The Manufacturing Industry in Mexico: A Primer
The manufacturing industry in Mexico has a long history and plays a fundamental role in the country’s economic structure.
History of the manufacturing industry in Mexico
Manufacturing has always had a strong tradition in Mexico. It began with the nation’s first inhabitants. Native peoples had extensive experience in areas such as craftsmanship, construction, weaving, and goldsmithing. In 1519, with the arrival of the Spaniards to the New World, practices were introduced that modernized processes and moved them towards the beginnings of industrialization.
With the dawn of the industrial revolution in the 1760s, Mexico further consolidated its national production apparatus with the emergence of multiple factories and companies that had cutting-edge technology and resources for the times.
From 1877 onward, the rise of Mexico’s system of electricity and the birth of a new network of railways precipitated a period of accelerated development of the manufacturing industry in Mexico. This growth, however, was deterred by armed conflict when the nation entered into a period of domestic turbulence as a result of the Mexican Revolution (1910-1917). This, of course, slowed the pace of industrial growth in the country’s economy.
Following the adoption of the Mexican Constitution on 5 February 1917 and the return of national political and social stability, Mexico became and has remained one of the world’s leading manufacturing nations.
Characteristics of the manufacturing industry in Mexico
In Mexico, there are several manufacturing sectors that form a fundamentally important part of the economy. Among the most prominent and modern are the automotive, aerospace, electronics, medical device, machinery and equipment, and metal forming industries. Mexico also has a large sector of manufacturing industry that is concentrated in the areas of food, beverage, and tobacco production.
Other key sectors that generate multimillion-dollar export revenues, as well as create income from domestic sourcing, are:
- Plastic and Rubber
- Chemicals
- Furniture, mattresses, and blinds
- Appliances
- Textile inputs and finishes
- Tanned and finished leather
The manufacturing industry in Mexico is attractive to investors
For many years, manufacturing in Mexico has drawn the fixed attention of investors and companies from all corners of the globe. In recent times, manufacturing has accounted for more than half of the value of investments made in the country’s economy by foreigners. One of the principal causes of Mexico’s emergence as a manufacturing power is the high quality and favorable cost of its labor force.
While raw material transformation processes have been modernized in the last several decades, and technology that utilizes robotics and automation have taken their place in the manufacturing industry in Mexico, the human factor remains indispensable. In the domestic labor market, there are plentiful sources of direct labor, supervisors, and individuals with extensive experience in the manufacturing sector. Although the cost of Mexican labor is regarded to be cheap by international standards, significant economic opportunities are available to workers that reach a high level of specialization.
Income level of skilled labor in the Mexican manufacturing industry
For those individuals that complete an academic course of studies that is focused on industrial engineering, many well-remunerated opportunities exist. A degree in Industrial Engineering provides the necessary education and training that enables graduates to lead projects and to oversee complex manufacturing processes.
According to studies conducted by the Mexican Institute for Competitiveness (IMC), industrial engineers are among the top ten groups of professionals in Mexico in terms of compensation. Currently, graduates of this course of studies have an average wage of $12,581 Mexican pesos per month. This amount is the equivalent to US $5,526. This annual wage of US $66,312 greatly exceeds the national per capita income of approximately US $10,500.
The economic contribution of the manufacturing industry in Mexico
The economic benefits of manufacturing in Mexico go beyond the acquisition of foreign direct investment. Year after year, the sector generates billions of dollars in revenue for the nation.
For example, in the first 5 months of 2019, the manufacturing sector experienced a growth rate of 10.5% when compared with the same period of the prior year. From January to the end of May 2019, manufacturing generated $225,616 alone. This represents approximately 57% of Mexico’s total profits from sales to other countries during the period.
Thus far in the 21st century, the manufacturing industry in Mexico has accounted for between 15% and 18% of the country’s annual GDP. The latter represents the figure for 2019. During the last decade, the lowest contribution of manufacturing to Mexico’s Gross Domestic Product was 15.4%. This occurred in 2015.
