New President Nieto Hopes to Boost Manufacturing in Mexico

By Doug Donahue

Enrique Peña Nieto was inaugurated as President of Mexico at the beginning of December, 2012, having made many promises in the course of his successful campaign, including to increase Mexico’s economic growth, employment and competitiveness. Nieto is a member of Mexico’s Institutional Revolutionary Party, which ruled Mexico for 71 years in a row, but had not held power since 2000.

What affect will the new pro-business President’s administration have on manufacturing in Mexico? It’s early days, but Nieto wasted no time in his efforts to boost industries that he sees as key to Mexico’s recovery – manufacturing chief among them. Nieto garnered bipartisan support for the “Pact for Mexico,” which was promoted by his party and signed as well by the conservative National Action Party and the leftist Democratic Revolution Party. The legislation includes measures Pena Nieto announced during his inauguration, such as education reform, pensions for people 65 and older and concessions for two new national television stations.

Commitment to Education

Nieto has promised to overhaul Mexico’s business, energy and education sectors in a fundamental way that could affect manufacturing as well as numerous other industries in Mexico. He wants to continue the momentum of his predecessor, Felipe Calderon, who oversaw the creation of more than 70 institutions of higher education and helped more than 30 existing institutions to expand their student enrollment, since 2006 alone. Nieto is aware of the growing demand for educated engineers and technicians in response to the ongoing growth of Mexican manufacturing. He wants to roughly double the number of college-age Mexicans enrolled in higher education programs.

Among Nieto’s pro-growth goals are a commitment to assemble more cars, drill more oil and build “better, faster, smarter bridges” to increase commercial activity, already valued at $1 billion per day, across the 2,000-mile US/Mexico border, the world’s busiest. For his part, President Obama called the plans “very ambitious” and promised that the bilateral relationship would grow.

Mexican Manufacturing Boosts Growth

Mexico’s economy is projected to grow 4% this year, above the global average. With steady growth, a stable currency, proximity to US markets and low-cost labor, Mexico will continue to impress as a destination for offshore manufacturing, particularly as growth in China slows. Many leading US and European companies already have manufacturing facilities in Mexico, including General Motors, Audi and Canadian aviation manufacturer Bombardier. Attracted by low labor costs and closeness to US markets, the trend of such companies setting up manufacturing in Mexico will only grow. Peña Nieto has stated he wants to make Mexico an attractive destination for foreign investment, and he fully supports foreign manufacturing concerns, which helps further generate jobs in Mexico and leads to infrastructure improvements.

 

 

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