Market Overview

If you have enjoyed success at selling your products or services to manufacturers in the U.S. and are interested in growing those sales through exports, we’d like to hear from you.

Mexico is, for many companies, a natural extension of their sales program in the U.S. Thanks to the North American Free Trade Agreement (NAFTA), U.S. exporters often enjoy competitive advantages in exporting to Mexico. And the proximity of Mexico can mean that U.S. exporters have significantly lower logistics costs, especially for larger items, than their Asian and European competitors.

Since the signing of NAFTA in 1993, Mexico has continued to expand its manufacturing base considerably. And bilateral trade between the U.S. and Mexico has grown over 200% in the last 12 years. Manufacturers continue to be drawn to Mexico, particularly to the northern region, as a result of its proximity to the consumer markets of the U.S. and Canada coupled with its lower pay scale. As a result, foreign direct investment has continued to flow into Mexico at the rate of an additional $18 billion per year – most of it directed at manufacturing.

Mexico’s industrial GDP has grown 5% per year for the past 6 years and shows little sign of slowing down. Over half of its industrial output, or some $100 billion, was exported to the U.S. last year. At the same time, Mexican manufacturers tend to buy their inputs, their manufacturing equipment, and their services from the U.S., which in 2005 exported over $60 billion to the manufacturing sector in Mexico.

Mexican Challenges, U.S. Exporter Opportunities

U.S. manufacturers continue to be among the most productive in the world. If you are supplying this sector in the U.S., you already know that. What you may not realize is that Mexico faces the same challenge from lower cost producers in Asia that the U.S. manufacturing sector confronts. What we have found is that Mexican manufacturers realize, especially with the growth of the export-driven manufacturing sector in China, is that they can no longer compete on the basis of low-cost labor.

Manufacturers in Mexico are concerned with the following issues. Each of them represents significant opportunities for U.S. providers of goods and services that have competence in these areas.

• Energy Costs
• Labor Costs
• Raw Materials/Input Costs
• Logistics Costs
• Access to Capital
• Increasing Product Design Capabilities

Beyond these shared areas, the opportunities for U.S. exporters can vary widely by manufacturing sector. We invite you to contact our CS Mexico Industry Sector Specialists directly to find out more about how we can help you identify those opportunities. In addition, we have a wealth of published CS Market Research on manufacturing in Mexico which is available through our sector specialists or from the U.S. Commercial Service office closest to you.

In addition, we recommend looking at our U.S. Export Finance page to learn more about how offering various finance options can help you win more business. We have found that smaller Mexican Tier 2 suppliers in the automotive sector, for instance, frequently are offered more business contingent upon increasing their capacity, but are constrained from doing so by lack of access to affordable capital. We can help you understand the benefits and risks of using such instruments as open account terms with export credit insurance to protect against non-payment.

Further Information, Comments or Questions

If you want to contact us about opportunities for you to increase your exports to Mexico’s manufacturing sector, please contact one of our our CS Mexico Industry Sector Specialists.