There is plenty of potential for growth in the Mexican market, providing opportunities as well as challenges in an increasingly globalized landscape.

Angel de Arriba Serrano

Director General, Mecalux Mexico

One advantage Mexico presents for building high-tech warehouses is that the cost of both labor and land is relatively low; therefore, companies can save money by outsourcing this sort of technological upgrade. Our products rely heavily on the overall state of the economy. Whenever an economic shock occurs, companies are quick to cut off warehousing expenses; yet, a turnaround can occur just as quickly as a crisis recedes and new projects again return to normal conditions. The exchange rate of the dollar is not favorable for Mexico at the moment, so our finances are constrained by the fact that our production supplies are in dollars. There are some industries, such as automotive, that are booming right now in Mexico, but our industry in particular is facing some challenges due to taxes. Mexico nevertheless has a dynamic economy, a sizable population of young people, and an incentivized industry structure; hence, we see plenty of opportunities to continue moving forward.

Gerardo Angulo

Director General, Timken

Foreign investment has increased. We have seen several companies opening or expanding their businesses all around Mexico, from the US, Italy, Germany, Japan, and Korea among others. There are state-of-the-art industrial parks. Distribution is much more centralized and more institutional. Large family companies are disappearing; some of them have been acquired by US companies, changing not only their names but their whole selling structure. Most of the recently installed OE manufacturers are looking and also supporting the development of local suppliers. Large users are approaching manufacturers to get direct contact and obviously, trying to get better prices and services and ensure there is a commitment from the manufacturer. Challenges have not changed, but the methods of negotiations have. Attracting customers has always been challenging. Fortunately, Timken has an extensive product portfolio with new products every year and we are working closely with distributors and end users to help them to improve their reliability and performance. Having more competitors abroad has led us to create different strategies.

Philipp Herrmann

Vice President, Item America

In 2007, Item started setting up a central warehouse for the US market to support and supply products to two existing distributors in the US, and then in 2011 Item defined the central warehouse as the headquarters for North and South America, and we have since then expanded. In 2014, we set our goals based on being close to this market, where a great deal of manufacturing was happening. Mexican, American, and other German companies also relocated here because of the long history and relationship between Mexico and Germany, which began with Volkswagen in Puebla and was followed by other suppliers coming over. The original plan was to have four partners, so we are now in the process of defining the fourth territory. This is difficult because we cannot reach this area as just one cluster, given its extensive spread. The infrastructure in Mexico is still in the development process. There is great potential in this market and, for Item in particular, we see Mexico as part of Item America and Mexico should have around one-third of the entire sales of Item goods in the next two years.