Mexico's manufacturing sector has established itself as a cornerstone of the country's economic growth and its positioning in international trade. Indeed, manufacturing exports have been the driving force behind the Mexican economy for decades, transforming the country from a raw materials-based economy to an emerging industrial power.
The history of manufacturing in Mexico is a narrative of transformation and adaptation. Since the mid-20th century, the country has undergone significant evolution in its approach to industrial production and exports.
From the 1940s to the 1970s, Mexico adopted the import substitution model, an economic strategy designed to reduce dependency on foreign products and promote domestic industrialization. While this protectionist approach initially stimulated domestic industrial growth, it eventually revealed limitations in global competitiveness and productive efficiency.
The signing of the North American Free Trade Agreement (NAFTA) in 1994 marked a turning point for Mexico's manufacturing sector. This agreement opened new market opportunities, primarily with the United States and Canada, driving a wave of foreign direct investment into Mexican manufacturing.
NAFTA, now renewed as the United States-Mexico-Canada Agreement (USMCA), has been crucial for Mexico's integration into global value chains, facilitating the creation of highly specialized industrial clusters, particularly in sectors such as automotive, aerospace, electronics, and more recently, semiconductors.
Recent data from the National Institute of Statistics and Geography (INEGI) confirms the narrative. The Mexican manufacturing sector is characterized by its diversity and increasing sophistication. Key sectors contributing to manufacturing exports include:
The geographic distribution of manufacturing production in Mexico is strategically spread across the country, with significant concentrations in:
These important states are included in our report about industrial corridors in Mexico made by Alejandro Mendoza, Prodensa’s President of Real Estate Solutions.
Mexico's manufacturing sector has shown sustained growth over the last decade, with some fluctuations due to global economic factors. However, INEGI data reveals that manufacturing exports have maintained an upward trend, with particularly notable growth in recent years.
In May, 89% of the annual growth in non-oil exports was explained by manufacturing, which grew at an annual rate of 4.51%. Automotive exports grew by 1.51%, and other manufacturing exports grew by 6.48% annually. This increase is significant given the challenging global economic context.
While other export sectors, such as oil, have experienced volatility, manufacturing exports have proven to be more resilient and consistent in growth. The accumulated growth of total exports in 2024, amounting to $10.529 billion, is largely explained by manufacturing exports, according to Banco Base.
Manufacturing exports play a crucial role in the Mexican economy, representing a significant portion of national GDP and dominating the country's total exports. In 2024, the manufacturing sector, excluding automotive, accounted for 35.6% of the accumulated growth of total exports in the first five months of the year.
The United States remains the primary destination for Mexican manufacturing exports, benefiting from geographical proximity and trade agreements. Canada, as part of the USMCA, is also a significant trade partner.
Additionally, Mexico has diversified its export markets, including:
There has been a gradual diversification in export destinations, although the United States remains the dominant partner. This diversification has been driven by free trade agreements with multiple countries and regions, government and private sector efforts to explore new markets, and the increasing competitiveness and quality of Mexican manufactured products.
The future prospects for Mexico's manufacturing sector are encouraging, according to a recent analysis by Banorte. Experts expect it to maintain a positive trend, albeit with heterogeneous behavior within the sector.
Factors contributing to this projection include:
However, some challenges are anticipated:
Several emerging sectors are gaining prominence in the Mexican manufacturing landscape:
In conclusion, manufacturing exports continue to be Mexico's economic engine, demonstrating adaptability and resilience in the face of global challenges. However, continued investment in innovation, infrastructure improvement, and deepening trade relationships will be crucial to maintaining and expanding Mexico's position as a global manufacturing leader in the years to come.