Trends in Nearshore and Offshore Manufacturing
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This Entrada Group (www.entradagroup.com) presentation explains why and how Mexico is becoming a key manufacturing destination for the world’s aerospace industry.
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Trends in Nearshore and Offshore Manufacturing
- 5. Part I: Trends
- 8. Part I: Trends
- 15. Bowles/ Nissan D&M/Volkswagon Part I: Trends
- 19. Part II: Case Study Estimate, compare, and contrast a Zacatecas, Mexico manufacturing site vs. an identical one located in Honduras, Nicaragua and Costa Rica in terms of Operating Costs & Business Risk
- 21. WWW.IBM.COM/GBS/PLI By projects 2003 - 2007 By jobs 2003 - 2007 Source: IBM-PLI Global Investment Locations Database (GILD) Part II: Case Study
- 22. WWW.IBM.COM/GBS/PLI By projects 2003 - 2008 By jobs 2003 - 2008 Source: IBM-PLI Global Investment Locations Database (GILD)
- 23. WWW.IBM.COM/GBS/PLI By projects 2003 - 2008 By jobs 2003 - 2008 Source: IBM-PLI Global Investment Locations Database (GILD)
- 24. Part II: Case Study
- 25. Part II: Case Study
- 26. Part II: Case Study Selected Comparative Country Statistics Year 2009 Statistics US Mexico Honduras Nicaragua Costa Rica Population 307m 111m 7.8 m 5.8 m 4.3 m Labor Force 154m 46 m 3.3 m 2.2 m 2.1m GDP 14 t 1.5 t 32b 16b 48b GDP per capita 46,000USD 13,200USD 4100USD 2800USD 10,900USD Inflation 0% 3.60% 5.90% 3.70% 7.80% Exports 1 t 230b 5.1b 2.3b 9.0b Exports to USA 80% 60% 61% 32% Internet Users 130m 23m .65m .185m 1.5m Main Exports apparel apparel semi conductor wire harness wire harness electronic, medical Companies Gildan, KC VF, Cupid Intel, Panduit Lear, FCI Yazaki, Draexlmaier Baxter Medical, Boston Scientific t=Trillion b=billion m=million USD=US Dollars
- 27. Part II: Case Study
- 28. Part II: Case Study Location>> Mexico <<<<<<<<Less Risk More Risk>>>>>>>>> Weighted # Risk Factor Weight>> 1 2 3 4 5 Totals 1 Labor Supply 17% 3 0.51 2 Unionization 10% 3 0.30 3 Infrastructure 15% 2 0.30 4 Climate 5% 2 0.10 5 Governmental 20% 3 0.60 6 Currency 20% 4 0.80 7 Inflationary 10% 3 0.30 8 Technology 3% 2 0.06 Totals = 100% 2.97 Location>> Honduras <<<<<<<<Less Risk More Risk>>>>>>>>> Weighted # Risk Factor Weight>> 1 2 3 4 5 Totals 1 Labor Supply 17% 2 0.34 2 Unionization 10% 3 0.30 3 Infrastructure 15% 3 0.45 4 Climate 5% 4 0.20 5 Governmental 20% 5 1.00 6 Currency 20% 2 0.40 7 Inflationary 10% 3 0.30 8 Technology 3% 4 0.12 Totals = 100% 3.11
- 29. Part II: Case Study Location>> Nicaragua <<<<<<<<Less Risk More Risk>>>>>>>>> Weighted # Risk Factor Weight>> 1 2 3 4 5 Totals 1 Labor Supply 17% 3 0.51 2 Unionization 10% 3 0.30 3 Infrastructure 15% 4 0.60 4 Climate 5% 4 0.20 5 Governmental 20% 1.00 6 Currency 20% 2 0.40 7 Inflationary 10% 3 0.30 8 Technology 3% 4 0.12 Totals = 100% 3.43 Location>> Costa Rica <<<<<<<<Less Risk More Risk>>>>>>>>> Weighted # Risk Factor Weight>> 1 2 3 4 5 Totals 1 Labor Supply 17% 2 0.34 2 Unionization 10% 3 0.30 3 Infrastructure 15% 2 0.30 4 Climate 5% 2 0.10 5 Governmental 20% 2 0.40 6 Currency 20% 4 0.80 7 Inflationary 10% 3 0.30 8 Technology 3% 2 0.06 Totals = 100% 2.60
Editor's Notes
- I’ll outline the business impetus to create shelter services, explain the evolution of those services in Mexico, describe the types of shelters available today and offer advice on how to choose the best shelter for your requirements.
- Location of Production by Market Region Primary Market Regions: North America, Europe and Asia
- Regionalism: Predictability—Currency Speed---transit times Costs---freight Trade Agreements---content requirements Nafta &Cafta Proximity to your client
- Example: Automotive Industry in the North American Region -- European OEMs---BMW, Mercedes and Volkswagon now re- quiring European suppliers to locate plants in North America
- D&M opens in Zacatecas, Mexico
- Reform of the Supply Chain Siemens goals 60% increase in pooling of spending—particularly indirects 25% increase in sourcing in emerging markets 20% reduction of the supply base
- Demand More communities looking for manufacturers to relocate production than there are manufacturing companies relocating
- State Competition Tier 1 automotive supplier in Mexico
- Country Competition Bulgaria v. Poland and Czech Republic Nicaragua v. Honduras
- Competing against the State China, Brazil, Russia Book by Ian Bremmer, “The End of the Free Market” Concept: The State is dominant economic player in select markets and their primary motivation is political, not economic. This makes it very difficult for the private sector to compete
- State owned companies, Privately held companies supported by the state Sovereign wealth funds financially subsidized, don’t necessarily need to make a profit, not transparent or accountable and have global reach State bailing out companies in strategic industries: France, US
- Manufacturers must have production operations in place in order to play Bowles/Nissan D&M/Volkswagen
- Greenfield Joint Ventures
- Subcontract Hybrids: Shelter in Mexico: help manage from a distance and across national borders
- Objective: Estimate, compare, and contrast a Mexico manufacturing site vs. an identical one located in Honduras, Nicaragua and Costa Rica in terms of Operating Costs & Business Risk
- Private Sources of Location Information and Analytics Trade Data: Global-Production .com Harmonized Tariff Codes- can determine patterns of cross-border trade. The patterns can help identify competitive locations Foreign Direct Investment: IBM Plant Location International Database Tracks public announcements worldwide of new FDI projects
- Operating Conditions—assess each country’s strength and weakness Legal and regulatory framework Economic factors: Financial incentives and tax structure, duties, inflation, interest rates, currency exchange Government and Political factors: stability and attitude towards business Social and Cultural factors Quality of life
- Infrastructure quality—transportation, telecommunications, utilities Labor characteristics: quality and availability of operators Availablility of skilled and industry specific personnel Characteristics of the location Proximity to parent company and/or competitors Proximity to suppliers
- Thank you for your attention. Any questions?