

At the end of Wednesday’s session, the team reviewed Mexico case studies and then headed to the famous Sotano Suizo to debrief and celebrate the conclusion of another successful regional meeting.

The post NAI Mexico Summer Regional Meeting Event in Tijuana, Mexico appeared first on NAI Mexico.

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MEXICO CITY (Reuters) – Mexico on Wednesday became the first country to ratify the United States-Mexico-Canada Agreement (USMCA) agreed late last year to replace the North American Free Trade Agreement (NAFTA) at the behest of U.S. President Donald Trump.

By a vote of 114 in favor to 4 against, Mexico’s Senate backed the trade deal tortuously negotiated between 2017 and 2018 after Trump repeatedly threatened to withdraw from NAFTA if he could not get a better trade deal for the United States.

Mexican President Andres Manuel Lopez Obrador had said the deal would be ratified this week in the Senate, where his leftist National Regeneration Movement (MORENA) and its allies have a comfortable majority in the 128-member chamber.

There has been little parliamentary opposition in Mexico to trying to safeguard market access to United States, by far Mexico’s most important export market, and the deal received support from nearly all the opposition lawmakers who voted.

Mexico sends around 80% of its exports to the United States, and Trump has vowed to impose tariffs on all Mexican goods if Lopez Obrador does not reduce the flow of U.S.-bound illegal immigration from Central America.

Canada, which has also fought with Trump over trade, is pressing ahead to ratify the deal. The main question mark hanging over its ratification is in the United States, where Democratic lawmakers have threatened to block the process.

Earlier on Wednesday, U.S. Trade Representative Robert Lighthizer said he believed Democrats’ concerns on enforcing labor and environmental provisions in the USMCA can be sorted out quickly. He spoke just hours after Democratic leader Nancy Pelosi said she still has many concerns over USMCA.

Trump, who had excoriated the 25-year-old NAFTA as a “disaster” for U.S. workers, wants to claim a first major trade deal victory as the campaign for the 2020 presidential election begins. The Republican formally https://www.reuters.com/article/us-usa-election-trump/trump-launches-re-election-campaign-presents-himself-as-outsider-and-victim-idUSKCN1TJ10W opened his re-election campaign in Florida on Tuesday and two dozen Democrats are competing for the party’s nomination to run against Trump.

Trump, Canadian Prime Minister Justin Trudeau and Mexico’s previous president Enrique Pena Nieto signed the USMCA on Nov. 30, 2018 after months of often acrimonious talks stretching back to the American president’s first few days in office.

Article originally published by Miguel Angel Lopez on www.investing.com

The post Mexico Becomes First Country to Ratify USMCA appeared first on NAI Mexico.

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Many U.S. manufacturers with highly intensive processes are feeling a cost crunch, and Mexico could be the solution they’re looking for. 

Manufacturing industries of all kinds are moving part of their operations south of the border in order to reduce costs, receive more convenient shipping, and make travel to and from their facilities much easier than manufacturing in China.

Many companies are likely to benefit from this nearshoring opportunity, but there are a few industries that have seen recent surges, in addition to the top mainstays that rely heavily on nearshoring to Mexico as part of their business operations.

For decades, powerhouse industries including automotive, aerospace, information technology, medical device manufacturing, and electronics have maintained good trade relationships with Mexico as part of a cost-effective supply chain solution. Among these companies are global brands including Ford Motor Co., Honeywell, Toyota and Samsung to name a few. These industries are able to stay competitive by taking advantage of the convenient logistics, highly-skilled workforce, and more cost-friendly operations and labor Mexico has over China.  In more recent years, other industries have seen the advantages of nearshoring to Mexico as well. These include (but aren’t limited to):

  • Office furniture
  • Stamping and metal mechanics
  • Plastics (to some extent)
  • Wire/cable harnessing
  • Textiles (automotive and industrial applications)

Additionally, according to Inbound Logistics, one in every six U.S. jobs is now tied to manufacturing, thanks to the digital age of 3D printing, big data, and robotics. To meet growing consumer needs and sustain business operations, Mexico is becoming an increasingly popular option for any and all manufacturing industries that want to mitigate costs without compromising quality.

Despite the growing interest in trade-related positions in the U.S., nearshoring to Mexico means access to a skilled, experienced workforce at a lower labor rate. Research continues to show one of the greatest challenges for U.S. manufacturers is attracting skilled labor even as trade and technical school enrollment slowly sees a resurgence. HVAC degrees make up almost half of the enrollment for post-secondary education in these intense, labor-focused fields with electrical, welding, and auto body collision repair following. Many Mexico vocational schools are set up in conjunction with companies and the government to train in these industries. The result is a strategic operational solution that allows foreign companies a competitive edge at a more economical rate.

Nearshoring to Mexico in Today’s World

In today’s world, trade disputes continue between the U.S. and China, which is causing more manufacturers to consider building new factories and moving operations to Mexico. NAFTA has grown and flourished over the years to help the U.S., Mexico, and Canada thrive. Companies in the 1990s and ‘00s originally looked to China as a cheap labor force but faced intellectual theft, among other challenges, which led people to turn to Mexico and other countries for its supply chain needs. Mexico follows similar IP laws as the U.S. and Canada to protect against fraud and theft. Proximity-wise Mexico also makes more logistical sense than China due to more compatible time zones, lower travel costs, and how quickly products are shipped and received.  

When considering nearshoring to Mexico, manufacturing industries should look at the country as a whole. For example, Northern Mexico is popular due to its familiarity and proximity to the border, but there are areas farther out that are not as competitive nor as expensive. Additionally, foreign companies benefit from the high level of sophistication involved when using Mexico’s nearshore services. Mexican facilities maintain certifications, including ISO, as well as a highly-skilled workforce, which makes recruiting competitive. There has been a growing number of engineering and manufacturing graduates in Mexico, which means U.S. industries must be ready to provide ongoing training and invest in the people for long-term retention and production control.

Generally speaking, nearshoring is a regular practice among a growing number of manufacturing industries. It’s not only the mainstays of the global automotive companies or aerospace firms that are nearshoring to Mexico anymore. Industries like metal mechanics and woodworking are experiencing a labor crunch in the U.S. due to employees retiring from these industries and a new wave of employees not interested in factory work. As a result, they are turning their attention south of the border to meet operational needs.

Companies that choose to work with an experienced shelter provider in Mexico benefit in many ways from setting up operations, including minimized risk and a more cost-effective solution. In short, manufacturers want a low-cost solution that’s nearby, which has led to a surge of North American companies to consider Mexico as a viable solution.

Sergio Tagliapietra is currently President and CEO of IVEMSA. He has spent the last 30 years pioneering administrative service solutions in Mexico as the head and founder of IVEMSA. Today, working with governments in all parts of the continent, he is one of the country’s most respected business leaders in the field.

Article originally published on www.manufacturingglobal.com

The post Why More Manufacturing Industries Are Nearshoring to Mexico appeared first on NAI Mexico.

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German automaker BMW today officially opened its billion-dollar plant in San Luis Potosí.

Located in the state capital, the company’s first Mexican factory will employ 2,000 people and has the capacity to build 175,000 vehicles annually. It will initially produce the BMW 3 Series.

The company’s Latin America CEO told the newspaper El Financiero that more than 200 domestic suppliers will provide parts to the plant, explaining that some of them are small and medium-sized business and others are large international ones.

Alexander Wehr said 2019 will be a big year for BMW in Mexico, a country where it first began selling vehicles 25 years ago.

“For us, Mexico is the market leader [in Latin America], not just for its size but also its potential. Last year we sold more than 18,500 units, just BMW, which is growth above 18%,” he said.

The new assembly plant will supply cars to Mexico and other Latin American markets but most of the vehicles it produces in San Luis Potosí will be sold in the United States.

BMW board member Oliver Zipse said at today’s inauguration that the possibility of the United States imposing tariffs on all Mexican goods doesn’t represent a threat to the company’s operations in Mexico.

“We’re going to maintain our plan, at the moment we don’t see any reason to change it,” he said, adding that consumers in the United States, rather than BMW, will pay any new tariffs.

“Almost all countries have tariffs and we continue to sell cars,” Zipse said.

“The San Luis Potosí plant will significantly increase our regional production flexibility in America. From here we will supply the global market with the BMW 3 Series sedan.”

BMW first announced that it would build a new factory in the state five years ago and construction began in June 2016.

Plant manager Hermann Bohrer said that construction of the plant generated a total of 4,400 jobs.

Source: mexiconewsdaily & el financiero

The post Despite Tariffs BMW Opens its New Billion-dollar Plant in San Luis Potosí appeared first on NAI Mexico.

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Our Senior Manager for Asia/Pacific Projects Mr Al Chu was present at the Mexico Aerospace Fair 2019, a commercial activity in the civil, military, security and defense aeronautical fields. The purpose of FAMEX is to bring together the leaders of the mentionned sectors to promote trade and the growth of the national aerospace industry in the region.

During the fair Mr Chu met with the leaders of the aeronautical as well as members of the Mexican government such as:

– Andrés Manuel López Obrador, President of Mexico
– Luisa María Alcalde Luján, Secretary of Labor in Mexico
– General Luis Crescencio Sandoval González, Secretary of Defense
– General Rafael Lira Bensemann, Commander of the Aerial Base of Tabasco
– General Rodolfo Rodríguez Quezada, President of FAMEX
– Mr Chu and members of the Aerospace Clusters

Where Can We Help You Next?

The post NAI Mexico present at the Mexico Aerospace Fair 2019 appeared first on NAI Mexico.

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Over the past five years, retail investors and developers have added a new imprint to the familiar terrain of cheek-by-jowl, mom-and-pop stores across Mexico, building U.S.-style strip and destination malls with brand name tenants.

The trend is growing across Mexico. And, at the U.S.-Mexico border, the creation of a special border economic zone that will halve the VAT sales tax, as well as cut corporate taxes, and double the minimum wage is expected by some to spur even faster expansion.

“This city is seeing right now an explosion in mixed-use projects”

said Harold Hoekstra, the Tijuana-based director of mixed-use development at consulting firm NAI Mexico.

“You’ll see it across the country, too, say in Guadalajara, Monterrey, Juarez. Companies are seeing the potential to invest in these sectors,” he said.

The increase of retail projects, often combined with offices, hotels, and residences, is exactly the opposite of what is happening in the United States, where traditional customers have largely shunned malls for online shopping. According to various articles, the number of store closings in the United States was expected to be more than 10,000 in 2018. Malls are either closing completely or have become collections of empty stores.

Horton Plaza, a San Diego project that opened in 1985 and was credited with revitalizing the city’s downtown, has become something of an eyesore. It recently was sold to Los Angeles commercial real estate company Stockade Capital, which plans to turn the shopping center into a mix of retail and office space that could appeal to Silicon Valley technology companies.

In Mexico, there has been 5% annual growth in the gross leasable area of commercial centers and an increase of 7.5% in retail sales.

“We’re still 10 to 20 years away from online operations decimating mall store operations” Hoekstra said.

“Mexicans like to go shopping. The malls are very strong. The numbers are good.”

Most of the mall developers are Mexican or South American, he said.

Plaza Sendero has built and operates 19 malls across Mexico—in addition to Tijuana and Mexicali, in Culiacan, Los Mochis and Ciudad Obregon, among other cities.

Mexican company Planigrupo, with 43 years of experience, develops, designs, builds, markets, and administers shopping centers throughout Mexico.

In Tijuana, some of the projects are in a revitalizing city center or in far-reaching areas of the city where spreading populations have become concentrated.

The Alameda Otay Town Center, located near the airport and the Otay Mesa border crossing has 163 shops, six residential towers, two hotels, and a medical center with 90 offices. Green areas are pet friendly. The mall also offers cultural events, Wi-Fi, parking and valet parking, as well as an outdoor auditorium.

Closer to downtown, the two-story Paseo Chapultepec, in addition to shops, restaurants and beer pubs, includes walkways, terraces and galleries.

Tenants at the malls include well-known brand names such as Best Buy, Costco, Applebee’s and Home Depot. Apple has stores in malls in Tijuana, Mexico City, Guadalajara and Monterrey.

South American brands also are becoming important mall tenants. Sodimac, a Chilean home improvement warehouse chain, is popping up. And Argentinian, Colombian and Peruvian stores are gaining a presence in Mexico, Hoekstra said.

Even though Mexican upscale department stores such as Liverpool and Palacio del Hierro are expanding to malls in the interior, he said, they are reluctant to establish operations in the border region because of the competition of their higher-end merchandise with U.S. retailers.

Many expect President Andres Manuel Lopez Obrador’s creation of incentives for the border economic zone to spur even further development.

“It’s a nice windfall for retailers; it will provide an incentive to the area”

said Jose “Pepe” Larroque, a Baker & McKenzie partner who chairs the law firm’s global real estate practice group.

Still, he said, the special program is scheduled to last for only two years and then be reevaluated, “so it’s hard to do long-term planning.”

Many details of the new zone are still unknown, but companies must register to gain the economic perks, companies or their branches must already be established in the zone and new companies are supposed to have new equipment in the zone for the first time.

“It might generate more investment in the border zone, but it’s still unclear,” Larroque said.

For U.S. landlords, investors and operators of retail centers, shopping malls, lifestyle centers and similar projects investing in Mexico it’s different than in the United States, said NAI’s Hoekstra.

One criterion is the same on both sides of the border, however: “location, location, location.”

But the capitalization rate (or cap rate), the most popular measure through which real estate investments are assessed for their profitability and return potential, is not the same.

“The retail sector in the United States averages a 7% cap rate,” Hoekstra said. “On the Mexican side, you have to look at 9% or higher … The interesting thing is that those deals are there.”

When acquiring a retail property in Mexico, he said, investors should want to know who the tenants are—especially the anchor tenants, what the lease terms are and their reliability to remain as tenants and keep paying rent.

With many Mexican shopping centers including brands seen in the United States and Canada, investors could start with clients they have north of the border. “Walmart has been a driver,” Hoekstra said.

Lastly, he said, is there a market?

For a landlord, there are retail centers for sale in appropriate locations with the right set of criteria and there is land for sale to develop malls or mixed-used projects, he said.

For retailers wanting to make the decision to increase their presence or undertake a project in Mexico, he added, the Mexican middle class is growing and has increased purchasing power and infrastructure has improved.

At the border, noted Larroque, the special economic zone could move more wealth to the region. With the doubling of the minimum wage, he said,

“More people will be making more money and will have cash to spend—on housing, retail, trade and commerce.”

Plus, it is more difficult to cross the border to shop in the United States, he noted.

“What newcomers are going to be investing?” he asked. “That’s where the questions lie.”

This article was originally written by Diane Linquist and published in the February 2019 edition of the Border Now

The post Retail Sector is Expanding, Changing the Look of Mexico appeared first on NAI Mexico.

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NAI Mexico Announces: Roberto Carrillo accepted into the Society of Industrial and Office Realtors (SIOR) on March 1, 2019.

Mr. Carrillo, Senior Vice President at NAI Mexico, is a 17-year veteran specializing in industrial corporate advisory and capital markets in Northwest Mexico. He has managed many of the largest industrial leases and portfolio acquisitions across the region.

Structuring more than 20 million SF for global clients, he has negotiated with the largest national funds and developers. Mr. Carrillo´s accounting specialty from the nationally renowned Monterrey Tech provides his clients tools and process to achieve their operations goals throughout Mexico and LatAm.

In 2018, his team structured and sold the Tijuana Portfolio: it consisted in 23 facilities totalling 1.3 million SF.

“We are proud to recognize Roberto as our newest SIOR recipient. Roberto’s consistent professionalism and exceptional service to each global client is now recognized, internationally.” noted CEO Gary Swedback

The Society of Industrial and Office Realtors® is the leading professional commercial and industrial real estate association, based in Washington, DC with  3000 individuals in more than 630 cities in 32 countries.

SIORs advisors are important to our global clients because:

• SIORs are the most qualified, successful, and experienced real estate advisors.
• SIORs are top producers recognized by developers, lenders and investors.
• Continuous professional education ensures SIORs lead industry practices for ethics, technology and performance.

NAI Global is the world’s leading managed network of commercial real estate firms. Members are market-leading firms across the U.S and worldwide, present in 400 offices in 60 countries and more than 6700 local market experts.

NAI Global brings together people and resources to deliver results for clients wherever needed. Therefore, clients come to NAI for deep local knowledge, and build their businesses on the power of NAI’s global network.

For more information please visit: www.naiglobal.com and www.sior.com

The post Roberto Carrillo Awarded With the Prestigious SIOR Designation appeared first on NAI Mexico.

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MEXICO CITY (Reuters) – Mexico’s government said on Tuesday it had reached an agreement with Brazil on the free trade of light vehicles, subject to a 40 percent regional content requirement, paving the way for more open commerce between Latin America’s two biggest economies.

The agreement takes effect on March 19th of 2019 and the content requirement would be subject to current formulas for calculation, the economy ministry said in a statement. The statement did not provide details on the formula.

Mexico has been seeking to diversify trading partners since U.S. President Donald Trump warned of the possible death of the North American Free Trade Agreement (NAFTA) that has underpinned Mexico’s foreign trade for a quarter-century.

The economy ministry said Mexico racked up a trade surplus in the auto sector with Brazil worth $868 million last year, three times the total recorded in 2017.

The automotive industry in Brazil is protected by subsidies and import taxes. Antonio Megale, president of automotive sector trade group Anfavea, told newspaper O Estado de S. Paulo he would have preferred to delay the free trade agreement by three years.

Announcing new investments in Brazil on the 19th , Carlos Zarlenga, General Motors’ top executive for South America, said the Brazilian industry was competitive and benefited from its scale, but noted that taxes were so high that 50 percent of the automaker’s revenue in the country was spent on taxes.

Source: www.reuters.com

The post Mexico and Brazil reach light-vehicle free trade agreement appeared first on NAI Mexico.

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