Goals and Expectations of "Plan México": Destined to Fail?
Ricardo Raphael speaks with Emilio Cadena about the goals and expectations of Plan México: Will it be an efficient plan for the country or just another idea destined to fail?
In a recent interview, Emilio Cadena, Prodensa CEO and former president of the Binational Board of Directors of the USA-Mexico Foundation, shared valuable insights on Mexico’s potential to emerge as one of the world’s top 10 economies. The conversation revolved around the recently unveiled "Plan México," a strategic framework to enhance the country's industrial and economic competitiveness. Here, we summarize the key takeaways from the discussion.
The "Plan México" sets a bold goal: to position Mexico as a leading economic power by leveraging its industrial capabilities and geographic advantages. At its core, the plan aims to build local capacities to produce components that are currently imported, fostering a stronger domestic supply chain without resorting to outdated protectionist policies.
Cadena emphasized the importance of developing an industrial ecosystem similar to those in Asia, which have rapidly built the necessary infrastructure to support high-value manufacturing. He underscored that this is not about “import substitution” in the traditional sense but about creating a more robust and competitive regional supply chain.
One of the key objectives of "Plan México" is to increase the integration of Mexican companies into global supply chains, particularly in the automotive, aerospace, and electronics sectors. Today, many parts used in Mexico’s export products are imported, limiting local value creation. By developing the infrastructure, capabilities, and skills needed to manufacture these components domestically, the plan aims to boost local content while attracting foreign direct investment (FDI).
Cadena noted that this effort should focus on investment from the North American region rather than relying heavily on imports from Asia, especially China. This strategy aligns with the broader "nearshoring" trend, where companies relocate operations closer to home markets to increase efficiency and reduce supply chain risks.
The "Plan México" outlines several ambitious targets, including:
Doubling Foreign Direct Investment: Mexico currently attracts $35-40 billion annually in FDI, but the goal is to reach $100 billion by the end of the decade. This aligns with the immense opportunity presented by the U.S. and Mexico’s combined annual imports of over $1 trillion from Asia.
1.5 Million Advanced Manufacturing Jobs: The plan seeks to grow Mexico’s manufacturing workforce by 50%, adding 1.5 million jobs to the current 3 million in the sector. Achieving this will require significant public and private investment and a collaborative approach.
Cadena highlighted the IMMEX program as one of Mexico's most successful tools for promoting foreign industrial investment. While not perfect, IMMEX has been instrumental in fostering growth in industries like automotive, aerospace, and electronics. Updating this program to align with the evolving global landscape is crucial for driving regionalization and attracting further investment.
Additionally, an updated nearshoring decree is expected soon. This policy will build on existing incentives like accelerated depreciation for relocation investments, making Mexico an even more attractive destination for global manufacturers.
Despite the optimism, Cadena acknowledged the challenges that must be addressed for "Plan México" to succeed. Security remains a critical concern that impacts investor confidence and economic growth. Furthermore, Mexico must strengthen its capital ecosystem by fostering venture capital, angel funds, and private equity to ensure businesses can access the funding they need to grow.
He stressed that creating an environment where companies of all sizes can secure low-cost, long-term capital is essential for Mexico to achieve its economic aspirations.
The discussion also highlighted the need for coordinated efforts between the public and private sectors. Cadena commended the initial collaboration under "Plan México," noting that both sectors are aligning to execute the plan effectively. Setting short-term milestones, as outlined in the presentation, will be crucial for maintaining momentum.
Mexico stands at a pivotal moment, with the potential to redefine its role in the global economy. "Plan México" presents a clear and ambitious roadmap to increase local industrial capabilities, attract investment, and create jobs. However, the success of this initiative depends on addressing challenges like security and capital access while fostering collaboration between stakeholders.
As Cadena aptly noted, this is an opportunity for Mexico to thrive in a "new era of North American trade." With the right execution and sustained effort, Mexico can position itself as a top global economy, benefiting not only the country but also the broader North American region.