“Mexico is open for business worldwide.” Forbes columnist and Global Equities/Emerging Markets Specialist Carl Delfeld recently covered Mexico’s growing status as a manufacturing and industrial superpower. “Its strengths are making money for investors,” he writes.
With Mexico’s exports hitting record highs in recent years,Mexico is well on its way to replacing China as the number one global manufacturing center for both the North American and South American Markets. While U.S. industrial production remains at pre-2007 levels,Mexico’s exports hit a record high in April of 2012 and its manufactured goods now represent an impressive 60 percent of its GDP,more than triple the numbers from the 1980s.
“China’s huge advantage in labor costs is evaporating,” writes Delfeld. “Mexico’s manufacturing wages are only 12 percent higher than China’s,and given all the logistical issues and transportation costs that come with shipping parts to China and then bringing the final product back,you can easily see Mexico’s advantage.”
All of this explains why countries everywhere – from America to Europe,Japan,South Korea and China – are all making big moves to invest in production facilities in Mexico. For example,Italian tire maker Pirelli just opened its first plant in Mexico,which is a direct result of the country’s booming auto production,which was up 20 percent on the year this April.
Mexico real estate also has a strong geographical edge over many of its competitors,since it is situated next to the U.S. and the countries of South America.
“Let’s take a moment and look at the big picture: While U.S. debt is approaching 90 percent of GDP,Mexico is at 27 percent,” Delfeld observes. “America’s budget deficit is 8.6 percent of GDP while Mexico is at 2.5 percent. In addition,inflation in Mexico is at a manageable 4.4 percent and,unlike Brazil,has no restrictions on capital inflows.”