TBY talks to Andrés Franco Abascal, the Under Secretary of Foreign Investment and International Commerce of the Secretariat of Economic Development, State of Nuevo León, on the administration’s goals for strengthening the economy of the state and capitalizing on competitive advantages.
TBY What are Nuevo León’s competitive advantages as an investment destination?
ANDRÉS FRANCO ABASCAL Nuevo León boasts access to both oceans, which means access to both Europe and Asia, with the internal infrastructure that plants established in Monterrey need. Although most of them export between 80% and 85% of their capacity to the US and Canada, they make sales domestically and to Central and South America. Our main competitive advantage is our strategic location. As members of the North American Free Trade Agreement (NAFTA), we have access to a market of 450 million people and contribute to a GDP that totals $15.5 trillion. NAFTA contains a mechanism for resolving disputes and provides protection for investments. Mexico is the third-largest partner of the US and the second-largest destination for all US exports. The two countries exchange over $1 billion a day in trade.
Other major competitive advantages include our human capital, stable labor force, and our industrial culture, which goes back to the late 1800s. June 2012 marks the 14th year without a single strike in the whole state, which demonstrates our confidence. An average of 5,000 engineers graduate every year in Monterrey. We have the highest education level in all of Mexico, with over 90 colleges and universities with more than 150,000 students enrolled at any given time. We also have many bilingual schools, maintaining a broad English base, which is crucial for business. Many of the 2,600 foreign companies operating in metropolitan Monterrey are operated by locals.
As a result, there is a combination of high-tech manufacturing in a low-cost region. We also have very close links between the academic world, the business world, and the government, which allows us to attract new businesses and enhance existing ones. We have many world-class industrial parks, as well as the only research and innovation park in Mexico. Our advantages are reflected in real terms by the confidence of international investors. We attracted $1.6 billion of FDI in 2011, and around 70% was for the expansion of foreign companies currently operating here.
What sectors represent your core strengths, and what emerging sectors are you hoping to develop?
We have a very diversified economy. We are a manufacturing center, and we produce over 10% of Mexico’s manufactured goods. Last year we exported a little over $30 billion from Monterrey, which is more than all of what Central America exports combined. This figure grew 50% in 2010 and exports continue to grow steadily. Many of our sectors are organized in clusters, the strongest of which is the automotive cluster. In Nuevo León we produce about 24% of all auto parts in Mexico. Our administration’s goal is to attract a full automotive assembly plant. Other core sectors include home appliances, electronics, metal mechanics, steel, glass, cement, and food and beverages. Software and ICT as well as health care are also increasingly important. Moreover, we are concentrating our marketing efforts on four emerging sectors: aerospace, biotechnology, nanotechnology, and energy.
Siemens recently chose Nuevo León as the location of their first low-voltage research center in Latin America. What role do your universities play in attracting knowledge-based investments like this one?
The federal and state governments are heavily focused on attracting R&D. A company such as Siemens has found the right talent in the universities through agreements. For example, before students graduate they can undertake an internship with Siemens. This is part of a long-term program, because the company wants to hire people who will stay with it. It wants to have a long-term relationship with students and with academia. There are more than 80 R&D centers that are located in Nuevo León. We also have the Research and Innovative Technology Park (PIIT), unique to Latin America, which was founded eight years ago and fully occupied within four years. We are currently on the second stage, aiming to expand the park and develop research incubators. Historically, we have attracted manufacturers, and we would also like to move toward a knowledge-based economy, focusing on R&D and value-added for the market.
How does Nuevo León’s Secretariat of Economic Development help to attract and secure FDI?
Our main mission in this office is to conduct marketing efforts to position Nuevo León as one of the most attractive places to do business in North America. We aim to create not only more jobs, but better jobs. What we do is create wealth.
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